Capital Gains Tax (Germany)

The capital gains tax (KapESt) is a form of collection of income tax and corporation tax in Germany . It is retained as withholding tax by the debtor of the investment income or by the paying agent (e.g. bank ) for the account of the creditor of the investment income and paid to the tax office .

Together with the introduction of the separate tax rate for income from capital assets , since January 1, 2009, it has generally had a final effect on certain capital income for private investors ( flat rate withholding tax ). Before this point in time, it only had this with (for example purely foreign) corporations in special cases.

In numerous exceptional cases, the compensation effect of the KapESt does not apply. It is then treated like a tax prepayment in the tax assessment .

functionality

Survey form

The capital gains tax (KapESt), like wage tax, is a form of collection of income tax (and corporation tax). Similar to wage tax, it arises with the inflow of investment income ( Section 44 (1), sentence 2 of the Income Tax Act). The aim of capital gains tax is to tax income from capital assets comprehensively and to make evasion more difficult. The income tax liability arises either from the normal tax rate or the separate tax rate for income from capital assets according to § 32d EStG. Since this separate tariff provides the same tax rate (25%) as the capital gains tax, the income tax is regularly settled through the withholding deduction. Discrepancies arise e.g. B. for investment income that belongs to a different type of income. In this respect, a correction must be made via the annual tax return.

Investment income with tax deduction

The investment income that is subject to tax is finally listed in Section 43 (1) EStG. This is the largest part of the investment income listed in Section 20 (1) and (2) EStG, even if they are assigned to other types of income (e.g. commercial). These are, for example, interest (if the debtor of this income is a domestic credit institution), dividends , income from certain insurance contracts, silent companies, option, futures and securities transactions, certificates and (to a limited extent ) from investment funds.

Not subject to tax deduction, for example

Income from other loan agreements of a non-credit institution (in particular other corporate and private loan transactions),
Current income from a foreign accumulating fund (even if it is in a custody account managed in Germany - due to a lack of cash flow, a tax deduction by a German bank is not possible),
Income from interest on mortgages and land charges and annuities from pension debts,
Income from the sale of a silent partnership or endowment insurance,
Income from certain foreign currency transactions.

These are to be declared subsequently by the creditor of the income.

In particular, the KapESt is not to be collected in areas in which, in addition to corresponding income, substantial related expenses are regularly incurred. If the expenses were not taken into account (see also assessment ), this would result in an excessive tax burden that could only be corrected with an assessment.
This applies in particular to the interbank area (interest income would be subject to the KapESt, but interest expenses would not lead to any reimbursement / crediting). The situation is similar when trading in securities. Again, profits and losses could not be offset during the year.
In order to avoid the resulting liquidation problems (payment of the KapESt during the year, reimbursement only through annual tax assessment) and also to simplify the administrative work that could arise due to the high number of business transactions, the collection of the KapESt is waived under certain conditions ( Section 43 Para. 2 EStG).

Assessment of capital gains tax

The withholding tax rate is 25% plus the solidarity surcharge (5.5% of the withholding tax) and, if applicable, church tax (8 or 9% of the withholding tax) ( Section 43a (1) No. 1 EStG). This is not to be confused with the special tariff for income from capital assets, which is also 25% plus surcharge tax (see also form of collection ).

In the case of church tax liability, the assessment base is reduced due to the deductibility of the church tax. More information can be found in the subsection Capital Gains Tax and Church Tax .

The following possible percentages result:

Church tax →	no		8th %		9%
Capital gains tax	${\ displaystyle {\ tfrac {100} {400}}}$	25.0000%	${\ displaystyle {\ tfrac {100} {408}}}$	24.5098%	${\ displaystyle {\ tfrac {100} {409}}}$	24.4499%
Solidarity surcharge	${\ displaystyle {\ tfrac {5 {,} 5} {400}}}$	1.3750%	${\ displaystyle {\ tfrac {5 {,} 5} {408}}}$	1.3480%	${\ displaystyle {\ tfrac {5 {,} 5} {409}}}$	1.3447%
Church tax	${\ displaystyle {\ tfrac {0} {400}}}$	0.0000%	${\ displaystyle {\ tfrac {8} {408}}}$	1.9608%	${\ displaystyle {\ tfrac {9} {409}}}$	2,2005%
Total load	${\ displaystyle \ mathbf {\ tfrac {105 {,} 5} {400}}}$	26.3750%	${\ displaystyle \ mathbf {\ tfrac {113 {,} 5} {408}}}$	27.8186%	${\ displaystyle \ mathbf {\ tfrac {114 {,} 5} {409}}}$	27.9951%

Tax deduction is waived for most income if the person obliged to withhold tax is presented with an exemption order or a non- assessment certificate ( Section 44a (1) to (3), 10 EStG). An exemption is z. B. is generally not possible with dividends that are distributed directly by a corporation to the shareholders. However, if these cases involve employee participation, it is again possible to post an exemption order with the employer.

Exemption orders may be used up to a total of the saver lump sum (€ 801 / € 1602 for married couples) ( Section 44a (1) No. 1 EStG in conjunction with Section 20 (9) EStG).

Determination of the tax base

The full investment income is subject to tax deduction without any deduction. In the case of sales income, the tax deduction is calculated taking into account the sales costs if the assets have been acquired or sold by the entity paying the investment income and have been kept or managed since then ( Section 43a (2), sentences 1 and 2 of the Income Tax Act).

If the taxpayer transfers the assets to another (own or third-party) custody account and the transaction is not a paid transaction, the domestic paying agent must notify the receiving domestic paying agent of the acquisition data ( Section 43a (2), sentence 3 EStG) .
In particular, in the case of unpaid acquisitions, the (overall or individual) legal successor is assigned the acquisition values of the legal predecessor ( Section 43a (2) sentence 3 and 4 EStG in conjunction with Section 43 (1) sentence 4 and 5 EStG) .
If the acquisition data is not proven due to a transfer process, 30 percent of the current stock exchange price ( Section 43a, Paragraph 2, Sentence 7 of the Income Tax Act) is assumed as the assessment basis for the withholding tax withholding tax . If the bank has neither the acquisition costs nor a current stock market price, the bank is obliged to report the matter to the tax authorities.

Reduced tax rate

Services provided by businesses of a commercial nature by legal entities under public law are only subject to a tax deduction in the amount of corporation tax of 15% ( Section 43a (1) No. 2 EStG), as this tax is restricted for the legal entity under public law itself due to its limitations Corporate income tax liability has a final effect ( Section 32 (1) KStG in conjunction with Section 2 No. 2 KStG). Thus, the capital gains tax also corresponds to the ultimate actual corporate income tax. The same applies for services to

tax-exempt corporations,
other domestic legal persons under public law,
Federal associations, Deutsche Rentenversicherung Knappschaft-Bahn-See, associations of the substitute funds and
Persons subject to limited corporation tax who have neither their management nor their domicile in Germany ( Section 44a (8) to (9) EStG).

Due to the limited taxation of legal entities under public law, the tax revenue is redistributed, since the capital gains tax (as a form of collection of corporate income tax) is now distributed to the various regional authorities within the framework of Art. 106 GG and thus the income does not remain entirely with one institution.

Certain services to tax-exempt corporations that pursue charitable, charitable or church purposes are completely exempt from withholding tax ( Section 44a (7) of the Income Tax Act).

Payment of capital gains tax

Typically, each active in Germany's financial institution required to make the tax deduction and the tax anonymously to the tax authorities withheld. However, other debtors of investment income may also be obliged to withhold tax, especially in the case of distributions from a domestic corporation that do not come from collective or special custody ( Section 44 (1) EStG). In the latter case, the exception applies that there is no monthly registration of capital gains tax, but that a corresponding one-time tax registration and payment to the tax office must be made at the time of the distribution ( Section 44 (1) sentence 5 EStG).

Realized losses from capital gains must be used (for private investors) to reimburse taxes already paid by the bank. The bank offsets the tax repayment with the outstanding tax payments and reports the figures in the KapESt registration to its business premises tax office.

Refrain from withholding tax on capital gains - exemption order

An exemption order (FSA) is

a document with which a taxpayer instructs a credit institution not to withhold any capital gains tax from its investment income (Section 44a of the Income Tax Act),
a method of taking into account the saver lump sum in the current year when taxing investment income and thus avoiding an income tax return.

If an FSA is issued, the credit institution can credit or pay out the investment income up to the amount of the saver's lump sum without tax deduction. The exemption does not change the fact that the investment income is generally taxable insofar as it exceeds the saver's lump sum. However, the exemption saves an income tax return if the investment income does not exceed the saver's lump sum and an assessment for income tax is not necessary for other reasons.

If an FSA is not issued, the credit institution must pay 25% capital gains tax (plus solidarity surcharge and, if applicable, church tax) to the tax office. The tax is then also deducted from investment income that is lower than the saver's lump sum. In this case, only an income tax return remains if the saver lump sum is to be taken into account.

An FSA and every change must be issued according to the officially prescribed template. The FSA can also be issued by fax or electronically. In this case, the signature must be e-authenticated by the customer, e.g. B. be replaced in the form of the usual banking secure PIN / TAN procedure.

The commissioned credit institution must notify the Federal Central Tax Office (BZSt) of the amount of investment income from which the investment income tax was not withheld due to the FSA.

An FSA is only effective if the BZSt has the tax identification number of the creditor of the investment income and, in the case of joint FSAs, that of the spouse / partner.

For more details on the FSA, especially for spouses and legal entities, see the letter from the Federal Ministry of Finance of January 18, 2016, IV C 1 - S 2252/08/10004: 017, published in the BStBl 2016 I p. 85.

Compensation effect

With the withheld tax, the tax for the corresponding investment income is generally settled for the private investor ( Section 43 (5) EStG). This investment income is then no longer recorded in the annual income tax return ( Section 2 (5b) EStG), but can be included for various reasons. If the collectively agreed income tax must be applied to the investment income (e.g. for certain income from silent participations), the compensatory effect does not apply.

The voluntary inclusion in the assessment can make sense, for example, if the use of the saver lump sum leads to tax refunds afterwards because no exemption order has been issued. It can also be useful if the marginal tax rate for total taxable income is below 25%. Choosing taxation at the individual tax rate avoids that the income from capital assets for taxpayers with low incomes is taxed higher than the marginal tax rate (assessment option § 32d Abs. 4, 6 EStG). At the request of the taxpayer, the tax office will carry out a cheaper check .

Investment income z. B. could not finally be taxed by the bank because the bank did not have all the necessary information, must also be assessed retrospectively ( Section 32d (3) EStG).

The tax withheld does not have a compensatory effect for investment income that is generated in the course of business activities ( Section 43 (5), sentence 2 of the Income Tax Act). An exception applies to certain corporations, especially to persons with limited tax liability who do not have a permanent establishment in Germany. For this, the corporation tax is covered by the withholding tax ( Section 32 (1) KStG). See also the information on the reduced tax rate in the assessment section .

losses

Losses are taken into account as follows: First, positive and negative income (e.g. interest from deposits and fixed-income securities , dividends , income from the final maturity of certificates , from redemption profits from financial innovations , profits and losses from sales transactions ) are offset at the level of the bank , whereby losses from the sale of shares can in principle only be offset against profits from the sale of shares ( Section 20 (6) EStG). Any remaining loss is the bank carried forward either to the next year or, at the request of customers by 15 December of each year, certifies and may be offset against capital gains of the current year at other banks or capital income in subsequent years by assessment ( § 43a para. 3, p. 2 ff. EStG).

Previous losses incurred before 2009 could be offset against capital income until December 31, 2013 according to the new law. However, this does not apply to interest or dividend distributions, as this was not possible under the old law either. Since then, these losses can only be offset against speculative profits in the sense of Section 23 EStG, e.g. B. with private capital gains from real estate transactions within the ten-year period.

Investment income with a foreign element

Foreign investment income of a resident

Income, such as dividend payments from a foreign corporation, is also subject to tax if the paying agent (usually a bank) is located in Germany. If a foreign tax has already been levied, the foreign taxes must be offset against the total withholding tax incurred, but no more than 25 percent foreign tax on the individual investment income ( Section 43a (3), sentence 1 EStG in conjunction with Section 32d ( 1) ). 5 EStG).

Should z. If, for example, the tax levied does not match the actual tax due to a double taxation agreement, a correction is only possible by way of assessment.

Tax deduction for foreigners

The capital gains tax also applies to this income, as it does to residents, regardless of whether the Federal Republic is entitled to taxation. However, the creditor of the investment income is entitled to a retrospective reimbursement via the Federal Central Tax Office for unjustly levied taxes ( Section 50d EStG, Section 32 (5) KStG).

For parent companies in other EU countries with a stake of at least 10 percent in German subsidiaries, the tax on distributions to the parent company is not levied on application due to the so-called parent-subsidiary directive ( Section 43b EStG). Nevertheless, the first step is to deduct the tax. The second step is to apply for a reimbursement from the Federal Central Tax Office.

Capital gains tax and church tax

By the end of 2014, investors could apply to the bank to have their church tax paid. To do this, they had to inform the credit institution of their religious affiliation and the applicable church tax rate. The bank calculated the church tax and passed it on to the religious communities via the business premises tax office responsible for it. If the investor did not submit an application to the bank, no church tax was withheld by the bank. However, if he was generally liable for tax, he had to declare this income in the income tax return.

As of 2015, the church tax on investment income will be automatically withheld by banks and other withholding agents. To prepare for this automatic withholding of church tax on the withholding tax, the withholding tax authorities ask the Federal Central Tax Office once a year about the religious affiliation of all customers, insured persons or shareholders. Details can be found in Section 51a, Paragraphs 2b to 2e, Paragraph 6 of the Income Tax Act. The data basis for this procedure is formed by the religious information stored in accordance with Section 39e, Paragraph 2, Sentence 1, No. 1 of the Income Tax Act.

The Federal Central Tax Office (BZSt) points out that every citizen can object in writing to the data retrieval by setting a blocking note. To do this, fill in the official form provided for this purpose and send it signed to the BZSt by post. The tax liability is not affected by this blocking notice. Instead of the collection at the source, the determination of the church tax is then mandatory in the assessment of the taxpayer, provided that he belongs to a religious community that collects church tax. In this case, the BZSt also forwards information to the taxpayer's tax office.

criticism

In the 24th activity report, the Federal Commissioner for Data Protection and Freedom of Information raised considerable reservations about the planned procedure. Constitutional concerns have also been raised in the literature. In essence, the point is that the legal basis for data storage ( Section 39e EStG) and data transmission to those obliged to deduct ( Section 51a EStG) have been decided by the Bundestag; however, the responsibility for legislation according to the Basic Law rests exclusively with the state parliaments ( Art. 140 GG in conjunction with Art. 137 (6) Weimar Constitution).

Calculation of church tax

In the case of a communicated church tax liability, the assessment base of the capital gains tax (KapESt) is reduced by the church tax (KiSt) attributable to the capital income, since the church tax paid here is deducted like special expenses ( § 43a Paragraph 1, Sentence 2 EStG in conjunction with. Section 32d (1), p. 4 EStG). If you take into account that the church tax is calculated from the product of the church tax rate and the fixed income tax, this results in the following formula:

{\ displaystyle {\ text {KapESt}} = 25 \, \% \ cdot (e - {\ text {KiSt}}) = 25 \, \% \ cdot (ek \ cdot {\ text {KapESt}})}

Here e is the capital income subject to capital gains tax and k is the church tax rate.

Solving the equation for capital gains tax results in a tax burden of

{\ displaystyle e \ cdot {\ frac {1} {4 + k}}}

or a tax rate of .

{\ displaystyle {\ frac {100 \, \%} {4 + k}}}

Tax certificate

For investment income that is basically subject to investment income tax, the debtor of the investment income or the paying agent is obliged to issue the creditor of the investment income upon request with a tax certificate according to the officially prescribed model. The certificate must contain the information required under Section 32d EStG. An obligation to issue exists regardless of whether capital gains tax has been withheld or not ( Section 45a, Paragraphs 2 to 7 EStG).

history

Capital Gains Tax Act, March 29, 1920

In Germany, a ten percent capital gains tax has been levied since April 1, 1920 (in accordance with the Capital Gains Tax Act of March 29, 1920, RGBl. P. 345 ).

From January 1, 1989, a ten percent so-called small capital gains tax on interest was introduced in Germany , but this was not a flat rate tax. It was repealed on July 1, 1989.

Before 2009, the capital gains tax was initially only applicable to a limited group of capital income, especially dividends, and was extended to interest income from 1993 onwards. The tax rate was included

20% for profit shares (dividends),
30% for interest from investments and
35% for over the counter shops .

The 30% and 35% capital gains tax was also known as the " interest rate tax " ("ZASt"). In addition, there were other tax rates such as B. 25% for profit distributions from typical silent partnerships .

On May 2, 2016, the research network consisting of “ Handelsblatt ”, Bayerischer Rundfunk , “ Washington Post ” and the US non-profit foundation ProPublica announced its data analysis on the so-called dividend arbitrage. With the transactions also known as " cum-cum-deals " banks helped their customers to avoid capital gains taxes. Commerzbank in particular is said to have done this frequently.

Distribution of taxes

The former withholding tax on interest has been integrated into the capital gains tax since 2009. Their income is not distributed uniformly across the federal, state and local governments, but according to the following rules:

Taxes not assessed on income (e.g. on dividends) are divided equally between the federal and state governments.
The municipalities receive 12 percent of the withholding tax (e.g. on interest and dividends), while the federal and state governments each receive 44 percent.

This right to income results from Art. 106 Paragraph 3 of the Basic Law , according to which the federal and state governments are entitled to half of the income tax and its member taxes, in conjunction with Section 1 of the Municipal Finance Reform Act , according to which the municipalities receive 12 percent of the withholding tax in advance.

The most important application example for the debtor capital gains tax is profit distributions by corporations. The revenue is distributed according to the same key as the revenue from corporation tax on the underlying profits, see Community tax (Germany) . The municipalities participated in the revenue from the paying agent capital gains tax because this tax reduces the income from the assessed income tax, in which the municipalities also participate.

literature

Paul Kirchhof : The church tax in the system of German constitutional law. In: Friedrich Fahr (ed.): Church tax, necessity and problem . Pustet, Regensburg 1996, ISBN 3-7917-1524-0 , pp. 53-82.

Felix Hammer: Legal issues of church tax. Mohr Siebeck, Tübingen 2002, ISBN 3-16-147537-2 , p. 396 ff.

Andreas Messerer: Corporate tax reform 2008: Compact - fast - reliable. All important legal changes. Richard Boorberg Verlag , 2007, ISBN 978-3-415-03956-8 .
Joachim Dahm, Rolfjosef Hamacher, Andrea Haustein: Guide to final withholding tax. Bank-Verlag , Cologne 2009, ISBN 978-3-86556-146-6 .
Fabian Steinlein, Heinz-Jürgen Tischbein, Alexander Storg: The withholding tax in practice. DG-Verlag, Wiesbaden, ISBN 978-3-87151-118-9 .

References and comments

↑ BMF letter of December 22, 2009 Item 39, updated version of October 9, 2012 [ Federal Ministry of Finance: individual questions on the flat rate withholding tax; Amendment to the BMF letter of December 22, 2009 (BStBl 2010 I p. 94), taking into account the changes made by the BMF letter of November 16, 2010 (BStBl I p. 1305) ( Memento of November 5, 2014 in the Internet Archive ) ], amended by a BMF letter of December 9, 2014 Federal Ministry of Finance: Individual questions on the flat rate withholding tax; Amendment to the BMF letter of October 9, 2012 (BStBl I p. 953) ( Memento of June 17, 2015 in the Internet Archive )

↑ Information from the BZSt

↑ form

↑ BT-Drs. 17/13000

↑ Fritz Schmidt, NWB 28/2014, pp 2112-2120, André PospischiL, DStZ 2014, pp 393-396

^ André Pospischil: Church tax in the 21st century. epubli, Berlin 2013, ISBN 978-3-8442-6927-7

^ Schmidt, Commentary Income Tax Act, Section 43 EStG, Item 1

↑ Taxes: Commerzbank back in twilight. Deutsche Welle, May 2, 2016, accessed on May 2, 2016 .

[1] BMF letter of December 22, 2009 Item 39, updated version of October 9, 2012 [ Federal Ministry of Finance: individual questions on the flat rate withholding tax; Amendment to the BMF letter of December 22, 2009 (BStBl 2010 I p. 94), taking into account the changes made by the BMF letter of November 16, 2010 (BStBl I p. 1305) ( Memento of November 5, 2014 in the Internet Archive ) ], amended by a BMF letter of December 9, 2014 Federal Ministry of Finance: Individual questions on the flat rate withholding tax; Amendment to the BMF letter of October 9, 2012 (BStBl I p. 953) ( Memento of June 17, 2015 in the Internet Archive )

[2] Information from the BZSt

[3] rm

[4] BT-Drs. 17/13000

[5] Fritz Schmidt, NWB 28/2014, pp 2112-2120, André PospischiL, DStZ 2014, pp 393-396

[6] André Pospischil: Church tax in the 21st century. epubli, Berlin 2013, ISBN 978-3-8442-6927-7

[7] Schmidt, Commentary Income Tax Act, Section 43 EStG, Item 1

[8] Taxes: Commerzbank back in twilight. Deutsche Welle, May 2, 2016, accessed on May 2, 2016 .