In Germany, building long-term wealth through an ETF savings plan (ETF-Sparplan) is highly tax-efficient, but requires understanding the specific tax rules applied to capital gains (Abgeltungsteuer).
Key Tax Privileges for German Investors
- Sparer-Pauschbetrag (Annual Allowance): The first €1,000 (€2,000 for married couples) of capital gains, dividends, and interest per year is entirely tax-free. Assigning a 'Freistellungsauftrag' to your broker is essential.
- Teilfreistellung (Partial Exemption): For stock ETFs (equity funds with >51% stock allocation), 30% of all gains and dividends are tax-free to compensate for taxes paid at the fund level. Only 70% is taxed.
- Abgeltungsteuer: Gains exceeding the allowance are taxed at a flat rate of 25% (plus solidarity surcharge and church tax, totaling ~26.375% to 28%).
ETF Sparplan Tax Simulator
Partial Exemption Savings (30%):
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Taxable Gains (after allowance):
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Estimated Capital Gains Tax (26.375%):
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