Taxes on Stocks Explained: A Guide for Austrian and German Investors

Nobody likes paying taxes, but understanding how investment taxes work can save you hundreds or thousands of euros per year. This guide covers everything Austrian and German investors need to know — capital gains tax, dividend tax, the tax-free allowance, and practical tips to minimize your tax burden legally.

Austria: Capital Gains Tax (KESt)

Tax rate: 27.5% on all capital gains and dividends. This is a flat rate — it doesn’t matter whether you earn €100 or €100,000 in gains. The rate is always 27.5%.

What gets taxed: When you sell a stock or ETF at a profit (the difference between purchase price and selling price), and when you receive dividend payments. Both are taxed at 27.5%.

Automatic vs. manual tax reporting: If you use an Austrian broker (like Flatex AT), the KESt is automatically deducted — you don’t need to do anything in your tax return. If you use a foreign broker (like Trade Republic, Interactive Brokers, DEGIRO), you must declare your capital gains yourself in your annual tax return (Einkommensteuererklärung, Beilage E1kv).

No tax-free allowance: Unlike Germany, Austria has NO annual tax-free amount for capital gains. Every euro of profit is taxed at 27.5% from the first euro.

Loss offsetting: You can offset losses against gains within the same year. If you made €2,000 profit on Apple but lost €500 on Tesla, you only pay tax on €1,500 net profit. However, you cannot carry forward losses to future years.

ETF taxation: Accumulating (thesaurierende) ETFs are taxed annually on their “deemed distribution” (ausschüttungsgleiche Erträge) — even though you didn’t actually receive any cash. Your Austrian broker handles this automatically. Foreign brokers don’t, which means more work for your tax return.

Germany: Capital Gains Tax (Abgeltungsteuer)

Tax rate: 26.375% (25% Abgeltungsteuer + 5.5% Solidaritätszuschlag). If you’re a member of a church, add 8-9% Kirchensteuer on top, bringing the effective rate to about 27.8-28%.

What gets taxed: Same as Austria — profits from selling stocks/ETFs and dividend payments.

Tax-free allowance (Sparerpauschbetrag): €1,000 per person (€2,000 for married couples filing jointly). The first €1,000 in annual capital gains and dividends are tax-free. This is a significant advantage over Austria.

Important: Submit a Freistellungsauftrag! To use the tax-free allowance, you MUST submit a Freistellungsauftrag to your broker. Without it, your broker will withhold tax on everything — and you’ll have to claim it back in your tax return. You can split the €1,000 across multiple brokers (e.g., €500 at Trade Republic and €500 at Scalable Capital).

Automatic tax deduction: German brokers (Trade Republic, Scalable Capital, comdirect, etc.) automatically deduct the tax and handle everything. You generally don’t need to include investment income in your tax return unless you want to claim back overpaid taxes.

Partial exemption for equity ETFs (Teilfreistellung): ETFs that hold at least 51% stocks receive a 30% tax exemption. This means only 70% of the gains are taxed. Effectively, your tax rate on equity ETF gains is about 18.5% instead of 26.375%. This is applied automatically by German brokers.

Loss offsetting: Similar to Austria — losses can offset gains. But Germany has a special rule: losses from stocks can ONLY be offset against gains from stocks, not against gains from ETFs or other investments. Losses from ETFs can be offset against any type of capital gain.

Comparison: Austria vs. Germany

Tax rate: Austria 27.5% vs. Germany ~26.4% (Germany is slightly lower). Tax-free allowance: Austria €0 vs. Germany €1,000 (Germany wins clearly). ETF tax benefit: Austria none vs. Germany 30% Teilfreistellung (Germany wins again). Automatic tax handling: Both countries — if you use a domestic broker. Overall, German investors have a slight tax advantage thanks to the Sparerpauschbetrag and Teilfreistellung.

Practical Tips to Minimize Taxes

Use your Sparerpauschbetrag (Germany only). Make sure you submit a Freistellungsauftrag. If you have a partner, consider whether both of you should have separate brokerage accounts to use both €1,000 allowances.

Choose accumulating ETFs. With accumulating (thesaurierende) ETFs, you defer taxes because gains are only realized when you sell. You still pay some tax on the “Vorabpauschale” (advance lump sum) in Germany, but it’s much less than the full tax on distributed dividends.

Hold long-term. The longer you hold, the longer your money compounds before taxes take a bite. There’s no lower tax rate for long-term holdings in Austria or Germany (unlike the U.S.), but the deferral itself is valuable.

Use an Austrian/German broker if possible. Automatic tax handling saves you time, stress, and potential mistakes. Using a foreign broker means you’re responsible for correct reporting — and mistakes can be expensive.

Keep records. Save all buy/sell confirmations, dividend statements, and year-end tax documents from your broker. You’ll need them for your tax return (especially with foreign brokers) and in case of an audit.

Calculate your net returns with our financial calculators. Our Gross-to-Net Calculator shows you exactly what you keep after taxes.

This article is part of our Academy series — investment education for beginners and beyond.

Disclaimer: This article is for educational and informational purposes only and does not constitute tax advice. Tax laws change frequently. Please consult a qualified tax advisor for your specific situation.