How does the flat rate tax calculator work?
You can easily calculate your final withholding tax with the final withholding tax calculator. To achieve this, you only need to specify how much your investment income is before tax, whether you pay church tax and which tax allowance should be considered.
You will be able to see the calculation of the tax burden and the income after the deduction of taxes directly. In addition, the final withholding tax calculator breaks down how much of the tax burden is attributable to the solidarity surcharge and church tax.
The use of the final withholding tax calculator is anonymous, and your data will not be stored
What is the final withholding tax?
The flat rate withholding tax is levied at a fixed tax rate and paid to the tax office at the source of its origin—by the bank or broker where the investment income is generated.
Investment income subject to the final withholding tax can be interest on investments, dividends, gains from securities transactions or even income from some insurance contracts (not in principle). Certain funds and also interest from privately granted loans are exempt. Section 43(2) of the Income Tax Act lists all exemptions where no capital gains tax is levied.
Income subject to the final withholding tax:
- Dividends from shares or other securities
- Gains from shares or other securities
- Gains from certificates or funds
- Interest, e.g., from checking or time deposit account, savings account, etc.
Income that is not subject to the final withholding tax:
- Loan agreements not issued by a credit institution. E.g. business or personal loans
- Interest from mortgages, land charges and annuities from pension debts
- Insurance on endowment policies
- Disposals of a silent partnership
- Foreign currency transactions
Since the final withholding tax has only been in place since 2009, shares purchased before the end of 2008 are tax-free. For these shares or securities, the legal regulation is used, which applied before 01.01.2009: if there were less than 12 months between purchase and sale, the income is taxable, if the period is longer than one year, no tax is due.
Personal tax rate on capital gains
There is also the option to calculate the capital gains tax according to your personal income tax rate, which can be advantageous if your income is otherwise low and your tax rate is well below 25%. In such a case, you can apply for taxation according to the personal tax rate in the tax return. This is done as part of a favorable tax assessment. However, only very few taxpayers choose this path.
If the final withholding tax is subject to the separate tax rate according to § 32d EStG for income from a capital asset, it amounts to a uniform 25% plus solidarity surcharge. In addition, church tax is added, if applicable because capital income is subject to church tax. If you do not pay church tax, you naturally do not have to pay it on your investment income.
The bank automatically pays the final withholding tax to the tax office, and the taxpayer receives notification of this. He can – but does not have to – declare the income and the tax already paid in his income tax return.
No omission of the solidarity surcharge in the final withholding tax
Even though the solidarity surcharge is eliminated in 2021 for all taxpayers earning less than 73,000 euros (single) or 151,000 euros (married), this relief does not apply to investment income from private assets. Thus, the solidarity surcharge will continue to be added to the final withholding tax.
Using the saver’s allowance
Investors have an annual allowance on investment income, the so-called saver’s lump sum. This is 801.00 euros per year for married couples applies twice the amount, so 1,602.00 euros. In order for the saver’s lump sum to be considered, however, an exemption order must be submitted to the financial company or broker from which you generate investment income. In doing so, it is also possible to split the amount between several providers.
Investors also need to know that they can offset losses from capital investments against gains. However, it is important to note that losses from equity transactions can also only be offset against price gains from equity transactions. The offsetting of losses and gains across asset classes is generally not possible.
Calculation of the final withholding tax
The basic rate of the final withholding tax is 25%. However, in fact, the final withholding tax is higher due to surcharges. To the final withholding tax in addition comes the solidarity surcharge with 5.5% of the paid capital gains tax or 25%. In addition, the church tax rate, which is 9% of the capital gains tax or 8% in Bavaria and Baden-Württemberg.
Thus, the capital gains tax including surcharges at 27.9951% of the profit achieved, at 9% church tax, or 27.8186% at 8% church tax. If no church tax must be paid, the rate is 26.375%.
The tax is only due on the capital gains above the saver’s lump sum of 801 euros per person. Mind you, this is the income, not the total volume of the capital investment. If, for example, the investment was a fixed-term deposit with a 2.5% profit, the taxpayer would have to have invested around 32,500 euros (profit then: 812.50 euros) before paying any mini-tax at all. This would then amount to 3.29 euros.
