You can deduct stock losses from taxes in Germany. However, there are the following exceptions.
- The stock losses can only be offset against stock gains. This means you cannot deduct your stock losses against other income.
- You cannot offset stock losses against interest, dividends, or other capital gains.
- There is an exception for ETFs, bonds, or funds. You can offset the losses from ETFs, bonds, and funds against all capital gains.
- You can offset only realized losses. This means when you sell the stock.
How does stock loss offsetting work?
Suppose you are single and hold two stocks:
- Stock A: Sold for a profit of €3,000
- Stock B: Sold for a loss of €1,200
- Capital gains tax-free allowance: €1,000
Other tax free allowances in Germany ->
Your bank automatically offsets the loss against the gain: €3,000 (gain) – €1,200 (loss) = €1,800 surplus
After applying your tax-free allowance: €1,800 – €1,000 = €800 taxable profit
You pay 25% withholding tax plus 5.5% solidarity surcharge (and church tax if applicable) on €800.
When you need a loss certificate (Verlustbescheinigung)
You need a loss certificate (Verlustbescheinigung) if you have accounts with multiple banks.
If you have one bank account, the bank automatically handles loss offsetting. They maintain loss offset accounts and continuously balance gains and losses.
NOTE: You must request the loss certificate from the bank where the losses occurred by December 15th for the current year.
If you miss this deadline, the losses carry forward internally to the next year. You cannot offset them across different banks via your tax return for the current year.
Stock loss offsetting between spouses
There are two ways to offset losses between spouses:
- Joint exemption order at the same bank: If you and your partner have accounts at the same bank, you can submit a joint exemption order (Freistellungsauftrag). The bank will automatically offset profits and losses across all accounts and portfolios.
- Offsetting via tax return: If you have separate accounts at different banks or no joint exemption order, you can still use loss offsetting. You need a loss certificate for this.
Example:
- Spouse A has a €2,000 loss on shares at Bank A
- Spouse B has a €3,000 gain on shares at Bank B
- Net gain: €1,000 (3000€ – 2000€).
- Capital gains allowance for spouse A: 1000€
- Capital gains allowance for spouse B: 1000€
- Taxable gain: 0€
This means you won’t pay any capital gains tax. Moreover, you’ll receive a refund of the withholding tax you paid during the year.
What is withholding tax, and how does it work? ->
Important deadlines and actions
- December 15th: Request your loss certificate from your bank if you want to offset losses across different banks.
- During tax season: Include the loss certificate in your tax return to offset losses from multiple banks.
- Throughout the year: Track your gains and losses across all accounts to plan your tax strategy.
Strategies to maximize the tax free allowane and reduce capital gains tax ->
