Derivatives and taxes in Germany: general orientation

What you will learn

• Which tax regime generally applies to private derivative gains in Germany.
• How the separate loss pots work and which losses can be offset against which gains.
• What changed for losses from Termingeschäfte with the Jahressteuergesetz 2024.
• Why records and the tax return matter, especially with foreign brokers.

Explanation

The German flat tax on capital income, the Abgeltungsteuer, and the annual allowance (Sparerpauschbetrag) were introduced in the course ETFs, Funds & Long-Term Investing. In short: for a private person, capital income is generally taxed at 25%, plus the solidarity surcharge (Solidaritätszuschlag) of 5.5% of the tax, plus church tax if applicable. The allowance is currently €1,000 per person (€2,000 for jointly assessed couples). Here we look at what is special for derivatives.

Derivatives as capital income

For private investors, gains from options, futures, CFDs, warrants and certificates are generally part of capital income (Einkünfte aus Kapitalvermögen). The tax law groups many of them as Termingeschäfte (forward-type transactions): contracts whose value depends on an underlying and that are settled in the future, such as options, futures and CFDs. A related special case is the Stillhalterprämie: the premium a seller (writer) of an option receives is generally taxable capital income when received; the cost of closing the position can be deducted.

Loss pots

A German bank or broker keeps loss pots (Verlustverrechnungstöpfe) for you:

• Share loss pot: losses from selling shares may only be offset against gains from selling shares. This restriction is being reviewed by the Federal Constitutional Court; check the current status.
• General loss pot: other losses, including derivative losses, can be offset against other capital income, such as derivative gains, interest and also share gains.

Unused losses are carried forward to the next year. If you have accounts at several banks, losses cannot be moved automatically between them. You can request a loss certificate (Verlustbescheinigung) from the bank by 15 December and settle the losses in your tax return.

The former €20,000 limit

From 2021, losses from Termingeschäfte could only be offset against gains from Termingeschäfte and Stillhalter premiums, and only up to €20,000 per year. The Jahressteuergesetz 2024 abolished this restriction, and it is no longer applied to all open cases. Derivative losses can therefore again be offset in full within the general rules. If your tax assessments from 2021 onwards were affected, ask a Steuerberater whether they can still be corrected.

Foreign brokers

German banks withhold the tax automatically. Many foreign brokers do not. In that case you must declare the income yourself in the tax return (form Anlage KAP) and keep complete records: trade confirmations, annual statements, financing costs and currency conversions.

Worked example

Hypothetical example: a single person with one German broker, no church tax. Results for one year: option and futures gains €6,000, knock-out certificate losses €4,000, share gains €2,000, share losses €3,000. Allowance €1,000. Simplified; transaction costs are assumed to be already included in the results.

1. Share pot: €2,000 − €3,000 = −€1,000. This loss can only be used against future share gains, so it is carried forward.
2. Other capital income: €6,000 − €4,000 = €2,000.
3. After allowance: €2,000 − €1,000 = €1,000 taxable.
4. Abgeltungsteuer: €1,000 × 25% = €250.
5. Solidarity surcharge: €250 × 5.5% = €13.75.
6. Total: €250 + €13.75 = €263.75, with €1,000 of share losses carried forward.

Note the asymmetry: the share loss could not reduce the tax on the derivative gains, even though the person lost €1,000 net on shares.

Common mistake

Practice activity

Hypothetical: a single person, one German broker, no church tax, allowance €1,000. One year: option gains €3,000, CFD losses €1,800, interest income €200, share gains €500, share losses €1,200. On paper, calculate (a) the share pot result, (b) taxable other income after the allowance, (c) the total tax including solidarity surcharge.

Key takeaways

• Private derivative gains in Germany are generally taxed as capital income at 25% plus solidarity surcharge (and church tax if applicable).
• Share losses only offset share gains; derivative losses go into the general pot.
• The €20,000 cap on losses from Termingeschäfte was removed by the Jahressteuergesetz 2024.
• With foreign brokers you must declare income yourself; keep full records and check with a Steuerberater.

Next step

In the final lesson you will use a decision framework and risk checklist to decide whether derivatives belong in your plan at all.