Investment income, defined as dividends, interest and capital gains on the sale
of securities purchased on or after January 1, 2009 is taxable at a flat rate of
25% (26.675% including the solidarity surcharge). If the income is paid through
the banking system, the tax will be withheld at source, generally as a final
burden. If the income comes from elsewhere, e.g. From a foreign bank, the
taxpayer must report it in his income tax return. The flat rate charge will then
be levied by assessment, independently of all other features of the taxpayer’s
The one exception to the flat rate charge on investment income is where the
investment is held as a business asset. In this case, the taxpayer may opt to treat
the income as business income, leading to the inclusion of 60% of the amount
in the total of his income taxable at his scale rate.
The amount of investment income actually charged to flat rate taxation in the
hands of an individual is reduced by a personal “saver’s relief” of €801 (€1,602
for a married couple) but with no possibility of claiming further expenses.
Capital gains on the sale of real estate are fully taxable, unless the real estate
was held for longer than ten years.