Individual resident in Germany sells shares

If the shares are held for safekeeping by a so-called domestic paying
agent (a bank, securities trading bank, etc.), which is often the
case especially with shares in listed companies, the domestic
paying agent must withhold 25% withholding tax plus solidarity
surcharge.

In such a case, withholding tax is generally final
(so-called final withholding tax), regardless of the taxpayer’s
personal income tax rate. If it is benefcial for the taxpayer, his
personal income tax rate can be used upon request as a basis
for taxation. However, if the shares are not held for safekeeping
by a domestic paying agent, no withholding tax is levied. The
taxpayer is then required to fle a tax return for the capital gains
in question.

When an individual holds shares in a corporation as business prop-
erty and sells such shares, 40% of the gain on the sale are tax-ex-
empt (partial income system). Shares in corporations that are held
as private assets also qualify for the partial-income system, pro-
vided that the shareholding is substantial (i. E. A direct or indirect
holding of at least 1% within a fve-year period at any point in time).
If the seller is not a resident in Germany, the gains on the sale
are subject to non-resident tax liability only if the shareholding is
substantial (i.e. A direct or indirect holding of at least 1% within
a fve-year period at any point in time) or if the shares are held
through a domestic permanent establishment.

No tax liability
arises in Germany for the sale of shares in a domestic corpo-
ration if the seller does not have a substantial shareholding (as
described above) in such a corporation, regardless of whether
the shareholder is an individual or a corporation.