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Capital gains tax (Abgeltungsteuer) has been withheld from my investment income. Can I achieve a reduction in the final withholding tax if I only have low other income?

With the introduction of the final withholding tax - as the name suggests - the tax deduction at the source of income was introduced with a compensatory effect. The tax rate is 25% plus solidarity surcharge and, if applicable, church tax. If a tax deduction has been made, this settles your tax liability attributable to the investment income earned.

If you only have a low taxable income, you can apply for a favourable tax assessment at the tax office responsible for you. The tax office will then apply your personal tax rate to the investment income earned if this results in a lower tax burden than would be the case by way of the 25% tax deduction at the source of income. As a rule of thumb, if your personal marginal tax rate is below 25%, it may be worth applying for a favourable tax treatment. You can calculate your personal marginal tax rate using the interactive tax calculator at

In order to apply for the Günstigerprüfung, you must submit a completed Anlage KAP with your income tax return for the year in question. The application for the Günstigerprüfung is made in line 4 of the Anlage KAP. The tax office will check your details and carry out the favourable tax treatment check. If the favourable tax treatment check is successful, the excess capital gains tax withheld to date will be credited or refunded against your remaining tax liability attributable to the other income.

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