TAXES TRADING WITH CAPTRADER
When trading shares and other financial instruments, there are not only opportunities for attractive profits, but also tax obligations that need to be considered. In Germany, income from capital assets, such as that generated through stock market trading, is subject to withholding tax. This is a flat rate of 25 percent plus solidarity surcharge and, where applicable, church tax. But what rules apply exactly? What are the exemption limits and allowances? And how does the offsetting of losses work? In order to maintain an overview as a private investor, as a company with a corporate custody account or as a professional trader and to avoid tax disadvantages, it is essential to know the most important tax regulations and obligations.
With CapTrader at your side, you already have a decisive advantage from the moment you open your account: Your profits from the individual trades are not directly reduced by the withholding tax. Capital gains tax (in Germany since 2009 in the form of withholding tax) is not automatically withheld at CapTrader, which means that almost all of your capital, including all income and profits, is available to you in full for profitable further investment. The only exception here is the deduction of withholding tax on dividend payments.
Only in the following year you declare your accrued investment income as part of your personal tax return and can thus achieve an interest-interest effect for your profits. This is possible because your securities account is not legally located in Germany or your country of residence, but with our European partner Interactive Brokers. CapTrader is therefore exempt from the so-called "advance withholding".
Good to know: Since we do not withhold any capital gains taxes, you do not need to submit an exemption order to us. You can simply claim your saver's allowance in your tax return.
Tax information
Find out on this page for private clients which documents CapTrader provides you with for your income tax return and how to update your tax information.
Tax information
Find out on this page for corporate clients which documents CapTrader provides you with for your income tax return and how to update your tax information.
Irish withholding tax
The Irish supervisory authorities require Interactive Brokers (IBKR) to pay withholding tax on interest income earned in Ireland. However, this tax can be reduced or waived through a double taxation agreement (DTA) with Ireland. Private individuals with residence in the EU (except Ireland) or resident in a country that has a double taxation agreement (DTA) with Ireland can reduce or reclaim Irish withholding tax.
Withholding tax with CapTrader
As soon as you also hold shares in your securities account that pay dividends, the issue of withholding tax will come up. In general, a so-called withholding tax is deducted from share holders when a dividend is paid, so that only the net amount is credited to the securities account (net amount = gross dividend less withholding tax). The clearing houses are obliged to make this deduction directly "at source". The withholding tax deducted is then paid by the clearing houses to the responsible tax authority (for U.S. equities, for example, this is the U.S. Treasury Department).
Depending on the legal situation in your country, you can then offset this withholding tax paid against your capital gains tax payable - so you do not have to pay "double" tax on dividends. Important for your personal tax return: Your securities account statement is often already accepted as proof that dividend payments have already been subject to withholding tax. If this is not the case, you can obtain an official certificate from CapTrader, the so-called "tax certificate". Individual tax certificate (Tax Voucher), apply with costs.
Details on the individual dividend credits and their withholding tax deductions can be found in your Activity Statement (Account Statement: Activities) in your account management (Client Portal) at CapTrader.
Income with US withholding tax from US securities
For investors, a withholding tax rate of 30 % is due on income from dividends from U.S. securities. According to the double taxation agreement between the Federal Republic of Germany and the USA, a reduction of this withholding tax to 15 % is possible for dividends. This also applies to most other EU countries. In case of residence outside the EU, a different withholding tax rate may apply.
The reduction in withholding tax can be claimed by filing the appropriate U.S. tax form. At Opening a CapTrader deposit all non-U.S. individuals and corporations must complete this so-called "W-8" tax form to confirm their country of tax residence and clarify whether a reduced withholding rate applies to them.
Initial registration & data collection
In the online application, the W-8 form is automatically filled out for you, so you don't need to fill out any additional documents here!
Subsequently amended U.S. tax forms can be taken into account retroactively only for dividend payments within the same calendar year.
Important: Provided you keep all personal data up-to-date in the account management (Client Portal), this form will remain valid. Every three years, you will be prompted to check the information in the W-8 once and confirm that it is up to date.
If you do need to change your W-8 form, simply use our guide to updating your W-8 form that we have put together for you.
Details on tax forms
Below you will find information on the various tax forms that may be of interest to you as an investor, trader or investor.
W-8BEN Form
As an international investor or non-US citizen, you can use the W-8BEN form to prove your status as a US foreigner and benefit from the reduced withholding tax rate if there is a corresponding double tax treaty between your country of tax residence and the USA. Follow our instructions for completing the W-8BEN form.
Notice: You apply for the W-8BEN form when you open your custody account and only need to update it once your account has been successfully opened if your personal circumstances change.
1042-S Formular
Tax return of non-US persons and companies:
Form 1042-S reports U.S. income of non-U.S. persons subject to U.S. withholding tax, including interest, dividends, substitute payments, and fees (paid to and for account managers) earned on your account for the year. You may receive multiple 1042-S forms reporting different types of income.
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