Germany
Guide to stock options and RSU taxation in Germany. Understand income tax, solidarity surcharge, and social security on equity compensation.
Germany is Europe's largest economy and a major hub for tech and multinational companies. German tax treatment of equity compensation involves income tax, solidarity surcharge, and social security—understanding the rules is essential for employees with stock options and RSUs.
Overview of German Tax System
Germany has a progressive tax system with:
- Income Tax (Einkommensteuer) on employment income
- Solidarity Surcharge (Solidaritätszuschlag) — 5.5% of income tax
- Social Security (pension, health, unemployment, care)
- Capital Gains Tax — generally flat 26.375% (incl. solidarity) on investment income
RSU Taxation
At Vesting
RSUs are taxed as employment income when they vest:
| Event | Tax Treatment | Rate |
|---|---|---|
| Vesting | Employment income | Progressive (14%-45%) |
| Solidarity Surcharge | 5.5% of tax | On income tax |
| Social Security | Employee share | ~9.3% (capped) |
Income Tax Rates (2025)
| Taxable Income | Rate |
|---|---|
| €0 - €11,604 | 0% |
| €11,604 - €66,760 | 14%-42% (progressive) |
| Above €66,760 | 42% (up to €277,825), then 45% |
At Sale
| Event | Tax Treatment | Rate |
|---|---|---|
| Capital Gain | Abgeltungssteuer (flat rate) | 26.375% (incl. solidarity) |
| Annual Exemption | Sparerpauschbetrag | €1,000 (single) / €2,000 (joint) |
Note: Capital gains on shares held as private assets are taxed at the flat rate. Employment-related shares may be taxed as income depending on holding period.
Stock Options
Taxation at Exercise
| Event | Tax Treatment |
|---|---|
| Grant | No tax |
| Exercise | Employment income on spread (FMV - strike) |
| Sale | Capital gains (26.375%) on post-exercise appreciation |
Qualifying Stock Options
Germany has rules for "qualified" stock options that can defer or reduce tax:
- Holding period: 4+ years from grant may qualify for capital gains treatment at exercise
- Requirements: Options must meet specific criteria under German law
- Consult a German tax advisor for plan-specific treatment
Social Security
Employee Contributions (2025)
| Type | Employee Rate | Cap |
|---|---|---|
| Pension | 9.3% | €87,600 (West) / €85,200 (East) |
| Health | 7.3% | Same cap |
| Unemployment | 1.3% | Same cap |
| Care | 1.525% | Same cap |
Total: ~19.4% (capped)
US-Germany Tax Treaty
- Article 15: Employment income generally taxed where work is performed
- Article 13: Capital gains generally taxed in country of residence
- Foreign Tax Credit: US citizens can claim credit for German tax paid
Key Takeaways
- RSUs taxed as employment income at vesting
- High marginal rates (up to 45% + 5.5% solidarity)
- Social security adds ~19% (capped)
- Capital gains: 26.375% flat for investment income
- Qualifying options may get favorable treatment
- US citizens must file both German and US returns
Additional Resources
Disclaimer: This guide discusses German tax rules for equity compensation. Tax laws change frequently. Always consult a qualified German tax advisor (Steuerberater) before making decisions based on this information.
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