Dividends after tax: what actually lands in your account

4 min read4 min

27/03/26

A dividend is announced as a gross figure, and that is exactly the number you remember. What arrives in the account is something else. Between the figure in the notice and the money on the settlement account stands the tax office.

How much it takes depends on the form of the investment. Anyone planning around dividends should reckon with the net, not the gross: on single stocks the difference is a good quarter.

From gross to net

The dividend a company pays out is not the amount that lands in your account. Between gross and net lies a chain of taxes, and it falls differently depending on the form of the investment. The bank deducts it automatically at source (Section 43 EStG); the chain is visible on every dividend statement.

Before any tax falls due, the Sparerpauschbetrag applies: the first EUR 1,000 of investment income per year (EUR 2,000 for jointly assessed couples) stays tax-free, provided a Freistellungsauftrag (exemption order) is in place.

The full tax chain

In figures, for EUR 1,000 of gross dividend above the allowance:

• Single stock: EUR 263.75 of tax, EUR 736.25 net.
• Equity-fund ETF: only EUR 700 is taxable; EUR 184.63 of tax on that, leaving EUR 815.37 net.

Church-tax payers pay more: the effective rate on single stocks rises to roughly 27.82 percent (8 percent church tax, Bavaria and Baden-Württemberg) or 28.00 percent (9 percent, the other federal states).

Calculate the net dividend

Teilfreistellung on ETFs

The Teilfreistellung (partial exemption, Section 20 InvStG) offsets the tax already borne at the fund level. For equity-fund ETFs (at least 51 % in equities), 30 % of all income is left tax-free; for mixed funds it is 15 %.

Foreign withholding tax

On foreign single stocks, the source country withholds tax first, before the German chain applies. The most important cases:

• United States: 30 percent by default, reduced to 15 percent with the usual W-8BEN status at the broker. Those 15 percent are credited in full against the German flat tax (Section 32d(5) EStG); the overall burden stays at roughly 26.375 percent.
• Switzerland: 35 percent withholding; 15 percentage points are creditable, the remaining 20 have to be reclaimed from the Swiss federal tax administration.
• France: 12.8 percent for private investors, creditable in full. If the custody chain does not apply the reduced rate at source, France withholds up to 30 percent; the excess is reclaimable from the French tax authorities.

With ETFs the question does not arise at the investor level: the fund bears the withholding tax on the underlying stocks, and the Teilfreistellung is the flat compensation for exactly that.

Distributing vs. accumulating

Practical tips

• Use the Sparerpauschbetrag (annual saver's tax-free allowance) before any tax falls due: file the exemption order where the dividends arise
• With ETFs you benefit from the Teilfreistellung: an effective rate of only 18.46 % on distributions
• Dividend-heavy single stocks are taxed in full; the Sparerpauschbetrag helps especially here
• With foreign stocks, check whether withholding tax is credited and whether your broker applies the reduced US rate of 15 percent
• Convert your expected annual dividends consistently into net figures; only then are they a planning quantity