The good news first
Many investors assume that a quarter of every withdrawal from their portfolio goes to the tax office. That is not true. Only the part of the withdrawal that consists of price gains and income is taxable in Germany. The money you paid in yourself comes back tax-free. On top of that come the partial exemption and the saver's allowance. This article explains how taxation works (as of 24 September 2026).
The building blocks of taxation
- Flat-rate tax (Abgeltungsteuer): 25 % on capital income (§ 32d Income Tax Act).
- Solidarity surcharge: 5.5 % on the flat-rate tax. Together this makes 26.375 %.
- Church tax: 8 % in Bavaria and Baden-Württemberg, 9 % in the other federal states, calculated on the flat-rate tax. Because church tax reduces the flat-rate tax, the total burden is about 27.8 % or 28.0 %.
- Partial exemption: for equity funds (more than 50 % equities) 30 % of the income is tax-free, for mixed funds (at least 25 % equities) 15 % (§ 20 Investment Tax Act).
- Saver's allowance: 1,000 € a year for single people, 2,000 € for jointly assessed married couples (§ 20(9) Income Tax Act). Give your bank an exemption order for it.
How large is the gain share?
What matters is how much gain each withdrawal contains. An example: over the years you have paid 180,000 € into an equity fund and the portfolio is worth 300,000 € today. The gain is 120,000 € of 300,000 €, i.e. 40 %. If you sell units worth 1,500 €, about 600 € of that is gain.
Strictly speaking, your bank applies the FIFO principle (first in, first out): the oldest units, which often have the highest gain share, are sold first. Our Withdrawal Plan Calculator simplifies this using the average cost basis, i.e. the gain share of the whole portfolio. Over the entire duration this largely evens out; in the first years the actual tax under FIFO can be higher.
Worked example for one year
Assumptions: 300,000 € portfolio, 40 % gain share, equity fund, 4 % return, 1,500 € withdrawal a month, saver's allowance 1,000 €, no church tax.
| Step | Amount per year |
|---|---|
| Withdrawals (12 × 1,500 €) | 18,000 € |
| of which gain share (approx. 40–41 %) | approx. 7,300 € |
| minus 30 % partial exemption | approx. 5,100 € |
| minus saver's allowance | approx. 4,100 € |
| Tax (26.375 %) | approx. 1,100 € |
Of 18,000 € in withdrawals, about 1,100 € goes to the tax office, just over 6 %. For a mixed fund it would be about 1,400 €, for a fund without partial exemption about 1,700 €. A jointly assessed married couple with a 2,000 € allowance would pay only about 840 € in the equity fund example.
Why the tax rises over time
While you withdraw, the remaining balance keeps growing. At the same time, every withdrawal takes out part of your cost basis. The gain share in the portfolio therefore rises year by year, and with it the taxable part of each withdrawal. Towards the end of a withdrawal plan, a large part of every payout can be gain. The calculator shows this development in the year-by-year table.
Planning net: how much do I have to withdraw gross?
If you count on a fixed amount arriving in your bank account, you should plan in net terms. Activate the option “Amount is after tax” in the calculator. It then sells enough every month for exactly your target amount to arrive after tax. The capital lasts a little less as a result, but the plan is more honest.
What the calculator does not cover
- Advance lump-sum tax (Vorabpauschale): accumulating funds are taxed on an annual advance lump sum that is credited when you sell later. It brings tax forward in time but changes the total burden only slightly.
- Loss offsetting: losses from other investments can reduce your tax.
- Most-favourable assessment: if your personal tax rate is below 25 %, you can apply in your tax return to be taxed at the lower rate.
- Health and long-term care insurance: voluntarily insured members of the statutory scheme also pay contributions on capital income.
Conclusion
The tax on a withdrawal plan is usually much lower than feared, because only the gain share counts and the partial exemption and saver's allowance provide further relief. Work through your own scenario in the Withdrawal Plan Calculator. How the advance lump-sum tax works in the saving phase is shown by the ETF Savings Plan Calculator. This information does not replace tax advice.