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Once Martin’s tax residency is confirmed, the next step is exploring the investment tax rates. The PWC database can help clarify the specifics around capital gains and distribution taxes in Germany.
Typically, capital gains from financial investments are taxed at a flat rate of 25% plus a solidarity surcharge, bringing the total to approximately 26.375%. However, investors benefit from an annual allowance of €1,000, which means that Martin would not owe any tax on his €100 profit for the year.