Solidaritätszuschlag

The Solidaritätszuschlag ("Soli") is a 5.5% surcharge on German income tax, originally introduced to fund the reunification of East and West Germany. While most taxpayers were exempted from the Soli on wage income starting in 2021, it still applies in full to capital income taxed under the Abgeltungsteuer.

Impact on prediction market taxes

The Soli adds 5.5% on top of the 25% Abgeltungsteuer, bringing the effective rate on capital gains to approximately 26.375% (before any Kirchensteuer). For a trader with €10,000 in prediction market profits above the Sparerpauschbetrag:

• Abgeltungsteuer: €2,500
• Solidaritätszuschlag (5.5% of €2,500): €137.50
• Total: €2,637.50

Future of the Soli

There is ongoing political debate about fully abolishing the Solidaritätszuschlag. However, as of 2025, it remains in effect for capital income including prediction market gains.

How Germany's total tax rate compares

Germany's combined capital gains rate (Abgeltungsteuer + Soli + optional Kirchensteuer) of ~26.4–28.6% sits in the middle of European rates. For comparison:

• Italy: 26% flat (imposta sostitutiva)
• Netherlands: ~36% on deemed returns (Box 3)
• Sweden: 30% flat (inkomst av kapital)
• Ireland: 33% CGT
• UK: Potentially 0% (gambling exemption)

Frequently asked questions

Can I avoid the Solidaritätszuschlag on prediction market gains?

No. Unlike wage income where the Soli was eliminated for most taxpayers in 2021, capital income remains fully subject to the surcharge. There is no exemption threshold for investment income.