P2P Lending Taxes in Germany: 2026 Investor Guide

How P2P Income Is Classified in Germany

German tax law treats P2P lending returns as Kapitalertraege (capital income), the same category that covers bank interest, bond coupons and dividends. When you lend to businesses or consumers via a platform, the interest you receive is not employment income or business profit - it is passive investment income subject to the flat-rate Abgeltungsteuer (final withholding tax).

The classification matters because it determines both the tax rate and the declaration procedure. Unlike salary or freelance earnings taxed on a progressive scale, capital income from P2P lending is taxed separately at a fixed percentage, and most investors can handle it through a single annual form.

Tax Rate and Solidarity Surcharge

The headline Abgeltungsteuer rate is 25% on net capital income. On top of that, the solidarity surcharge (Solidaritaetszuschlag) adds 5.5% of the tax amount, bringing the combined effective rate to approximately 26.375% for most taxpayers. If you belong to a recognised church collecting church tax (Kirchensteuer), that adds a further 8-9% of the Abgeltungsteuer, pushing the total burden slightly higher.

For investors in the highest income brackets whose marginal personal income-tax rate exceeds 25%, the Abgeltungsteuer can be advantageous - it caps the tax on investment income. For lower earners whose marginal rate is below 25%, the law permits applying your personal rate instead via the Guenstigerpruefung (more favourable assessment), though this requires full disclosure and forfeits some anonymity in banking relationships.

The EUR 1,000 Sparer-Pauschbetrag Allowance

German tax law grants a Sparer-Pauschbetrag (saver allowance) of EUR 1,000 per year for single taxpayers and EUR 2,000 for married couples filing jointly. This allowance applies to all forms of capital income combined - P2P interest, dividends, bond coupons, savings-account interest and realised gains from selling securities. Only income above the threshold is taxed.

Most German banks and brokers honour a Freistellungsauftrag (exemption order) that you file to split your EUR 1,000 allowance among different institutions. However, foreign P2P platforms do not participate in the Freistellungsauftrag system. They pay gross interest without withholding German tax. You must then claim the allowance manually on your annual tax return by declaring the gross income and subtracting the allowance on Anlage KAP.

Declaration on Anlage KAP

Because European P2P platforms are not German banks, they typically do not withhold Abgeltungsteuer at source or file automatic reports to the Bundeszentralamt fuer Steuern. This places the declaration duty squarely on the investor. You must report P2P interest income on Anlage KAP, the capital-income schedule that accompanies your annual Einkommensteuererklaerung (income-tax return).

On Anlage KAP, you enter gross capital income received from foreign sources and claim the Sparer-Pauschbetrag if you have not already used it elsewhere. The tax software or your local Finanzamt will compute the Abgeltungsteuer and solidarity surcharge on the taxable remainder. If you earned P2P interest from a platform in Latvia, Lithuania or Switzerland, that income is still subject to German tax because Germany taxes residents on worldwide income.

There is no automatic information exchange for most P2P accounts in 2026, though the EU's DAC6 and AEOI frameworks mean some larger platforms may begin reporting under Common Reporting Standard in future years. Regardless, German law requires self-declaration. Failure to declare foreign capital income can trigger penalties and interest, and the statute of limitations for tax evasion is up to ten years.

Foreign Platform Reporting and Withholding

Platforms such as Maclear (Switzerland), Mintos (Latvia) and InRento (Lithuania) do not withhold German Abgeltungsteuer. They pay you the full interest amount. A Latvian platform holding a MiFID II licence from Latvijas Banka is not a German bank and has no German tax-collection obligation.

Some investors mistakenly believe that because they see no tax deduction on their P2P account statement, the income is somehow tax-free. It is not. You receive gross payments, and you owe German tax on the net gain when you file your return. Keep every monthly statement and transaction export - the Finanzamt can request documentation during an audit.

Deductibility of Defaults and Losses

The treatment of loan defaults and capital losses in P2P lending is one of the trickiest areas of German tax law. If a borrower defaults and you suffer a verified loss, whether that loss is deductible depends on the legal structure of your investment.

If the platform issues debt instruments (loan notes or bonds) that you can trade, realised losses may be offset against other capital gains within the same tax year or carried forward. If instead you hold direct loan receivables, the rules for Ausfallwerbungskosten (irrecoverable receivables) apply, which can be more restrictive and require clear documentation that the debt is unrecoverable.

Platforms with buyback guarantees complicate this further: if the platform or a loan originator repurchases a defaulted loan at par, you may not have a realised loss for tax purposes. Conversely, if the platform writes off the loan and you receive nothing, you likely have a deductible loss, but you must document the default notice and any recovery proceedings.

Because the rules vary by case and German tax advisers interpret them differently, consult a local Steuerberater if you have material defaults. Do not assume that a default automatically creates a tax deduction - the burden of proof lies with you, and the Finanzamt will scrutinise large claimed losses.

Record-Keeping and Documentation

German tax authorities expect investors to maintain complete records of foreign investment income. For P2P lending, that means:

• Annual account statements from each platform showing total interest earned.
• Transaction exports listing every deposit, withdrawal, interest payment and fee.
• Loan-level data if you claim specific losses - borrower anonymised ID, default date, recovery status.
• Currency conversion records if the platform denominates income in a currency other than EUR; use the European Central Bank reference rate on the date of receipt.

Most platforms let you download CSV or PDF reports covering a full calendar year. Do this in January for the prior tax year and store the files for at least ten years. If the platform ceases operations or deletes old data, you may lose the documentation needed to defend your tax return.

Church Tax and Investment Income

If you are a member of a recognised church in Germany and pay Kirchensteuer, that tax also applies to capital income. The church-tax rate is typically 8% or 9% (depending on the state) of the Abgeltungsteuer amount. For P2P income subject to 25% Abgeltungsteuer, church tax adds roughly 2-2.25 percentage points to your total burden.

German banks withhold church tax automatically when they withhold Abgeltungsteuer. Foreign P2P platforms do not. You declare the income on Anlage KAP, the Finanzamt computes the church tax, and you pay it as part of your annual tax bill or receive a revised assessment if you overpaid via quarterly prepayments.

Comparing German P2P Tax to Bank Interest

Interest from a German savings account and interest from a Latvian P2P platform are taxed identically under German law - both fall under Kapitalertraege, both enjoy the EUR 1,000 allowance, both face 25% Abgeltungsteuer plus solidarity surcharge. The only procedural difference is that the German bank withholds tax at source and files an automatic report, whereas the foreign platform does not, leaving you to self-declare.

This equivalence is important for portfolio planning: if you hold bonds, dividend stocks and P2P loans, they all share the same EUR 1,000 allowance and the same tax rate. A diversified investor earning EUR 2,000 of total capital income uses the full allowance and pays approximately 26% on the remaining EUR 1,000, regardless of which asset generated it. For a detailed comparison of returns after tax, see our return calculator.

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