Capital Gains Tax in Europe: the complete comparison
Sell a winning investment in London, Berlin, Paris, Madrid or Milan and you can hand over anywhere from 0% to 39% of the gain - for the exact same profit. The difference is not just the headline rate; it is allowances, tax wrappers and residence rules that rarely make the news. This guide breaks down all five of Europe's largest markets, then shows how to find the cheapest option for your own numbers.
The five markets at a glance
| Country | Rate | Allowance | Wrapper |
|---|---|---|---|
| United Kingdom | 18% / 24% | £3,000 | ISA, SIPP (tax-free) |
| Germany | 26.375% | €1,000 | none (Teilfreistellung 30% for equity funds) |
| France | 30% (PFU) | — | PEA, assurance-vie |
| Spain | 19%–28% | — | none (fund transfers deferred) |
| Italy | 26% (12.5% govt bonds) | — | none (loss carryforward 4y) |
Two patterns jump out. First, only the UK and Germany give a meaningful annual allowance - and both have shrunk it sharply (the UK from £12,300 to £3,000 in three years). Second, only the UK and France offer a wrapper that erases the tax entirely. Everywhere else, the taxable-account rate is what you pay.
Country by country
United Kingdom - low rate, tiny allowance, unbeatable wrapper
The UK charges 18% (basic-rate taxpayers) or 24% (higher-rate) on gains above a £3,000 annual allowance. That allowance is now so small that even a modest portfolio triggers a bill. But the UK also has the most generous wrapper in Europe: the Stocks & Shares ISA shelters £20,000 a year with zero capital gains tax and zero dividend tax, for life. In practice, a disciplined UK investor pays little CGT at all - because they never hold taxable gains outside the ISA.
Germany - one flat rate, a fund quirk in your favour
Germany applies a flat 25% Abgeltungsteuer plus a 5.5% solidarity surcharge - 26.375% all-in - above a €1,000 Sparer-Pauschbetrag. The clever detail is the Teilfreistellung: 30% of the gain on an equity fund (51%+ equities) is exempt, lowering the effective rate to about 18.5% for fund investors. Germans also watch the Vorabpauschale, a small advance tax on accumulating funds. There is no ISA-style wrapper, so most gains are taxable.
France - a high flat rate, but two escape hatches
In a plain compte-titres, France taxes gains at a flat 30% PFU (12.8% income tax + 17.2% social charges) with no allowance - the harshest headline of the five. But France also has the richest wrapper ecosystem: a PEA held five years drops the income-tax portion to zero (17.2% social charges only), and assurance-vie held eight years unlocks a €4,600/€9,200 annual allowance and a reduced 7.5% rate. French tax planning is really wrapper planning.
Spain - progressive, and a fund loophole
Spain folds gains into the savings base and taxes them progressively: 19% up to €6,000, then 21%, 23%, 27% and 28% above €300,000. There is no annual allowance, but Spain offers a powerful deferral: you can switch between investment funds (traspaso) without realising the gain, postponing tax until you finally cash out. For fund investors that is a wrapper in all but name.
Italy - flat 26%, with a bond discount and a "fiscal backpack"
Italy charges a flat 26% on most gains, but only 12.5% on Italian and white-list government bonds - a genuine reason to hold BTPs. Italy also lets you carry forward realised losses (minusvalenze) for four years to offset future gains, the so-called zainetto fiscale. Active Italian investors harvest losses deliberately to keep that backpack full.
The wrapper advantage - why the country matters less than you think
Compare the taxable-account rates and France looks expensive and the UK cheap. But that comparison is misleading, because the two countries with the highest and lowest headline rates both offer wrappers that reset the game to zero. A £20,000 ISA gain in the UK: £0 tax. A €20,000 gain in a five-year-old PEA: only 17.2% social charges, no income tax. Meanwhile the same gain in a German, Spanish or Italian taxable account pays the full 26%-28%.
The practical takeaway is the opposite of the intuitive one: fill your tax wrapper before you compare national rates. For most investors in the UK and France, the wrapper decision matters far more than the headline rate ever will. Our ISA, PEA and assurance-vie calculators quantify exactly how much each shelters.
So which country is actually cheapest?
Ignore wrappers for a moment and compare pure taxable accounts, and the answer flips with the size of the gain:
- Small gains (under ~€5,000): the UK and Germany win, because their allowances (£3,000 / €1,000) erase most of the gain before any rate applies.
- Medium gains (€10,000-€50,000): it tightens. The UK's 24% higher rate, Italy's 26% and Germany's 26.375% cluster together; Spain's 19%-23% progressive band can undercut them; France's flat 30% is usually the most expensive.
- Large gains (€100,000+): Spain's progression climbs toward 28% and France stays at 30%, while Italy's flat 26% and Germany's 26.375% look relatively stable. The UK's 24% often ends up the lowest headline for very large gains.
Because the ranking genuinely changes with the number, a static table can mislead you. The most reliable answer is to run your exact figure through our Capital Gains Tax by Country tool, which ranks all five instantly.
Calculate yours
This guide is general information for 2024/25-2026 headline rules, not tax advice. Rates, allowances and wrapper rules change and vary by personal circumstances, region and residence. Confirm your position with a qualified adviser.
Frequently asked
Which European country has the lowest capital gains tax?
There is no single answer - it depends on the size of the gain and whether you use a tax wrapper. On modest gains the UK (£3,000 allowance) and Germany (€1,000 allowance) often come out cheapest because the allowance wipes out a big slice of a small gain. On large gains, headline rates dominate: Italy and Spain's lower entry rates can beat France's flat 30%. But a UK ISA or a mature French PEA can push the effective rate to zero or to social charges only - which usually beats every taxable account.
Do tax wrappers change the ranking completely?
Yes, dramatically. A Stocks & Shares ISA (UK) and, after five years, a PEA (France) remove capital gains tax entirely (the PEA still owes 17.2% social charges). Germany, Spain and Italy have no equivalent all-purpose CGT wrapper, so their taxable-account rates apply in full. This means the "cheapest country" question is often really a "cheapest wrapper" question - fill the wrapper first, wherever you are.
Where am I taxed on capital gains - where I live or where the shares are?
Almost always where you are tax-resident, not where the company or exchange sits. This is why internationally mobile investors compare national rates so carefully. Double-taxation treaties prevent the same gain being fully taxed twice, but the residence country usually has the primary right to tax investment gains. Confirm your position with a cross-border adviser before relying on it.
Are dividends taxed the same as capital gains?
Not always. Germany taxes both at 26.375%. France applies the same 30% PFU to both. Spain and Italy fold dividends into the same savings base as gains. The UK is the outlier: dividends have their own £500 allowance and 8.75%-39.35% rates, separate from the £3,000 capital gains allowance and 18%/24% rates - so UK investors must plan the two separately.