BubbleTax

Knowledge

Tax Knowledge

The tax rules for your account at Interactive Brokers, CapTrader or another IBKR-based broker: six topics, one paragraph each, with the full article behind it.

BubbleTax is tax report software for German private investors with an account at Interactive Brokers or an IBKR-based broker such as CapTrader, LYNX, Estably, MEXEM, WH SelfInvest, AGORA direct or ProRealTime. The software reads the broker's Flex Query export and turns it into tax-ready reports and values for the German tax return, including Anlage KAP, KAP-INV and SO. It covers stocks, ETFs and funds, dividends, options, futures, CFDs, foreign currencies, withholding tax and the Vorabpauschale. Disposals are matched under FIFO, every conversion uses the ECB rate of the respective day.

Why these pages exist

Interactive Brokers is based in Ireland and does not withhold German capital gains tax; there is no tax certificate under § 45a EStG. The same applies to CapTrader, LYNX, Estably, MEXEM, WH SelfInvest, AGORA direct and ProRealTime, which settle through IBKR as introducing brokers. You declare your investment income yourself, and the tax office expects the figures in Anlage KAP, KAP-INV and SO. The six topics below are the points where IBKR statements and German tax law diverge. Each paragraph gives the core rule and the legal basis; the linked article works through an example.

The six topics

  1. FIFO calculation

    If you sell shares or ETF units bought in several tranches, the units acquired first count as sold first (§ 20 (4) sentence 7 EStG). This order determines the acquisition cost and the gain or loss for each sale. IBKR statements use other lot assignments, so BubbleTax rebuilds your positions across all years using FIFO.

    FIFO calculation for shares

  2. Foreign currency gains

    Your USD account is a separate asset for tax purposes: dollars received from a share sale and spent later on a purchase are disposed of at that moment. If less than a year lies in between, the exchange gain is a private sale transaction (§ 23 (1) sentence 1 no. 2 EStG); here too, the amounts acquired first count as sold first. Interest-bearing foreign currency balances fall under § 20 (2) sentence 1 no. 7 EStG instead.

    Foreign currency gains in the USD account

  3. Withholding tax

    The source country withholds tax on US dividends, usually 15 percent for IBKR accounts with a W-8BEN on file. The German tax office credits the foreign tax assessed and paid against German capital gains tax, capped at 25 percent per item of income and at the German tax due on that income (§ 32d (5) EStG). BubbleTax groups dividends by country and shows the creditable share.

    Crediting withholding tax

  4. ETF partial exemption

    Part of the income from investment funds stays tax-free: 30 percent for equity funds, 15 percent for mixed funds, 60 percent for real estate funds and 80 percent for foreign real estate funds (§ 20 InvStG). The partial exemption applies to distributions, the advance lump sum (§ 18 InvStG) and the gain on selling the units. These figures belong in Anlage KAP-INV, not in Anlage KAP.

    Partial exemption for ETFs

  5. Options and derivatives

    Premiums from written options are taxable as option writer premiums (§ 20 (1) no. 11 EStG); the premium paid to close the position reduces them. Gains from derivatives such as futures fall under § 20 (2) sentence 1 no. 3 EStG. Losses from them can be offset against other investment income; only losses from share sales stay in a separate pot (§ 20 (6) sentence 4 EStG).

    Taxing options and writer premiums

  6. Guide: Flex Query and Anlage KAP

    The Flex Query is the configurable data export in the Interactive Brokers account management, also used by CapTrader, LYNX and the other introducing brokers. You set it up once with nine sections (about 15 to 30 minutes), export it as XML for each tax year and upload the file. The report names the line of Anlage KAP, KAP-INV or SO for every figure.

    Setting up the Flex Query

In brief

The technical terms on this page, one paragraph each. Legal bases in brackets.

Flex Query
The configurable data export in the Interactive Brokers account management, also used by introducing brokers such as CapTrader or LYNX. BubbleTax needs it as an XML file with nine sections. Once set up, you export it again for each tax year.
FIFO
First In, First Out: when you sell, the units bought first count as sold first (§ 20 Abs. 4 Satz 7 EStG). This determines the acquisition cost and thus the gain or loss. IBKR uses other methods by default; BubbleTax rebuilds the positions under FIFO.
Vorabpauschale
A notional minimum return on fund units (§ 18 InvStG): the amount by which a fund's distributions in a calendar year fall short of the base return. It mainly affects accumulating ETFs that distribute little or nothing. BubbleTax calculates it from your holdings and distributions.
Partial exemption (Teilfreistellung)
A fixed share of fund income stays tax-free, depending on the fund type (§ 20 InvStG): 30 percent for equity funds, 15 percent for mixed funds, 60 percent for real estate funds, 80 percent for foreign real estate funds. It applies to distributions, the Vorabpauschale and gains from selling the units.
InvStG
The German Investment Tax Act governs how income from investment funds and ETFs is taxed at investor level: distributions, Vorabpauschale and disposal gains (§ 16 InvStG), with the Vorabpauschale (§ 18 InvStG) and partial exemption (§ 20 InvStG). These values belong in Anlage KAP-INV.
Spin-off
A corporate action: a company splits off a part and books shares of the new company into your account. For tax purposes it has to be determined whether the new shares replace the old ones and how the acquisition cost is allocated (§ 20 Abs. 4a EStG). BubbleTax detects spin-offs from the Flex Query section Corporate Actions.
Anlage KAP
The income tax return form for capital income: dividends, interest, gains and losses from shares and derivatives, creditable withholding tax. The report names the line for every value.
Anlage KAP-INV
The form for investment income without German withholding at source, as with IBKR: distributions, Vorabpauschale and gains from selling fund units (§ 16 InvStG).
Anlage SO
The form for other income. Relevant for investors in the case of private sales transactions under § 23 EStG; the report shows such values separately from capital income.
Understand IBKR Taxes