Taxes · Option writers
How option-writing premiums are taxed in Germany: expiry, buyback and assignment
Premiums you collect for writing options are capital income under § 20(1) no. 11 of the German Income Tax Act (Stillhalterprämien). They are taxed when received at the flat rate: 25 % plus a 5.5 % solidarity surcharge, 26.375 % in total, plus church tax if you pay it. If you buy the option back, the premium you pay counts as negative income at the time of payment. If the option expires worthless, the whole premium stays taxable.
By Daniel Berg ·
Flat tax + solidarity surcharge, no church tax
26.375%
- With 8 % church tax (Bavaria, BW)
- about 27.82 %
- With 9 % church tax
- about 27.99 %
- Saver’s allowance
- €1,000 / €2,000 joint
- Taxable
- When the premium is received
Last reviewed October 2026. General information, not tax advice.
When and how the premium is taxed
Anyone who sells an option – a covered call, a cash-secured put or the short leg of a spread – is an option writer, a Stillhalter in German tax language. The Finance Ministry describes the premium as payment for the commitment and risk taken on during the option’s life (BMF letter of 14 May 2025, para. 25). For tax purposes it is its own category within capital income: § 20(1) no. 11 EStG.
What matters is receipt. A German bank withholds the tax the moment the premium is credited to you (§ 43(1) sentence 1 no. 8 EStG, BMF para. 25), not when the option expires. Fees for the sale reduce the premium.
The rate is the 25 % flat tax (§ 32d(1) EStG) plus a 5.5 % solidarity surcharge on top (§ 4 SolZG, levied on the flat tax at the full rate without the phase-in zone). With church tax the flat tax falls slightly, because a quarter of the church tax is credited: the formula is e / (4 + k), where k is the church tax rate. German banks retrieve your church tax status from the Federal Central Tax Office (§ 51a(2c) EStG).
Expiry, buyback, assignment, cash settlement: what happens for tax
| Outcome | What happens for tax | Basis |
|---|---|---|
| Option expires worthless | The premium, taxed on receipt, remains income. The expiry itself triggers nothing further. | § 20(1) no. 11 EStG |
| Closing buyback | The premium paid plus costs is negative income at the time of payment and goes into the general loss pot. | § 20(1) no. 11, 2nd half-sentence EStG; BMF paras. 25, 33 |
| Short call assigned | You deliver the shares: a sale under § 20(2) EStG. The premium is not part of the capital gain. | BMF para. 26 |
| Short put assigned | You buy the shares at the strike. The premium does not reduce their cost basis and is ignored when you later sell. | BMF para. 33 |
| Cash settlement (e.g. index options) | A cash settlement you pay is treated as a loss from a derivative transaction. | § 20(2) sentence 1 no. 3(a) EStG; BMF paras. 26, 34 |
The wording “negative income at the time of payment” has been in the statute since the 2024 Annual Tax Act. Before that, the law said the premium income was “reduced” by premiums paid in the closing transaction.
Wheel and covered call: one strategy, two loss pots
The real tax trap of the wheel strategy is not in the options but in the shares. Premiums run through the general pot. Shares assigned on a cash-secured put or delivered on a covered call belong to the share pot, and share losses can only be offset against share gains (§ 20(6) sentence 4 EStG).
Made-up stock priced in euros, one contract of 100 shares, no fees. Saver’s allowance already used up, no church tax.
- Short put
- Strike €50
- Put premium
- €200
- Call premium
- €150
- Shares sold at
- €46
1Sell the put
€200 premium is taxable on receipt (general pot): €52.75 of tax.
2Assignment
You buy 100 shares at €50. Your cost basis is €5,000, not €4,800 – the premium is not deducted (BMF para. 33).
3Sell the call
€150 premium, general pot again: €39.56 of tax. The call expires worthless.
4Sell the shares
You sell at €46 for €4,600. Result: a €400 share loss – share pot.
Economically you lost €50 (200 + 150 − 400). For tax, you paid about €92 on €350 of premiums, and the €400 share loss only helps if you have gains from selling shares in the same or a later year. Without them, you pay tax on a round trip that cost you money.
Whether the share-pot restriction is constitutional is before the Federal Constitutional Court (case 2 BvL 3/21). More in the guide to loss offsetting for derivatives.
The saver’s allowance and the loss pots
| Pot | What goes in | What it can offset |
|---|---|---|
| Share pot (Aktientopf) | Losses on selling shares, including shares assigned on short puts | Only gains on selling shares |
| General pot (“other losses”) | Buybacks, long options expiring, cash settlements as writer, futures, bonds | All positive capital income: premiums, interest, dividends and share gains |
- Order: share gains are netted against share losses first, then everything else against the general pot (BMF paras. 118, 229). Share gains the share pot does not absorb can therefore be offset by option losses – not the other way round.
- Saver’s allowance (Sparer-Pauschbetrag): €1,000 a year, €2,000 for jointly assessed couples (§ 20(9) EStG). Actual expenses such as data feeds or software are not deductible on top.
- Exemption order: applied only to income left after loss offsetting (BMF para. 230). You can split the allowance across several German banks, up to €1,000 or €2,000 in total.
- Year end: the bank carries unused losses forward pot by pot. To offset them against gains at another bank you need a loss certificate – request by 15 December (§ 43a(3) sentence 5 EStG, BMF paras. 233 f.).
Calculator: what is left of your premium after tax
Enter the premium received and, if you bought the option back, the cost of the buyback in euros. The calculator deducts whatever is left of your saver’s allowance and computes the flat tax, the solidarity surcharge and, if you choose, church tax under § 32d(1) EStG. For a full tax year with carry-forwards and USD conversion, use the options tax calculator.
- Premium after buyback
- €500.00
- Covered by the allowance
- − €0.00
- Taxable
- €500.00
- Flat-rate tax
- €125.00
- Solidarity surcharge
- €6.88
- Total tax
- €131.88
Left after tax
€368.12
Effective tax rate: 26.38 %
Simplified calculation for a single trade held privately. Not tax advice.
What the calculator does not cover
- Lower personal rate: if your personal income tax rate is below 25 %, you can ask for your capital income to be taxed at the normal scale instead (Günstigerprüfung, § 32d(6) EStG).
- Foreign broker: nothing is withheld; you declare premiums yourself and convert foreign currency. See taxes with a foreign broker.
- Other income and losses in the same year: the calculator looks at one trade on its own. Losses in the general pot reduce the tax on your premiums; share losses do not.
- Business assets and companies: if the trades belong to a business, different rules apply (§ 20(8) EStG). For a comparison with a trading company, see the GmbH comparison.
Sources and review date
- § 20 EStG – para. 1 no. 11 (option premiums), para. 6 (loss offsetting), para. 9 (saver’s allowance)
- § 32d EStG – 25 % flat tax, church tax formula, lower-rate option
- § 43 EStG – withholding tax on option premiums (para. 1 sentence 1 no. 8)
- § 4 SolZG – 5.5 % solidarity surcharge
- § 51a EStG – church tax on capital income
- 2024 Annual Tax Act, BGBl. 2024 I No. 387 – new wording of § 20(1) no. 11 EStG (Art. 3 no. 7(a))
- BMF letter of 14 May 2025 on the flat-rate tax – paras. 25, 26, 33, 34 (option writers), paras. 118, 228–230, 233 (loss pots)
Frequently asked questions
Do I pay tax on the premium while the option is still open?
Yes. The premium is taxable when received, and a German bank withholds the tax straight away. A later buyback only counts as negative income when you pay for it.
What is the tax rate on option premiums in Germany?
26.375 % without church tax (25 % flat tax plus 5.5 % solidarity surcharge on it). With church tax it is about 27.82 % at 8 % and about 27.99 % at 9 %. Capital income up to the saver’s allowance of €1,000 (€2,000 jointly) is tax-free.
What happens for tax when I am assigned on a short put?
You have bought the shares at the strike. The premium was already taxed and does not reduce your cost basis. If you later sell the shares at a loss, it goes into the share pot and can only be offset against share gains.
How is rolling taxed?
As two transactions: buying back the old option is negative income when paid, and the premium for the new option is new income.
Does the old €20,000 cap still apply to option writers?
No. The cap on derivative losses was removed by the 2024 Annual Tax Act for all open cases. Buyback losses and cash settlements can now be offset against all capital income.
Where to go next
All numerical examples in this guide are rounded, illustrative assumptions, not market data. The content is educational and not investment advice. Options are complex instruments; you can lose the entire amount invested, and more than that when selling options.