How are RSUs and stock options taxed in Germany?

Equity compensation is one of the trickier tax topics in Germany, partly because the rules differ between instrument types and partly because cross-border situations add real complexity on top.

Restricted Stock Units (RSUs) are normally treated as employment income at the moment they vest. The share value at vesting is added to your salary for that month, taxed at your marginal income tax rate plus social contributions up to the relevant ceilings. Many employers run a sell-to-cover — they automatically sell a portion of the vesting shares to cover the German tax — but the full vesting value is still reported as wages on your payslip.

After vesting, you own the shares outright. Future price gains and losses on those shares are then taxed under standard German capital gains rules — the flat 25% Abgeltungsteuer plus Solidaritätszuschlag, which works out to around 26.375% combined for most savers without church tax.

Stock options are usually taxed at exercise rather than at grant. The difference between the exercise price and the share price on the day of exercise is treated as employment income. Later gains on the shares you actually own follow the same capital-gains rules as RSUs.

Cross-border situations add an extra layer. Shares that partly vested while you were tax-resident in another country can be split between countries for tax purposes, based on where the work was performed during the vesting period. The share value at vesting also needs to be converted to euros at the official rate on that date — that's mandatory for the tax calculation, not optional.

For non-trivial equity, working with a Steuerberater who handles international cases regularly is genuinely worthwhile.