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This article is intended for individuals who are tax resident in Germany and hold investments from the United States or the United Kingdom as private assets. Nationality is generally not relevant. The same principles apply, for example, to a German, US or British citizen who lives in Germany and is tax resident there. The guide covers ordinary investments held by private investors, especially funds held through a standard securities account. It does not cover business assets, significant corporate shareholdings with entrepreneurial influence or complex fund structures.

Traditionally Germany has had a so called synthetic tax system. That means that the total income from each and every source is amalgamated and the sum multiplied by the individual tax rate of the taxpayer. This method also means that losses from certain sources (such as trade and business or renting out real estate and property) can be credited against other positive income. Germany abolished this system with regard to income from capital investments and now this kind of income is not part of this amalgamation but is taxed at a special tax rate.