How do you correctly enter employee shares from the USA?

If you have received shares from your US employer as part of an employee programme, you must declare this benefit in your German tax return. In this article, we will explain step by step how to do this easily with Lohnsteuer kompakt – and how to avoid paying tax twice.

When are the shares taxable?

If shares are not transferred to you immediately but only after a certain waiting period (known as the vesting period), they are considered to have been "received". From this point on, they belong to you and are considered additional wages in Germany – like a salary in the form of shares.

The value of the shares at the time of transfer must be declared in the tax return and is taxable in Germany. In many cases, your US employer has already withheld taxes on this share value. You can have these US taxes credited in Germany to avoid double taxation.

How to record employee shares in Lohnsteuer kompakt

Enter wages without tax deduction

Navigate in Lohnsteuer kompakt to:

"Income from employment" > "Other income" > "Wages without tax deduction"

Enter the full market value of the transferred shares there - e.g. 20.000 Euro.

Credit foreign tax

Go to:

"Foreign income" > "Creditable foreign taxes"

Add the following information:

• Country of origin: USA
• Income: 20.000 Euro
• Creditable tax: e.g. 10.000 Euro, if verifiable

The tax office will then check whether and to what extent the US tax can be offset against your German tax.

Additional information for the tax office (recommended)

It is best to supplement your tax return with a brief explanation in the section "Message to the tax office".

Example: As part of my US employer's employee share programme, shares with a total value of 20.000 Euro were transferred to me in 2024. 50% (10.000 Euro) was withheld as a flat-rate tax. I apply for the crediting of this foreign tax in accordance with the Germany–USA DTA.

Submit documents (recommended)

Submit documents from your employer or broker with your tax return showing the market value of the transferred shares and the amount of foreign tax withheld. Although it is not mandatory to provide this evidence, it is recommended to avoid queries from the tax office and to clearly demonstrate the crediting of the foreign tax.

Tip: After submitting the tax return, you have the option to submit the documents electronically with Lohnsteuer kompakt.

What applies when selling the shares later?

If you sell the shares later and make a profit, you must pay tax on this profit in Germany. This is called capital gains tax. The value the shares had when received (e.g. 20.000 Euro) is considered the "starting value". Only the profit above this must be taxed.

Example: You sell the shares later for 25.000 Euro. Since the purchase value is 20.000 Euro, only 5.000 Euro must be taxed.