Before You Start
- Understand your country’s capital gains tax rules for ETFs (e.g., Germany, Netherlands, France, Italy, Spain, Belgium, Austria).
- Have an active brokerage account accessible to European residents (e.g., DEGIRO, Interactive Brokers, Trade Republic).
- Hold at least two similar ETFs in your portfolio (to facilitate switching).
- Export or access your transaction history and current unrealised gains/losses.
- Check your tax residency status for the applicable year.
Time needed: 45–90 minutes for basic harvesting, plus time for record keeping and tax filing
What you'll need: Broker login, Excel/Google Sheets or tax software, internet access, and access to your country’s tax guidelines
ETF tax loss harvesting is a powerful yet underused technique for European investors aiming to lower their annual tax bill. By intentionally selling ETFs at a loss and replacing them with similar (but not “substantially identical”) ETFs, you can offset taxable capital gains—without fundamentally changing your long-term investment allocation.
This guide will walk you through ETF tax loss harvesting in Europe for 2026, covering country-specific tax nuances, prohibited transactions, and practical steps for popular brokers like DEGIRO and Interactive Brokers. You'll learn with real EUR-based examples, and finish with an actionable checklist.
What Is ETF Tax Loss Harvesting—and Why Does It Matter in Europe?
Tax loss harvesting means selling an investment (here, an ETF) for less than you paid, to realise a capital loss. This loss can offset other capital gains, reducing your overall tax liability. While the principle is universal, the details differ across Europe:
- Germany: Capital gains are taxed at 25% (Abgeltungsteuer) plus solidarity surcharge and church tax. Realised losses can offset gains from other securities in the same year or be carried forward.
- Netherlands: Taxation is based on ‘Box 3’—a deemed return on net assets, not realised gains/losses. Tax loss harvesting typically does not reduce Box 3 taxes.
- France, Italy, Spain, Austria, Belgium: Capital gains are taxed when realised; losses can often offset gains, but rules vary.
Key point: Tax loss harvesting benefits you only if your country taxes realised capital gains and allows losses to offset gains. Check your local rules.
Pro Tip
If you invest in UCITS ETFs, you’ll avoid US estate tax complications and simplify reporting for most European tax authorities.
Step 1: Identify Eligible ETFs With Unrealised Losses
What to do: Review your portfolio and list ETFs currently trading below your purchase price (“in the red”). Most brokers show unrealised gains/losses. For manual tracking, export your transactions to Excel or Google Sheets and calculate your cost basis per ETF.
- On DEGIRO: Go to “Portfolio” → “Performance” tab. Losses are shown in red, gains in green.
- On Interactive Brokers: In the Client Portal, select “Portfolio” → “Unrealized P/L”.
- On Trade Republic: Tap “Portfolio” → Each ETF shows “Performance” in € and %.
Why it matters: You can only harvest losses that are currently unrealised. Accurate tracking ensures you don’t miss opportunities or accidentally sell at a gain.
What can go wrong: If you miscalculate your cost basis (especially after multiple purchases), you might trigger a gain instead of a loss. Always double-check your broker’s numbers.
Example: You bought 50 shares of iShares Core MSCI World UCITS ETF (EUNL) at €100 each (€5,000 total). In June 2026, the price drops to €90—your unrealised loss is (€90–€100) × 50 = –€500.
Step 2: Check Your Country’s Tax Rules and Prohibited Transactions
What to do: Review whether your country allows capital loss harvesting and what restrictions apply—especially regarding “wash sales” or “bed-and-breakfasting” (buying back the same ETF too soon).
- Germany: No explicit “wash sale” rule, but losses cannot be claimed if you repurchase the identical security on the same day or via certain tax-advantaged accounts. Losses can offset gains from other ETFs or stocks.
- Netherlands: Tax loss harvesting is not effective under Box 3.
- France, Italy, Spain, Austria: Losses generally offset gains, but check for minimum holding periods or specific anti-abuse rules.
Why it matters: Violating these rules can get your loss disallowed. Especially important: don’t immediately rebuy the same ETF after selling for a loss.
What can go wrong: If you repurchase the same ETF too quickly, your tax authority may deny the loss. In Germany, buying back on the same day is not allowed for loss harvesting.
Pro Tip
Switching between similar—but not identical—ETFs (e.g., from iShares MSCI World UCITS (EUNL) to Xtrackers MSCI World UCITS (XDWD)) lets you keep market exposure without violating anti-abuse rules.
Step 3: Sell the Loss-Making ETF
What to do: Place a sell order for the ETF with the unrealised loss. Check the settlement date—this is when the sale is considered effective for tax purposes.
- DEGIRO: Search for the ETF in “Portfolio”, click “Sell”, enter quantity, review estimated proceeds, then confirm.
- Interactive Brokers: In “Portfolio”, click the ETF, choose “Sell”, input quantity, select market or limit order, review, and submit.
- Trade Republic: Tap the ETF in your Portfolio, tap “Sell”, enter amount, swipe to confirm.
Why it matters: The sale realises your capital loss, making it available to offset current or future capital gains. The settlement date (often T+2) is what counts for tax reporting.
What can go wrong: Selling outside trading hours may result in poor execution prices. Double-check the ETF’s liquidity and bid-ask spread to minimise slippage.
Example: You sell all 50 shares of EUNL at €90, realising a €500 capital loss.
Step 4: Immediately Buy a Similar, Not Identical, ETF
What to do: To maintain your desired market exposure, buy a similar ETF tracking the same index but from a different provider. For example, if you sold iShares Core MSCI World UCITS ETF (EUNL), buy Xtrackers MSCI World UCITS ETF (XDWD) or Amundi MSCI World UCITS ETF (CW8).
- DEGIRO: Search for “XDWD” or “CW8” in the “Products” tab, click “Buy”, enter quantity, review estimated cost, and confirm.
- Interactive Brokers: In “Trade” or “Portfolio”, search for the replacement ETF, select “Buy”, input quantity, and submit.
- Trade Republic: Tap the search bar, enter the ETF’s name or ISIN, tap “Buy”, enter amount, and swipe to confirm.
Why it matters: This “switch” keeps you invested in the market, reducing the risk of missing a rebound after your sale. Using a different ETF avoids prohibited “wash sale” transactions.
What can go wrong: Accidentally buying an ETF that is too similar (exact same ISIN, or by the same provider) may trigger anti-abuse rules in some countries. Always check the ETF’s ISIN and provider.
Example: You buy 50 shares of XDWD at €90 each, using the €4,500 proceeds from your EUNL sale.
Pro Tip
If your broker supports fractional ETF buying, you can reinvest the exact proceeds—even if the new ETF’s price differs slightly from the original.
Step 5: Record the Transaction for Tax Reporting
What to do: Immediately document the sale and purchase—date, ETF name/ISIN, quantity, sale/purchase price, and any fees. Save broker confirmations and export transaction statements for your tax records.
- Most brokers (DEGIRO, Interactive Brokers) allow you to export transaction history as CSV or PDF.
- Include the realised loss in your tax software or pass it to your accountant.
Why it matters: Accurate records are crucial if your tax authority requests documentation. In Germany, for example, you must substantiate losses to offset gains on your tax return.
What can go wrong: Missing or incomplete records can lead to denied deductions or extra scrutiny. Always back up your files.
Example: Your 2026 tax file includes a €500 realised loss from selling EUNL, with PDF confirmations from DEGIRO and a spreadsheet logging all details.
Step 6: Offset Gains and File Your Tax Return
What to do: When preparing your 2026 tax return, report both your realised gains and losses. Most European countries require you to declare capital gains/losses from ETFs in a dedicated section.
- Germany: Include your loss in the “Anlage KAP” form. Your broker may have already withheld tax, but you can reclaim some by declaring your loss.
- France, Italy, Spain, Austria: Report capital gains and losses in the relevant tax form. Check if losses can be carried forward to future years.
Why it matters: Properly declaring losses can directly reduce your taxable gains—and, by extension, your final tax bill.
What can go wrong: Failing to include all details or missing tax deadlines may result in denied deductions or penalties.
Example: You have €1,000 in ETF capital gains and €500 in losses. You only pay tax on the net €500 gain, saving approximately €125 in German capital gains tax.
ETF Tax Loss Harvesting: Action Checklist
- Check your country’s eligibility and rules for loss harvesting.
- Identify ETFs in your portfolio with unrealised losses.
- Sell the loss-making ETF on your broker platform.
- Buy a similar—but not identical—ETF to maintain exposure.
- Record all transactions and save confirmations.
- Report the loss and offset gains in your tax return.
- Review your process annually or after major market drops.
Common Mistakes
- Rebuying the same ETF too soon: This can trigger anti-abuse rules and invalidate your loss.
- Not checking country-specific rules: Tax loss harvesting is ineffective in the Netherlands and may be restricted elsewhere.
- Poor record keeping: Missing documentation can lead to denied claims by tax authorities.
- Confusing ISINs and ETF providers: Always switch to a genuinely different ETF (different ISIN, different provider) to avoid issues.
- Overlooking fees and bid-ask spreads: High transaction costs can eat into your harvested losses.
Next Steps
ETF tax loss harvesting is a valuable tool for European investors in eligible countries, but it requires careful attention to details, especially tax regulations and execution timing. Review your portfolio for harvesting opportunities at least once a year—typically after market downturns. If you hold dividend-paying ETFs, also consider reading our guide to ETF dividend taxation in Europe to optimise your after-tax returns.
As tax laws and brokerage features evolve, stay up to date with your country’s rules and your broker’s reporting tools. Consider consulting a tax advisor for complex situations or large portfolios.
Disclaimer: This article is for educational purposes only and does not constitute financial advice. Always do your own research and consider consulting a qualified financial advisor before making investment decisions.