Advance lump-sum tax (Vorabpauschale)
A notional minimum return on funds and ETFs that is taxed every year, even if you sell nothing.
In short
As of 5 October 2026The Vorabpauschale (advance lump sum) is a notional minimum return on funds and ETFs that is taxed every year, even if you sell nothing. Roughly: value at the start of the year times the base rate times 0.7, capped at the actual gain. At 10,000 euros and the 2026 base rate of 3.20 percent, that is 224 euros.
Accumulating ETFs pay you nothing, yet Germany taxes a small amount in advance each year. The basis is the Vorabpauschale: value at the start of the year times the base rate times 0.7, capped at the actual gain. Distributions are deducted.
For 2026 the base rate is 3.20 %. The tax is debited from your cash account in early 2027 if your saver's allowance is used up. For equity ETFs, 30 % is tax-free (partial exemption).
Example: ETF worth 10,000 euros on 1 January 2026, up over the year. Vorabpauschale: 224 euros, of which 156.80 are taxable, so about 41 euros tax. It is credited when you sell, so you are not taxed twice.
Related terms
Sources
- Investmentsteuergesetz (InvStG), § 18 Vorabpauschale
- Investmentsteuergesetz (InvStG), § 20 Teilfreistellung
As of 5 October 2026 · Educational content, not investment or tax advice.