Vorabpauschale 2027: what your bank debits in January (calculator)

An accumulating ETF reinvests its income instead of paying it out. So that some of it is still taxed every year, German law calculates a minimum return: the Vorabpauschale, or advance lump sum. It is not money you receive, just a figure for the tax calculation. Your bank withholds flat-rate tax on it. How tax on stocks and ETFs works in general is explained in the chapter Taxes on stocks.

The formula is in § 18 of the Investment Tax Act (InvStG). The value of your units at the start of the year is multiplied by the base rate (Basiszins) and by 0.7. For 2026 that means: value at the start of the year times 3.20 % times 0.7, so 2.24 % of the value. This is the base return (Basisertrag). It is capped at what your fund actually gained in value during the year, plus distributions. Distributions are then deducted again. What remains is the Vorabpauschale.

For equity ETFs, 30 % of it is tax-free; for mixed funds, 15 %. The rest is taxed at 25 % plus a 5.5 % solidarity surcharge on that tax, 26.375 % in total. Church tax adds a little more.

The Vorabpauschale for 2026 counts as received on the first working day of the following year. The finance ministry names 4 January 2027. Banks calculate from that day. The tax is taken from your cash account (Verrechnungskonto) in the first days of January; the exact date depends on your bank. You will then find a tax statement marked Vorabpauschale in your inbox. Keep the years straight: the January 2027 debit is for 2026, not 2027.

A Freistellungsauftrag only prevents the debit if it is high enough at this bank. Because the Vorabpauschale is received on 4 January 2027, it already uses the 2027 allowance, not the 2026 one. At the start of the year that is usually still completely free. Tax is still debited if you have no order, or too small an order, at this bank, for example because you split the 1,000 euros across several banks. Example: with 156.80 euros taxable and a 100 euro order, 56.80 euros are taxed, about 15 euros. An existing loss pot at the bank can also reduce the tax.

Then § 44 (1) of the Income Tax Act applies. You have to provide the missing amount to the bank. The bank may collect it from any account in your name with that bank, even without your consent. If you have an overdraft there, it may use that too, unless you objected before the income was received. The law does not provide for selling your fund units. If collection fails, the bank reports it to the tax office, and your tax office claims the tax through your tax return. The easiest fix is to leave a few extra euros in the cash account at the end of December. The calculator above shows how much.

The DAX stood at 24,490 points at the end of 2025 and at 25,065 points in early October 2026. That is a little over 2.3 % up, including dividends, because the DAX is a performance index. So it sits just above the 2.24 % threshold. If it stays there until New Year, a DAX ETF worth 10,000 euros at the start of the year triggers the full 224 euros. If the DAX ends the year below about 25,040 points, the Vorabpauschale is capped at the actual gain. If it ends below its level at the start of the year, there is none.

The MSCI World in our data is a price index in US dollars without dividends. In early October it was about 12 % above its level at the end of 2025. What counts for you, though, is the value of your ETF in euros, which can differ because of the exchange rate. If your MSCI World ETF ends the year at least 2.24 % up, it is also the full 224 euros per 10,000 euros. These are snapshots, not a forecast.

If you bought your ETF during 2026, the Vorabpauschale is reduced by one twelfth for every full month before the month of purchase. If you bought in July, only half counts. For savings plans this applies to each instalment, and the bank does it automatically.

Distributing ETFs pay out dividends, which are taxed in the year they are paid. These distributions are deducted from the Vorabpauschale. If they exceed the base return, there is no Vorabpauschale. With a 3.20 % base rate, though, some payouts are no longer enough, and a small Vorabpauschale remains.

This is where people mix up the years. The base rate the finance ministry publishes in January 2027 applies to calendar year 2027. The tax on it is only debited in early January 2028. It has no effect on the January 2027 debit. It is derived from the yield on long-dated German government bonds on the first trading day of 2027, as calculated by the Bundesbank. How high it will be is not known yet. If it rises, the possible Vorabpauschale for 2027 rises too. For comparison: it was 2.53 % for 2025 and 3.20 % for 2026.

The Vorabpauschale is an advance payment. When you sell later, your gain is reduced by all Vorabpauschalen already taxed (§ 19 InvStG). So you do not pay twice on the same money, only earlier. You can see how a regular ETF savings plan might develop over the years in the savings plan calculator. Crypto follows entirely different rules; see our topic on the crypto holding period.