All terms
Advance lump-sum tax (Vorabpauschale)
A notional minimum return on funds and ETFs that is taxed every year, even if you sell nothing.
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.