Advance lump sum (Vorabpauschale)

The Vorabpauschale (advance lump sum) is an annual minimum tax on accumulating funds and ETFs in Germany. It was introduced in 2018 to ensure that ETFs that make no distributions are also taxed.

How it works:

• Based on the Bundesbank's base interest rate (2026: approx. 2.3%)
• Calculated on the value of your ETF units at the start of the year
• Deducted in January from the clearing account (not from the ETF itself!)
• Credited later when you sell (no double taxation)

Sample calculation: €10,000 in an MSCI World ETF. Base rate 2.3% × 70% (partial exemption) = 1.61%. Advance lump sum: €161. Of this, 25% tax + Soli = approx. €42. Debited from the clearing account.

Tip: make sure there is enough money in your clearing account in January. Otherwise the broker can't pay the tax and there will be problems.