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Investmentfonds ohne deutschen Steuerabzug

 


What is the advance lump sum?

The so-called advance lump sum ensures that a certain minimum taxation takes place at the investor level - even in cases where a fund makes no or insufficient distributions. The amount of the advance lump sum always refers to the previous year. When the shares are actually sold, the advance lump sums taxed up to that point are deducted from the proceeds of the sale (proceeds of sale minus acquisition data minus advance lump sum).

This means that a capital gain is reduced (and thus the tax burden). In the case of a capital loss, the advance lump sum already calculated increases your capital loss. Double taxation is therefore excluded.

The advance lump sum has been levied and taxed since the beginning of 2019.

What is the advance lump sum?


What is the advance flat rate?

The advance lump sum is a special tax regulation for income from accumulating or partially accumulating funds. Since 2019, it has been levied annually and represents an advance taxation of future expected increases in value.

Important: The advance lump sum is deducted again from the actual sales profit when the fund shares are sold to avoid double taxation.

How is the advance lump sum calculated?

The advance lump sum is not based on actual profits but is calculated using the following formula:

Advance lump sum = 70% of the base interest rate × value of the fund share at the beginning of the year

  • The base interest rate is set annually by the Deutsche Bundesbank on 02.01.
  • The advance lump sum is limited to the so-called basic income. This corresponds to the difference between the first and last redemption price in the year, plus any distributions.
  • If there is no redemption price, the stock market or market price is used.

The calculated advance lump sum is then subject to withholding tax of 25% – plus solidarity surcharge and, if applicable, church tax.

When is the advance lump sum considered received?

The advance lump sum is not recorded immediately but always on the first working day of the following year as income. This is regulated by § 18 para. 3 InvStG.

Advance lump sum for 2025 (BMF letter dated 10.01.2025)
  • Base interest rate (02.01.2025): 2,53%
  • 70% of this: 1,771%
  • Fictitious receipt: 02.01.2026

What is the advance flat rate?


What is partial exemption?

For certain domestic income, there is an additional burden of corporation tax at the fund level for public investment funds. To offset this pre-taxation at the fund level, fund distributions, advance lump sums, and capital gains from the sale of fund units are partially exempt from tax. This is referred to as a "partial exemption".

The rate of the fund-specific partial exemption depends on the type of fund (as of October 2018):

  • 30% for equity funds (at least 51% equity according to the investment conditions)
  • 15% for mixed funds (at least 25% equity according to the investment conditions)
  • 60% for real estate funds (at least 51% in real estate or real estate companies according to the investment conditions)
  • 80% for real estate funds with a foreign focus (at least 51% in foreign real estate or foreign real estate companies according to the investment conditions)

The classification of a fund into a fund category is based on the investment policy by the fund company (investment company). They provide the qualification of the fund (e.g. equity or mixed fund).

 

Tipp

The tax certificate from the custodian banks usually states: "Total of all positive capital income, gains and earnings (including distributions, advance lump sums and gains from the sale of investment units after partial exemption)." The individual items are then explained in more detail. Investors should carefully check whether this is also the case with their tax certificate. If the disclosure has not been made: You should request the statement on the equity ratio, real estate ratio, etc. from your fund provider if it has not already been sent to you unsolicited.

These figures are often already published online in the annual reports. Check the relevant ratios of your fund. If, for example, the equity ratio is consistently more than 50%, a partial exemption of 30% should be applied, which must be claimed in the tax return - and not with the fund provider or the custodian bank. Failure to do so may result in paying too much income tax on your capital income.

What is partial exemption?


Which funds are affected by the advance flat rate?

In principle, all domestic and foreign investment funds (including ETFs) can be affected by the advance lump sum.

For distributing funds, any distribution made is taken into account when calculating the advance lump sum. If the distribution is sufficiently high, no advance lump sum is incurred. It can therefore be assumed that the advance lump sum mainly affects accumulating funds.

Which funds are affected by the advance flat rate?


Is the withholding tax on the advance lump sum credited upon a later sale?

Yes, when the fund shares are sold at a later date, all advance lump sums of the fund that have already been taxed are deducted from the sales proceeds on a pro rata basis.

This is to avoid double taxation.

Is the withholding tax on the advance lump sum credited upon a later sale?

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Field help

Do you have a tax statement from your foreign bank? (summary)

Select "yes" if you have a summarised tax statement from your foreign bank or foreign financial institution.

This tax statement usually contains total amounts for:

  • Distributions
  • Advance flat rates
  • Gains and losses from sales
  • tax deductions already withheld (e.g. capital gains tax, solidarity surcharge, church tax)

Tip: A summary is particularly useful if you have received a complete annual statement or a tax report with total values from your bank – e.g. from a foreign broker or online bank.

Typical examples of foreign brokers without German tax deduction are:

  • DEGIRO (Netherlands)
  • Interactive Brokers (USA)
  • Lynx Broker (Netherlands / IBKR)
  • etoro (Cyprus / Israel)
  • Trading 212 (UK / EU)
  • Revolut (UK)
  • Freedom24 (Cyprus)
  • flatex.at (Austria – no German withholding tax)
  • CapTrader (IBKR-based)
  • Banx Broker (IBKR-based)
Would you like to record the details for specific investment funds separately? (individual entry)

Select "yes" if you wish to record the details for each individual investment fund separately and in detail.

With individual entry, you can:

  • Specify purchases and sales for each fund
  • Record distributions received
  • Have the advance lump sum calculated automatically
  • Specify profits and losses for each fund

Tip: You can find the required information in the annual statements from your custodian bank or the income statements from your fund provider – the relevant data is listed separately for each fund.

Credited foreign taxes (line 40 of Form KAP)

Enter the credited foreign taxes that apply to fund income and have already been credited against German tax as part of investment taxation. This includes, for example, withholding taxes on foreign dividends or interest income in the fund assets.

The amount will be transferred to line 40 of the KAP form.

Example: A fund holds US shares and distributes income to you. In the US, 15% withholding tax is deducted, so on a distribution of 1.000 Euro, 150 Euro withholding tax is incurred. Of this, 100 Euro was credited against your German tax. Enter 100 Euro here.

Сreditable foreign taxes (line 41 of Form KAP)

Enter the creditable foreign taxes applicable to fund income that would generally be creditable against German income tax. The amount may be higher than the actual credited tax if, for example, statutory maximum amounts under the Investment Tax Act (§ 7 para. 1 InvStG) limit the credit.

The value is transferred to line 41 of Form KAP.

Example: A total of 300 Euro foreign withholding tax was deducted from fund income, but only 250 Euro were creditable. Enter 300 Euro here.

Notional foreign taxes (line 42 of Form KAP)

Enter any notional foreign withholding taxes that are considered for tax credit purposes under certain double taxation agreements (DTAs) or the Investment Tax Act, even though no tax was actually withheld abroad.

The amount is entered in line 42 of Form KAP.

Example: A DTA allows a notional withholding tax of 10% to be credited for certain foreign income from a fund, even though no actual tax was withheld. For income of 1.000 Euro, this results in a notional tax of 100 Euro. Enter 100 Euro here.

Should foreign tax deduction amounts be taken into account?

Select "yes" if foreign tax deductions have already been credited on the income from investment funds.

This concerns withholding taxes levied on fund income abroad, which can be taken into account in Germany under the Investment Tax Act.

The foreign taxes can be credited against German tax. However, maximum amount regulations and possible credit limits under an existing double taxation agreement (DTA) must be observed. Only the amounts actually credited should be entered here.

Was a remaining allowance for legally protected old shares in investment funds determined?

If a remaining allowance for protected old shares in investment trusts has been determined for you by 31.12.2024, please select "yes" here.

The allowance of 100.000 Euro for old stocks is determined and offset by the tax office as soon as parts of the old stock are sold and a tax return is filed. Only at this point the assessment procedure begins. The remaining tax-free amount can be found in the tax assessment notice of the previous year. If the tax-free amount has been completely used up, it is determined annually as zero.