What is the Vorabpauschale, simply explained?

The Vorabpauschale (advance lump sum) is an annual advance tax on accumulating (reinvesting) funds and ETFs. Because these pay no distributions, no tax would otherwise arise for years. So the state taxes a notional minimum return each year — even if you sell no shares.

How high is the Vorabpauschale in 2026?

The base yield is calculated as: fund value at the start of the year × base rate × 0.7. The base rate (Basiszins) for 2026 is 3.20% (2025: 2.53%). The Vorabpauschale is the lower of the base yield and the fund's actual gain for the year, reduced by any distributions.

When do I pay no Vorabpauschale?

If your fund had no gain in the year (or is down), the Vorabpauschale is €0. Nothing is due either to the extent an exemption order (Freistellungsauftrag) covers it — up to the saver's allowance of €1,000 (€2,000 for couples).

When is the Vorabpauschale debited?

The Vorabpauschale for a year falls due on the first banking day of the following year — so the 2026 one is debited in early 2027. The bank automatically debits the tax from your clearing account unless a sufficient exemption order is in place.

ETF Advance Tax 2026 (Vorabpauschale) in Germany

You hold an accumulating ETF, you’ve sold nothing — and yet your bank deducts tax at the start of the year. That’s the Vorabpauschale (advance lump sum), and in 2026 it hits noticeably more investors: the base rate has risen to 3.20% (2025: 2.53%). This guide explains how it works, how to calculate it, and how to often avoid it entirely with one simple order.

In short: The Vorabpauschale taxes a notional minimum return of accumulating funds — even without a sale. Formula: fund value at start of year × 3.20% × 0.7 = base yield. You’re taxed on the lower of the base yield and the actual gain, minus distributions. For equity funds the partial exemption (Teilfreistellung) keeps 30% tax-free. A Freistellungsauftrag up to €1,000 often prevents the debit entirely.

Why the Vorabpauschale exists

A distributing ETF pays out dividends regularly — you pay tax on them immediately. An accumulating ETF automatically reinvests the income. Without a countermeasure, you’d pay tax only on sale, many years later. The Vorabpauschale limits this tax-deferral advantage by taxing a minimum return each year. It’s credited back on a later sale — nothing is taxed twice.

How it’s calculated

Three steps:

Base yield = fund value on 1 January × base rate (2026: 3.20%) × 0.7.
Vorabpauschale = the lower of the base yield and the actual gain for the year, minus distributions paid during the year.
Taxable = Vorabpauschale × partial exemption. For equity ETFs, 30% stays tax-free, so only 70% is taxed.

This is then subject to 25% withholding tax + 5.5% solidarity surcharge (= 26.375%), plus church tax if applicable.

Worked example

Lena holds an accumulating equity ETF, value on 1 Jan 2026: €20,000. The ETF rises 9% in the year.

Base yield: €20,000 × 3.20% × 0.7 = €448
The actual gain (€1,800) is higher → the base yield counts: €448
Partial exemption 30% → taxable: €448 × 70% = €313.60
Tax: €313.60 × 26.375% ≈ €82.71

But: if Lena has an exemption order of €1,000, this amount is still free — she pays €0.

When the Vorabpauschale is €0

The fund is down. No gain → no Vorabpauschale.
Distributions ≥ base yield. If enough was distributed (and already taxed) in the year, nothing remains.
An exemption order covers it. Up to the saver’s allowance of €1,000 (€2,000 for couples), nothing is debited.

Debit and liquidity

The 2026 Vorabpauschale falls due on the first banking day of 2027. The bank automatically debits the tax from your clearing account (Verrechnungskonto). Important: make sure there’s enough balance there — otherwise you risk overdraft interest or a forced sale of shares.

Common mistakes

Not filing an exemption order. The simplest lever to avoid the debit up to €1,000. More on this: Saver’s allowance & exemption order.
Forgetting the partial exemption. Equity funds keep 30% tax-free — those who don’t know overestimate their burden.
Fearing double taxation. On sale, the Vorabpauschale already paid is credited.
An empty clearing account. With foreign brokers that have no clearing account, you must declare the tax yourself via Anlage KAP.

How Restio helps

The Vorabpauschale is abstract, the formula awkward, and the debit often comes as a surprise. Restio makes it tangible:

Calculate it — enter the fund value and fund type, and Restio works out the base yield, partial exemption and expected 2026 tax for you.
Optimise your exemption — Restio shows whether your exemption order covers the Vorabpauschale or whether you should adjust it.
Instant answers — ask in English or German: “Why did my bank deduct tax in January?” or “Do I have to enter the Vorabpauschale in my tax return?”

For a binding assessment — for example with several foreign brokers — consult a tax advisor (Steuerberater). Restio sorts it out first so you know what’s at stake.

The Vorabpauschale is no footnote in 2026: at a 3.20% base rate it bites noticeably on larger portfolios. Investors who know the formula and file an exemption order keep it small — or at zero. The legal basis is in §18 InvStG.