Vorabpauschale on ETFs: How to Calculate Your 2026 Tax Bill
Every January, German brokers debit the tax on the Vorabpauschale — and every year even experienced investors wonder whether the number is right. The calculation takes three steps, and once you understand it you can manage your exemption order (Freistellungsauftrag) and settlement account deliberately. For 2026 the base rate (Basiszins) is 3.20%.
The calculation in three steps
The Vorabpauschale taxes accumulating funds that would otherwise grow tax-free for years. Here’s the maths:
- Base income: fund value on 1 January × base rate × 0.7. Example: €100,000 × 3.20% × 0.7 = €2,240.
- Cap: the Vorabpauschale never exceeds the year’s actual gain. In loss years it drops to zero. Distributions are deducted.
- Tax: equity ETFs get the 30% Teilfreistellung (partial exemption). Taxable: €2,240 × 0.7 = €1,568; at 26.375% that is roughly €414 of tax — debited at the start of the following year.
Important: the Vorabpauschale is not an extra tax but a prepayment. On sale, it is deducted from the taxable gain.
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Accumulating vs. distributing: when tax is due
With a distributing ETF you pay tax on dividends directly; the Vorabpauschale rarely matters because distributions usually exceed the base income. With an accumulating ETF you only pay on the lump-sum figure — the rest keeps compounding tax-deferred. Which variant fits your strategy mostly depends on how you use your saver’s allowance — details in our comparison of accumulating vs. distributing ETFs.
| Accumulating | Distributing | |
|---|---|---|
| Ongoing tax | Only Vorabpauschale (capped) | Full distribution taxable |
| Tax deferral | High — bulk only on sale | Low |
| Using the allowance | Only up to the lump sum | Automatically via distributions |
| Cash needed in January | Yes, tax is debited | No, withheld at distribution |
Optimising your exemption order and settlement account
Three levers are worth pulling:
- Allocate the exemption order properly: €1,000 (€2,000 if married) covers roughly €64,000 of portfolio value per person at 30% partial exemption (€100,000 × 3.20% × 0.7 × 0.7 ≈ €1,568 per €100,000). An order parked at a bank with no capital income is wasted.
- Fund the settlement account: if there is no balance in January, some brokers report the outstanding tax to the tax office — needless hassle.
- Check loss pots: existing losses offset the lump sum automatically.
Frequently asked questions
Is the Vorabpauschale due in loss years too?
No. It is capped at the year’s actual gain — if your ETF fell or went sideways, it is zero.
Do I pay tax twice because of the Vorabpauschale?
No. Previously taxed lump sums are deducted from the gain when you sell. It is a prepayment, not an additional tax.
How much is the 2026 Vorabpauschale per €100,000?
At a 3.20% base rate and an equity ETF with 30% partial exemption: base income €2,240, taxable €1,568, tax roughly €414 — provided the fund gained at least that much.
Forecasts and simulations based on your actual portfolio instead of sample values – free with MoneyPeak.