The January charge Germany

What will the Vorabpauschale take from your fund in January?

Every January a German broker takes money out of the account of somebody who sold nothing. It is capped twice, cancelled by distributions and often absorbed entirely by the yearly allowance – and in two recent years it was zero for everybody.

Your fund, over one year

Both values are the fund position, not the amount you paid in. Your broker's year-end statement has them.

Value on the first trading day€The charge is computed from this and nothing else. Example: a fund worth 80,000 on 2 January is charged from 80,000, whatever it does afterwards. Value on the last trading day€The year's gain caps the charge. Example: a flat or falling year owes nothing at all, however high the Basiszins was. Distributions during the year€They come off the charge one for one. Example: a distributing fund that paid out more than the notional return owes no Vorabpauschale at all. YearThe Basiszins is set each January and has been anywhere from below zero to over three percent. Example: 2021 and 2022 charged nothing, for anybody.

The fund, and what is left of your allowance

Fund typeDecides the Teilfreistellung. Example: a world equity ETF holds over 51 percent equities and so exempts 30 percent of the charge. Tax-free allowance€The Sparerpauschbetrag: 1,000 per person, 2,000 for a jointly assessed couple. Allowance already used€Interest, dividends and realised gains use the same yearly allowance. Example: leave it at zero if this fund is your only investment. Tax on investment income%The standard rate including the surcharge. Example: church members pay a little more again, which this does not model.

Taken from your account next January

€67 Charged. Your broker will take this from the settlement account in January, whether or not you sold anything.

Notional return€1,792the opening value times 70 % of the 3.2 % Basiszins

The year's actual gain€6,400the first cap – the charge never exceeds this

Vorabpauschale€1,792after the cap and after distributions

Exempt€538the Teilfreistellung of 30 % for this fund type

Allowance left afterwards€0for interest, dividends and any gain you realise

What paying it early costs€444over thirty years at 7 percent – the tax is credited at the sale, the compounding is not

The same holding, under every Basiszins so far

Two of these years charged nothing, because the Basiszins was below zero.

Year	Basiszins	Vorabpauschale	Tax
2021	-0.45 %	€0	€0
2022	-0.05 %	€0	€0
2023	2.55 %	€1,428	€0
2024	2.29 %	€1,282	€0
2025	2.53 %	€1,417	€0
2026	3.2 %	€1,792	€67

Whatever is charged is added to the fund's acquisition cost, so the same gain is not taxed twice: at the eventual sale it comes back off. The cost is not the tax, it is the years of compounding that money no longer does.

What this answers

Why money left your account for a fund you did not sell

An accumulating fund reinvests instead of paying out, and without this charge it could defer tax indefinitely. So the law taxes a notional minimum return each year – capped at what the fund actually made, and reduced by anything it did pay out.

Easy to miss

It is usually smaller than people fear

The Sparerpauschbetrag absorbs the charge on a fairly large holding, and the charge itself is capped twice. For most private investors with one ETF, the answer for several years running has been nothing.

What it does not answer

Whether your broker got it right

Brokers compute this per fund and per lot, with part-year holdings scaled by month. A holding bought during the year owes a twelfth of the charge for each full month after the purchase, which this does not model.