Level 0 ETF basics · Part 8/14

ETFs & tax in Germany: the essentials

In Germany, ETF gains are subject to the flat capital gains tax (25 % plus solidarity surcharge and possibly church tax). Three terms determine how much of it is actually due.

Staircase of five bars: gain, base yield, advance lump sum, taxable part and tax for a fund worth 10,000 euros
Germany's advance lump-sum tax (Vorabpauschale) for 2026 in an example without allowance: €10,000 fund value at the start of the year, €800 gain. (1) Gain €800, (2) base yield = €10,000 × 3.20 % base rate × 70 % = €224, (3) advance lump sum = the smaller value, €224, (4) after the 30 % partial exemption €156.80, (5) 26.375 % flat tax including solidarity surcharge = €41.36. The tax is credited on a later sale.

1. Saver’s allowance (Sparerpauschbetrag)

Each year 1,000 € of capital income is tax-free (jointly assessed couples: 2,000 €). It is applied automatically when an exemption order (Freistellungsauftrag) is on file with the broker .

2. Partial exemption (Teilfreistellung)

For equity funds (at least 51 % stocks), 30 % of income is tax-free. This offsets taxes already paid at fund level and lowers the effective tax on equity-ETF gains.

3. Advance lump-sum tax (Vorabpauschale)

Because accumulating ETFs pay no dividends, the Vorabpauschale applies: a yearly advance tax on a notional minimum return, so that accumulating funds are taxed on an ongoing basis too.

  • It only applies if the fund rose during the year.
  • It is usually small and credited against tax on a later sale (no double taxation).
  • German brokers collect it automatically from the cash account.
Interactive calculator

Vorabpauschale calculator

Equity ETF: 70 % base-yield factor, 30 % partial exemption, 26.375 % flat tax (incl. Soli, excl. church tax). Capped at the actual gain. Base rate for 2026: 3.20 % (German Federal Ministry of Finance, January 13, 2026). No guarantee, not tax advice.

Holding via a foreign broker

Foreign brokers do not withhold German tax. The income must then be declared in the tax return; with a German broker the deduction happens automatically.

This article is general information, not tax advice. Rules can change.