What is the advance lump sum?
The advance lump-sum tax is a specific taxation of investment income (funds, ETFs). In total future profits in advance taxes are levied on future profits.
Is this a new scam by the state to make money?
Yes and no. The advance lump sum has been around since its introduction in 2018, but the tax is only now becoming interesting for investors, as it will only apply from 2024 comes into force. The main reason for the change in the legal situation was the tax deferral effect of accumulating ETFs. As the funds reinvested the dividends, the tax office only received the taxes when the fund was sold. With distributing ETFs, on the other hand, the tax office received tax on every distribution (provided the saver's lump sum of €1000 was used up). The aim of the law was therefore to create a kind of equality between accumulating and distributing ETFs.
How does the tax work?
First of all: Well done Germany! - The upfront lump sum is not very complicated, no calculations and bureaucracy for us investors, the broker takes care of everything and tells us the value of the tax due.
1. the prime rate is published by the Federal Ministry of Finance
2. you have a positive performance of your fund/ETF
3. prime rate is credited to your investment amount
Sounds simple: now it gets "more complicated"
Example calculation:
- Investment amount: €100,000
- Base interest rate 2023: 2,55%
- Formula: Investment sum * base interest rate * 0.7 = €1,785
But: If the increase in value is less than the value calculated above, then only this value is taxed.
Example calculation:
- Investment amount: €100,000
- Base interest rate 2023: 2,55%
- Formula: Investment sum * base interest rate * 0.7 = €1,785
- Increase in value: €1,500
The tax office then continues to calculate with the €1,500, and the €285 falls by the wayside.
Special feature: Accumulating equity ETF: partial exemption of 30%
Example calculation:
- Investment amount: €100,000
- Base interest rate 2023: 2,55%
- Formula: Investment sum * base interest rate * 0.7 = €1,785
- Increase in value: €1,500
The tax office then continues to calculate with the €1,500, and the €285 falls by the wayside. In addition, there is now a saving of 30% on the value:
Actual value: €1050
And NO, you don't have to pay €1050! Only this amount is now subject to capital gains tax + any solidarity surcharge + church tax.
Actual advance lump sum: 1050* 0.265 = €278.25
Are only accumulating ETFs affected by the advance lump sum?
No, the same process is also carried out for dividend ETFs. (The distributions are automatically deducted from the advance lump sum)
What exactly should I do now?
It is important that everyone deposits money in the clearing account at the end of 2023. I can only guess whether the broker will make an announcement about the tax ... but I think so.
Sources:
- https://de.wikipedia.org/wiki/Vorabpauschale
