Germany–Switzerland · Investment Fund Taxation
§ 19 InvStG · Vorabpauschalen · Partial ExemptionGerman Tax on Fund and ETF Sales from a Swiss Securities Account
If an individual who is tax resident in Germany sells fund or ETF units held in a Swiss securities account, the gain generally needs to be calculated under the German Investment Tax Act. The difference between the purchase and sale prices is not always sufficient: advance lump-sum investment income amounts (Vorabpauschalen) recognised during the holding period reduce the disposal gain for tax purposes, any applicable partial exemption must be taken into account, and relevant foreign currency amounts must be determined in euros for German tax purposes.
Starting Point
A gain from selling fund units is a separate category of investment income
Under section 16 of the German Investment Tax Act (InvStG), investment income includes gains from selling investment fund units, in addition to distributions and Vorabpauschalen.
For privately held fund units, the disposal gain is calculated under section 19 InvStG by applying the corresponding rules of section 20(4) of the German Income Tax Act (EStG).
The custodian bank’s location in Switzerland generally does not change this German tax liability.
Section 19 InvStG
The taxable fund gain involves more than sale proceeds minus the purchase price
Vorabpauschalen recognised during the holding period are deducted from the disposal gain.
The applicable partial exemption for the fund is then considered.
- Determine the sale proceeds
- Deduct acquisition costs
- Account for direct disposal costs
- Deduct recognised Vorabpauschalen
- Review the fund classification
- Apply the partial exemption
- Determine the taxable amount
Gain Calculation
Combine sale proceeds, acquisition costs and Vorabpauschalen
For investment fund units held as private assets, section 19(1) InvStG refers to the gain calculation rules in section 20(4) EStG.
Sale proceeds
The relevant proceeds from the actual disposal of the fund units.
Acquisition costs
Historical acquisition costs of the units sold, as determined for tax purposes.
Vorabpauschalen
Amounts recognised during the holding period reduce the gain.
Partial exemption
Part of the remaining investment income may then be tax-exempt.
Vorabpauschalen
Previously recognised Vorabpauschalen prevent double taxation
Section 19(1) InvStG expressly requires the disposal gain to be reduced by the Vorabpauschalen recognised during the holding period.
This is particularly important for accumulating ETFs that have given rise to Vorabpauschalen over many years.
Swiss accounts often lack this history in the format required for German tax
Swiss custodian banks generally do not calculate the German Vorabpauschale. Where Vorabpauschalen have been recognised in German tax returns, annual records should therefore be maintained for each fund position.
Recognised Vorabpauschalen are deducted in full
Under section 19(1) InvStG, Vorabpauschalen recognised during the holding period must be taken into account in full when calculating the disposal gain, irrespective of any partial exemption.
Partial Exemption
A fund or ETF disposal gain may also be partly tax-free
Gains from selling investment fund units constitute investment income. They can therefore also qualify for the partial exemptions under section 20 InvStG.
| Fund type | Partial exemption for private holdings | Taxable portion |
|---|---|---|
| Fund with no qualifying exemption | 0% | 100% |
| Mixed fund | 15% | 85% |
| Equity fund | 30% | 70% |
| Real estate fund | 60% | 40% |
| Foreign real estate fund | 80% | 20% |
ETF status does not automatically mean a 30% exemption
The specific unit class must meet the requirements for an equity fund under the German Investment Tax Act. A bond ETF or money market ETF does not qualify for an equity fund exemption merely because it is structured as an ETF.
Foreign Currency
A fund gain in CHF is not automatically the gain for German tax purposes
For German income tax purposes, the relevant acquisition and disposal amounts must be determined in euros.
If the fund is held in a Swiss account maintained in CHF, movements in the Swiss franc, as well as the fund’s price performance, may therefore affect the taxable gain calculated in euros.
A small fund price increase in CHF can still produce a larger gain in EUR
An investor acquires fund units when one Swiss franc is worth fewer euros. By the time of the subsequent sale, the franc has strengthened against the euro.
The gain for German tax purposes may therefore be higher than the price gain alone shown in CHF in the Swiss bank report.
Swiss Custodian Bank
The Swiss sales report generally provides only the underlying data
A Swiss bank does not necessarily calculate disposal gains under German investment fund tax law.
Acquisition costs, Vorabpauschalen, fund classification, partial exemptions and foreign currency amounts therefore require a separate review.
Unit class
Identify the exact fund or ETF position.
Purchase history
Retain purchase dates, unit quantities and acquisition costs.
Tax history
Maintain records of previously recognised Vorabpauschalen for each position.
Currency
Determine relevant foreign currency amounts in euros for German tax purposes.
Swiss tax exemption for a private capital gain does not determine its German treatment
Even if a private disposal gain is not taxed as income under Swiss law, it may be taxable under the German Investment Tax Act where the investor is tax resident in Germany.
Older Holdings
Fund units acquired before 2018 require a separate tax history
The investment tax reform introduced a tax cut-off on 31 December 2017.
Under section 56 InvStG, existing units are generally deemed to have been sold at the end of 31 December 2017 and reacquired at the beginning of 1 January 2018.
The relevant value is generally the last redemption price of 2017 or, if no such price is available, the stock exchange or market price.
Older Swiss account holdings may lack the values needed for the German transitional rules
Particularly where the units were already held at a Swiss bank in 2017, check whether the year-end 2017 redemption price or market value, original acquisition costs and subsequent tax history can still be reconstructed.
Grandfathered Fund Units
Fund units acquired before 2009 are subject to a special transitional rule
Section 56(6) InvStG provides special grandfathering protection for certain fund units acquired before 1 January 2009 that have not been held as business assets since their acquisition.
Changes in value up to the end of 2017 generally remain tax-free. Changes in value from 1 January 2018 are generally taxable to the extent that the special personal allowance of EUR 100,000 is exceeded.
The EUR 100,000 allowance is personal, with its remaining balance tracked over time
It applies to taxable changes in value of grandfathered fund units from 2018 onwards and must not be confused with the annual savings allowance (Sparer-Pauschbetrag).
Example
Selling an equity ETF held in a Swiss securities account
Sale after several years
An individual who is tax resident in Germany holds a qualifying equity ETF in a Swiss securities account.
The relevant acquisition costs for tax purposes are EUR 100,000. The units are sold for EUR 150,000. Direct disposal costs amount to EUR 500. During the holding period, a total of EUR 4,000 in Vorabpauschalen has been recognised.
| Item | Amount |
|---|---|
| Sale proceeds | EUR 150,000 |
| Less acquisition costs | − EUR 100,000 |
| Less disposal costs | − EUR 500 |
| Subtotal | EUR 49,500 |
| Less recognised Vorabpauschalen | − EUR 4,000 |
| Gain before partial exemption | EUR 45,500 |
| 30% partial exemption | EUR 13,650 tax-free |
| Taxable investment income | EUR 31,850 |
This example shows why records of Vorabpauschalen from previous years must be retained for the eventual sale.
Losses
Losses from fund sales are also governed by investment fund tax rules
If the calculation produces a disposal loss, this generally constitutes negative investment income.
An applicable partial exemption generally affects both positive and negative investment income.
Fund losses are not the same as losses on directly held shares
The special loss offset restriction for disposals of directly held shares must not simply be applied to investment fund units. Fund and ETF units follow the investment fund tax rules.
Review Process
Selling funds from a Swiss account in eight steps
Identify the fund
Determine the ISIN and exact unit class.
Check the acquisition date
Establish whether the units were acquired before 2018 or from 2018 onwards.
Acquisition costs
Reconstruct the relevant tax basis.
EUR amounts
Prepare foreign currency amounts for German tax purposes.
Vorabpauschalen
Compile the amounts recognised during the holding period.
Calculate the gain
Combine sale proceeds, costs and the tax history.
Partial exemption
Review the fund classification and applicable exemption rate.
Reporting
Report the investment income in Germany.
Common Mistakes
Where fund and ETF sales from Swiss accounts are often calculated incorrectly
Copying the broker’s gain
The Swiss disposal gain is used for German tax without review.
Forgetting Vorabpauschalen
Investment income already recognised for tax purposes is not taken into account on sale.
Forgetting the partial exemption
The entire disposal gain from a qualifying fund is taxed.
Automatically applying 30% to ETFs
The fund’s qualification as an equity fund is not checked.
Using the CHF gain
Relevant EUR amounts are not calculated separately for German tax.
Ignoring the 2018 transition
Older units are treated like fund units acquired under the rules applying from 2018.
Overlooking grandfathering
Fund units acquired before 2009 are reviewed without considering section 56 InvStG.
Applying share loss rules
Directly held shares and investment fund units are treated as equivalent for tax purposes.
Frequently Asked Questions
Selling funds and ETFs from a Swiss securities account
Do I have to pay German tax on an ETF sale from my Swiss account?
How is the disposal gain calculated?
Why are Vorabpauschalen deducted on sale?
Is only the taxable portion of the Vorabpauschalen deducted?
Does the partial exemption also apply when selling an ETF?
Does every equity ETF qualify for a 30% partial exemption?
Can I use the gain reported by the Swiss broker?
Do I need to convert CHF amounts into euros for Germany?
What about fund units purchased before 2018?
What about fund units acquired before 2009?
Are fund losses treated like losses on directly held shares?
Which documents should I retain before selling?
Further Reading
Funds and ETFs in Swiss securities accounts
Germany–Switzerland Tax Advice
Planning to sell funds or ETFs from a Swiss securities account?
We review acquisition costs, foreign currency amounts, historical Vorabpauschalen, fund classification, partial exemptions and older holdings, and calculate the disposal gain correctly for German tax purposes.
Request a Fund Sale Tax Review