vorabpauschale-schweizer-depot-etf

Germany–Switzerland · Investment Fund Taxation

§ 18 InvStG · Base Rate for 2026: 3.20%

Vorabpauschale on ETFs Held in a Swiss Securities Account

An ETF held in a Swiss securities account can also give rise to a German advance lump-sum investment income amount (Vorabpauschale) if you are tax resident in Germany. The relevant rules are those of the German Investment Tax Act, rather than the location of the custodian bank. For the 2026 calendar year, the applicable base rate is 3.20%. The Vorabpauschale for 2026 is deemed received for tax purposes on the first working day of 2027, namely 4 January 2027.

Basic Principle

Accumulating income in a Swiss account does not prevent German taxation

The Vorabpauschale is investment income under section 16 of the German Investment Tax Act (InvStG). It is intended to provide ongoing minimum taxation of investment funds even where a fund distributes none or only part of its income.

Accumulating ETFs in particular can therefore give rise to German tax even though no corresponding distribution has been credited to the Swiss bank account.

Holding the fund units with a Swiss bank generally does not change this treatment.

Section 18 InvStG

The Vorabpauschale is not simply the base rate applied to the account value

The first step is to calculate a statutory base return (Basisertrag). Distributions during the calendar year are then taken into account.

The fund’s actual performance also limits the base return.

  • Determine the value at the beginning of the year
  • Apply 70% of the base rate
  • Observe the limit based on actual performance
  • Take distributions into account
  • Apply any pro rata reduction for the acquisition year
  • Then consider the partial exemption

Calculation

How the Vorabpauschale is generally calculated

Under section 18(1) InvStG, the base return is calculated first. The starting point is the redemption price of the investment fund unit at the beginning of the calendar year.

Opening value × 70% × base rate = base return The base return is also capped by the actual change in value plus distributions.
Base return − distributions = Vorabpauschale A Vorabpauschale arises only to the extent that distributions fall below the applicable base return.
01

Opening value

Redemption price or applicable stock exchange or market price at the beginning of the calendar year.

02

Base rate

The German Federal Ministry of Finance publishes the applicable interest rate for each calendar year.

03

Performance cap

The base return must not exceed the positive total of the actual change in value and distributions.

04

Distributions

Distributions reduce the Vorabpauschale.

Calendar Year 2026

Base rate for 2026: 3.20%

The German Federal Ministry of Finance (BMF) has announced a base rate of 3.20% for calculating the Vorabpauschale for 2026.

Since section 18 InvStG uses only 70% of this base rate to calculate the base return, the resulting factor for 2026 is 2.24% of the relevant opening value.

2026 calculation Value
Base rate for 2026 3.20%
Statutory factor 70%
3.20% × 70% 2.24%
Maximum base return before the performance cap 2.24% of the opening value

The base rate changes each year

The 3.20% rate must therefore not automatically be used for earlier or later calendar years. The relevant rate is the one published by the BMF for the calendar year concerned.

Distributing Funds

Distributions reduce the Vorabpauschale

A Vorabpauschale arises only to the extent that the investment fund’s distributions fall below the applicable base return.

A distributing ETF can therefore also give rise to a Vorabpauschale if its distributions are lower than the applicable base return.

0

No distribution

For an accumulating fund, the entire applicable base return may become the Vorabpauschale.

<

Distributions below the base return

The difference may remain as a Vorabpauschale.

≥

Sufficient distributions

If distributions equal or exceed the base return, no Vorabpauschale generally arises.

Partial Exemption

A partial exemption can also apply to the Vorabpauschale

The Vorabpauschale is investment income. Consequently, the partial exemptions under section 20 InvStG must also be taken into account where the statutory conditions are met.

Fund type Partial exemption for a private investor Taxable portion
Equity fund 30% 70%
Mixed fund 15% 85%
Real estate fund 60% 40%
Foreign real estate fund 80% 20%

“ETF” does not automatically mean a 30% partial exemption

What matters is whether the particular ETF qualifies as an equity fund under the German Investment Tax Act. A bond ETF, for example, does not receive an equity fund exemption simply because it is traded on an exchange.

Swiss Custodian Bank

The practical issue: Swiss banks generally do not calculate the German Vorabpauschale

For a German securities account, the Vorabpauschale is generally taken into account through the German investment income withholding tax procedure.

A Swiss bank, however, is generally not a German domestic custodian. It therefore usually neither calculates the German Vorabpauschale nor deducts German investment income tax on it.

A Swiss account requires more independent calculation

German tax liability does not disappear merely because no German tax is withheld.

The necessary fund and price data must be prepared separately for the German tax return.

  • Identify the fund holdings
  • Determine opening and closing values
  • Record distributions
  • Apply the base rate for the relevant year
  • Determine the partial exemption
  • Document the Vorabpauschale
  • Reconcile a subsequent sale with the tax history

Swiss tax reports often do not include the German Vorabpauschale

Swiss tax values and taxable income follow a different system. A Swiss tax report is therefore a source of data, rather than a completed German investment fund tax calculation.

Acquisition During the Year

The Vorabpauschale is reduced by full months in the year of purchase

If a fund unit is acquired during the calendar year, section 18(2) InvStG reduces the Vorabpauschale by one twelfth for each full month preceding the month of acquisition.

Example: Purchase in July

Six full months precede the acquisition month

If the ETF is acquired in July, January through June are the six full months preceding the month of acquisition.

The otherwise calculated Vorabpauschale is therefore reduced by six twelfths in the acquisition year.

Do not calculate the reduction by individual days

The statutory reduction uses full months preceding the acquisition month. The specific purchase date within that month does not result in a further daily pro rata reduction.

Deemed Receipt Date

The Vorabpauschale for 2026 is recognised for tax purposes in 2027

Under section 18(3) InvStG, the Vorabpauschale is deemed received on the first working day of the following calendar year.

The BMF has expressly confirmed that the Vorabpauschale for the 2026 calendar year is deemed received on 4 January 2027.

2026

Calculation year

Price performance, distributions and the 2026 base rate determine the Vorabpauschale.

4 Jan

Deemed receipt

The Vorabpauschale for 2026 is deemed received on 4 January 2027.

2027

Tax assessment

For a Swiss securities account, it therefore generally needs to be included in the 2027 tax assessment.

Avoiding Double Taxation

Previously recognised Vorabpauschalen reduce the subsequent disposal gain

The Vorabpauschale is not an additional tax that simply remains on top of taxation of the full capital gain when the investment is eventually sold.

Section 19(1) InvStG requires the disposal gain to be reduced by the Vorabpauschalen recognised during the holding period.

The Vorabpauschale forms part of the fund holding’s tax history

Particularly for a Swiss securities account, annual records should therefore show which Vorabpauschalen were recognised for each fund position.

  • Document the annual Vorabpauschale for each position
  • Maintain clear records of the holding period
  • Account for securities account transfers
  • Preserve historical acquisition costs
  • Deduct recognised Vorabpauschalen when calculating the disposal gain
  • Then apply the partial exemption correctly

Recognised Vorabpauschalen are taken into account in full on sale

Section 19 InvStG expressly requires Vorabpauschalen recognised during the holding period to be taken into account in full when calculating the gain, irrespective of any partial exemption.

2026 Example

Accumulating equity ETF in a Swiss securities account

Simplified Example

Opening value of EUR 100,000

An individual who is tax resident in Germany holds an accumulating ETF in a Swiss securities account throughout 2026. The ETF meets the requirements for an equity fund.

Item Amount / Rate
Value at the beginning of 2026 EUR 100,000
Value at the end of 2026 EUR 110,000
Distributions in 2026 EUR 0
Base rate for 2026 3.20%
70% of the base rate 2.24%
Base return EUR 2,240
Actual increase in value EUR 10,000
Vorabpauschale EUR 2,240
Equity fund partial exemption 30%
Taxable amount EUR 1,568

Since the actual increase in value of EUR 10,000 exceeds the calculated base return of EUR 2,240, the performance cap does not reduce the amount in this example.

With a 30% partial exemption, 70% of the Vorabpauschale, or EUR 1,568, is taxable. The actual tax payable then depends in particular on the remaining savings allowance (Sparer-Pauschbetrag) and the investor’s personal tax circumstances.

Performance Cap

A smaller price increase can result in a lower Vorabpauschale

The calculated base return is not automatically the final Vorabpauschale.

It is capped by the positive amount resulting from the difference between the first and last redemption prices of the year, plus distributions.

Example

Opening value EUR 100,000 — closing value EUR 101,000

The initially calculated base return for 2026 would be EUR 2,240.

However, if the fund increased in value by only EUR 1,000 and made no distributions, the actual performance limits the base return to EUR 1,000.

Documents

Data needed for a Swiss securities account

ISIN

Fund identification

ISIN, fund name, unit class and fund domicile.

1 Jan

Opening value

Redemption price or relevant market value at the beginning of the year.

31 Dec

Closing value

Redemption price or relevant market value at the end of the year.

DIV

Distributions

Amounts and dates of distributions during the relevant calendar year.

BUY

Acquisition details

Acquisition date, number of units and historical acquisition costs.

TFS

Fund classification

Information on the investment policy and any applicable partial exemption.

Common Mistakes

Where the Vorabpauschale is often handled incorrectly for Swiss accounts

01

No distribution = no tax

The Vorabpauschale is overlooked for accumulating funds.

02

Copying the Swiss tax report

Swiss taxable income is treated as equivalent to German investment fund income.

03

Using the wrong base rate

A base rate from a different calendar year is applied.

04

Forgetting the 70% factor

The full base rate is used instead of 70% of that rate.

05

Ignoring the performance cap

The full base return is used despite lower actual fund performance.

06

Not deducting distributions

Income already distributed is not taken into account in the Vorabpauschale.

07

Forgetting the partial exemption

Income from a qualifying equity fund is taxed in full.

08

Double taxation on sale

Historical Vorabpauschalen are not taken into account when calculating the subsequent disposal gain.

Frequently Asked Questions

Vorabpauschale on ETFs held in a Swiss securities account

Do I have to pay tax on a Vorabpauschale for an ETF in a Swiss account?
Generally yes, if you are tax resident in Germany and the conditions of section 18 InvStG are met. The custodian bank’s location in Switzerland does not remove German investment fund taxation.
What is the base rate for 2026?
The base rate published by the German Federal Ministry of Finance for the 2026 Vorabpauschale is 3.20%. The statutory calculation of the base return uses 70% of this rate, equivalent to 2.24%.
When is the Vorabpauschale for 2026 taxed?
The Vorabpauschale for the 2026 calendar year is deemed received on the first working day of the following year: 4 January 2027.
Does a Vorabpauschale arise if the ETF falls in value?
The base return is limited by the actual change in value plus distributions. Where there is no positive excess amount, no positive Vorabpauschale generally arises.
Can distributing ETFs give rise to a Vorabpauschale?
Yes. If distributions are below the applicable base return, the difference may give rise to a Vorabpauschale.
Does the 30% partial exemption also apply to the Vorabpauschale?
Yes, if the fund meets the requirements for an equity fund under the German Investment Tax Act. For private investors, the equity fund partial exemption is generally 30%.
Is every ETF an equity fund?
No. ETF means an exchange-traded investment fund. For the German partial exemption, the fund’s tax classification is decisive.
What happens if I buy the ETF during the year?
In the acquisition year, the Vorabpauschale is reduced by one twelfth for each full month preceding the month of acquisition.
Does my Swiss bank deduct German tax on the Vorabpauschale?
Generally not. For a Swiss securities account, the German Vorabpauschale typically needs to be calculated separately for the income tax return.
Is the Vorabpauschale taxed again when I sell?
Under section 19 InvStG, the disposal gain is reduced by the Vorabpauschalen recognised during the holding period. This adjustment prevents those amounts from being included again in the full disposal gain.
Do I need to document the Vorabpauschale each year?
Ongoing documentation is particularly important for a Swiss securities account because recognised Vorabpauschalen are needed to calculate the eventual disposal gain correctly.
Is the Swiss annual tax report sufficient for the calculation?
Not necessarily. It may provide important fund and price data, but generally does not calculate the German Vorabpauschale under section 18 InvStG.

Germany–Switzerland Tax Advice

Do you hold ETFs or funds in a Swiss securities account?

We calculate Vorabpauschalen, review fund classification and partial exemptions, prepare Swiss bank documents for your German tax return, and maintain records of recognised Vorabpauschalen for subsequent disposal gain calculations.

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