ETF Partial Exemption

Since 2018, ETFs are taxed differently than individual stocks. The upside: a portion of your ETF returns is automatically tax-free – between 15% and 60% depending on fund type. This is called partial exemption.

How Partial Exemption Works

Depending on the fund type, a certain percentage of returns is tax-exempt:

ETF Classification

BubbleTax automatically classifies your ETFs and applies the correct partial exemption rate. You can also adjust the classification manually.

Advance Lump Sum (Vorabpauschale)

If your ETF distributed less than the so-called base return during the year, the difference is taxed as an advance lump sum (Vorabpauschale) – a minimum taxation under § 18 InvStG. The Vorabpauschale is deemed received on the first business day of the following year.

BubbleTax calculates the Vorabpauschale automatically based on the Bundesbank base interest rate, your ETF holdings, and actual distributions – including correct partial exemption.