ETF Partial Exemption
For equity ETFs, 30 % of all current and realized income is automatically tax-free. BubbleTax classifies your ETFs and applies the rate.
Since 2018, ETFs are taxed differently from individual stocks. Instead of the full Abgeltungsteuer on every distribution, a partial exemption (Teilfreistellung) per § 20 InvStG applies: between 0 % and 60 % of income stays tax-free depending on fund type. On top of that comes the advance lump sum (Vorabpauschale), a minimum taxation for accumulating funds. BubbleTax does both automatically; both belong in Anlage KAP-INV.
- 1.Gross distributionequity ETF, at least 51 % stocks€100.00
- 2.Partial exemption 30 %§ 20 Abs. 1 InvStG−€30.00
- 3.Taxable amountbasis for KAP-INV line 4€70.00
- 4.Abgeltungsteuer 25 % × €70plus solidarity surcharge, no allowance€17.50
- =→ Effective tax rateinstead of 25 %, thanks to partial exemption17.5 %
How the amount in KAP-INV emerges
BubbleTax classifies every ETF, determines the correct rate and applies it to all annual income: distributions, advance lump sum and capital gains.
- 01
ETF classification from WM data service or fund documents: equity, mixed, real estate or other fund.
- 02
Partial-exemption rate assigned: 30 %, 15 %, 60 % or 0 % per § 20 InvStG.
- 03
Rate applied to all income: distributions, capital gains and advance lump sum, each at the ECB rate in euros.
- 04
Reporting in Anlage KAP-INV in the lines matching the fund type.
Partial-exemption rates by fund type
The rate depends on the fund's equity quota, fixed in the fund's investment terms. Changes take effect from the next financial year.
| Fund type | Rate | Examples |
|---|---|---|
Equity funds at least 51 % stocks per investment terms | 30 % | MSCI World, S&P 500, Stoxx Europe 600, thematic ETFs |
Mixed funds at least 25 % stocks | 15 % | classic 60/40 strategies, lifecycle funds |
Real-estate funds (domestic) predominantly German real estate | 60 % | open-ended German real-estate funds |
Real-estate funds (foreign) predominantly foreign real estate | 80 % | global REIT funds in special-rule form |
Other funds bond, money-market, commodity funds | 0 % | bond ETFs, money-market ETFs, broad commodity ETFs |
Advance lump sum: minimum taxation for accumulating funds
If your ETF distributed less than the so-called base income (Basisertrag) during the year, the difference is taxed as advance lump sum. It is deemed received on the first business day of the following year (§ 18 InvStG).
BubbleTax computes the advance lump sum automatically from the Bundesbank base rate, your ETF holdings and actual distributions, including partial exemption.
Important to know
The advance lump sum is only due when the base rate is positive. In low-rate years (most recently 2021), it falls away entirely. For 2024, the base rate is 2.29 %.
§ 20 Investmentsteuergesetz (InvStG) governs partial exemption per fund type. § 18 InvStG governs the advance lump sum. Distributions, capital gains and advance lump sum are reported separately per fund type in Anlage KAP-INV, so the tax office can apply the rate correctly. BubbleTax generates the entries automatically and follows strictly the rates of the currently valid InvStG.