Glossary › Vorabpauschale (advance lump sum)
The Vorabpauschale is a notional income that German investors are taxed on each year when a fund distributes less than a statutory minimum return.
Since the 2018 investment tax reform, accumulating funds are also meant to be taxed annually. For this a base return is calculated: the redemption price at the start of the year times 70% of the base rate published each year by the Federal Ministry of Finance. The year’s distributions are deducted from this; at most the actual increase in value is taxed. The amount is deemed received on the first working day of the following year, and the custodian bank collects the tax.
The Vorabpauschale is not an additional tax but an advance payment: on sale it is deducted from the gain. It does cost liquidity, however, because tax falls due without any money flowing from the fund. Whether a partial exemption applies depends on the fund’s tax classification. The rules only apply to investors taxable in Germany.
60 of the 139 active funds reinvest income only, 55 offer accumulating and distributing share classes, 14 only distribute. For accumulating units, German investors are regularly charged a Vorabpauschale as long as the base rate is positive and the fund gains in value.
Accumulating funds marketed in Germany (alphabetical) · as at 16 Oct 2026