The new tax rules for investment funds

In 2018, the tax rules for investment funds changed. The good news is that most private investors will not have to pay more tax following the reform. The most important facts at a glance:

  • Since January 1, 2018, German funds have had to pay taxes of 15 percent on certain domestic income from fund assets. This is new - until then only investors were taxed, but not German funds.
  • Since then, the funds have had to pay tax on dividends, rental income and profits from the sale of real estate if this income comes from Germany.
  • For private investors, the bottom line tax burden is not higher than before 2018. They receive compensation in the form of partial exemptions from the final withholding tax. The amount of the tax-free portion depends on the type of fund.
  • According to calculations by the Federal Ministry of Finance, fund investors who do not pay taxes on income from capital assets and thus do not benefit from tax exemptions only pay an average of just under three euros more per year.
  • The protection of fund units acquired by investors before 2009 has ceased to apply since 1 January 2018. For most private investors, however, the consequences of the abolition will be significantly mitigated by a tax-free amount of EUR 100,000.

Pre-determined Flat Rate Tax (Vorabpauschale)

At the beginning of 2019, many fund investors noticed a debit on their current or settlement account due to "fund taxation". For the first time, the so-called Flat Rate Tax (Vorabpauschale) was applied to the performance of reinvesting or partially distributing funds for 2018.

Explanation video (available in German only)

Download as .mp4 (40MB)

Brochure

Our brochure "Investment Tax Reform Compact" provides an overview of the key points of the reform and answers the most frequently asked questions as comprehensibly as possible (available in German only).

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