How To Avoid Taxes ("Vorabpauschale") When Investing In ETFs in Germany

How To Avoid Taxes ("Vorabpauschale") When Investing In ETFs in Germany | PerFinEx Investing

Рет қаралды 6,944

Күн бұрын

If you are investing in ETFs or mutual funds in Germany, you may have to pay capital gains taxes on profits this year, even if you did not make any profits. 😱
In this PerFinEx investing video, we explain what preliminary tax ("Vorabpauschale") is and how you can avoid paying taxes when investing in ETFs in Germany. We discuss the 2 different types of ETFs - accumulating and distributing - and explain how they differ in terms of dividend payments.
We also compare the returns on investing in these ETFs and explain why regulators created a preliminary tax ("Vorabpauschale") for accumulating ETFs. We then show you how to calculate your preliminary tax and how to avoid paying it.
Watch this video to learn more about investing in ETFs and mutual funds in Germany and how to maximize your government benefits.
Read the full article on our website here:
perfinex.de/avoid-paying-vora...
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00:00 ETF Investors Have To Pay Taxes Without Making A Profit
00:30 Difference Between Accumulating ETFs Vs. Distributing ETFs
01:45 Why Germany Introduced The Preliminary Tax ("Vorabpauschale")
02:56 How To Calculate Your Preliminary Tax ("Vorabpauschale")
05:30 Axel's Personal Opinion Of The Preliminary Tax ("Vorabpauschale")
05:59 How To Avoid The Preliminary Tax ("Vorabpauschale")
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Пікірлер: 38

@PerFinEx Жыл бұрын

Let's avoid taxes together: perfinex.de/meeting

@cenk82 4 ай бұрын

Well, I catch it "until you take out of the pension", which means even if 100 years passed from the initial investment to the ETF, any amount of appreciation (capital gains) will be taxed at least 25% by the Finanzamt. Therefore, you need to check, IMHO, either having an apartment for rent, as it is tax free after 10 years, or crypto currency investment as it is tax free after 1 year. Am I right? 🙂

@amirhosseinnazary3498 11 ай бұрын

Great video, thanks

@mbeeck Жыл бұрын

Great video

@JonathanHenkels 2 ай бұрын

To be fair, when cash in paid out in dividends and interest it is taxed even in the US - there is no such things as a mutual fund or ETF that can avoid paying tax for income it receives. This was a nice tax loophole that unfortunately closed, but its not the worst things I've ever seen. Good video explaining the Vorabpauschale!

@knusper72 3 ай бұрын

Do we need to pay Vorabpauschale and capital gain tax (during sell) as well?

@enb1440 Жыл бұрын

Great video! I have one question, does this kind taxation apply to zero coupon bonds as well? Let's say I buy a 15 year bond that gives 0% dividend and costs 70 per share. The taxes will be required just at the end of the 15 year period, or should I pay taxes each year on this kind of bond on the virtual profit (30% divided in 15 years)? Thanks

@PerFinEx Жыл бұрын

As you make no profits in your example, there is no preliminary tax („Vorabpauschale“). 👍

@enb1440 Жыл бұрын

@@PerFinEx the bond on the market, will probably rise year by year to match the value 100 at the end of the period. So year to year the increase in value would be similar to accumulating ETF, hence my doubt.

@marinhobrandao Жыл бұрын

May I suggest you a video, comparing main low cost brokers, such as Degiro, Scalable Capital and Trade Republic? It would be nice and helpful, as it’s sometimes difficult to find out what’s better cost benefit option.

@PerFinEx Жыл бұрын

Great idea! We'll put it on the list.

@joaovilaverde3117 Жыл бұрын

Simple overview: - Degiro Pros: You can find pretty much any stock, etf and probably derivatives you can imagine. Cons: It's not a German based broker so there's no direct integration with the Finanzamt. In other words, it might be a headache to take care of the taxes... - Scalable: Pros: You can pay a subscription of 35 euros year and you don't pay any transaction fees on transactions over 250 euros. Cons: You have to pay fees on transactions under 250 euros... - Trade Republic: Pros: They currently give you 2% on cash sitting in your account (whereas scalable gives you 2.3% but you must be subscribed to one of their most expensive premium plans...) Cons: You always pay a transaction fee no matter what (maybe expect saving plans). In summary, I'd exclude degiro right off the bat because of the taxes thing. I have both Scalable and Trade Republic because they both offer things I want, but if I had to pick one I'd definitely go with Scalable. This ain't broker advice, I'm just a random dude writting a comment on youtube. Please do your own due diligence.

@jjsdf7sdfhj-xy1lg 6 ай бұрын

What happens when you sell at a loss? Do you get a credit to apply to future gains? Also, what happens if you have a virtual gain $100 in year 1, and then year 2 sell for $900. Do you get a rebate on the tax you pre-paid in year 1?

@rclakmal 6 ай бұрын

Are there private pensions that allows lump sum withdrawal of our entire contribution +profit - taxes without age restrictions?

@PerFinEx 6 ай бұрын

Yes, pensions in level 3 allow lumpsum payout. After the age of 62 you will receive additional tax benefits when withdrawing (either monthly pension or lumspum).

@user-up8co6tu2p Жыл бұрын

Great video! However, I believe there is an error in the calculation: 17,85€ would be the Vorabpauschale for 1000€ Fictional Profit, not for €100. Am I wrong?

@PerFinEx Жыл бұрын

Thank you for double-checking our numbers. The preliminary capital gains tax („Vorabpauschale“) is based on the invested amount on Jan 1 of any given year, not on the fictional profit during that year. Therefore, the Vorabpauschale for 1.000€ invested is always 17,85€ no matter how much profit you make. Meaning both Axel and you are correct. 👍

@ireallyamayuube 6 ай бұрын

Hi@@PerFinEx, thanks for this explanation, but in the video you show the calculation based on the fictional profit (100), not the initial amount (1000)... if the initial amount is the only thing that counts, why do we even need to consider the 100?

@glbong42 Жыл бұрын

This pre-tax is really bullshit...

@ireallyamayuube 6 ай бұрын

Does the fact that they are counted from Jan 1 means that if I buy more share on, let's say, the 1st March, those won't count until the next year?

@mohammadheidari1888 6 ай бұрын

not an expert but I don't think it works like that. they will consider how much money was invested during the tax year and how much was the profit overall and then calculate the tax.

@alessandropia7814 6 ай бұрын

Great video! In case I will move to another country without selling my ETFs. Will the Vorabpauschale be returned to me?

@PerFinEx 6 ай бұрын

Why would the Vorabpauschale be returned to you in that case?

@alessandropia7814 6 ай бұрын

@@PerFinEx Once I sell the ETF in Germany I pay less taxes on the capital gain since I already paid taxes on it during the previous years for the Vorabpauschale. But, let's say that before selling the ETF, I will change my tax residence in another country. When I sell the ETF in the other country, how can I keep track of the Vorabpauschale to avoid double taxation?

@HL-uw7fk 6 ай бұрын

What if your profit is 0% because ETF didn’t grow at all, but you were paying in money whole year, so sum of money at the end of the year will be bigger because of your monthly payments. It will appear like profit to Finanzamt and you will be taxed this way? Based on your video, if Im not mistaken, they just look 1st January total sum vs 31 December and if it’s bigger you pay preliminary tax?

@mohammadheidari1888 6 ай бұрын

i'm not an expert but it does not work like that. they can check that the money was your invested money and not part of the profit.

@HL-uw7fk 6 ай бұрын

@@mohammadheidari1888 thanks, I hope this is the case 😂 I also expect it to be like this to be honest…

@Sabrina-ll6lo 10 ай бұрын

Does this only applies if your depot is in Germany? Thanks

@PerFinEx 10 ай бұрын

This applies as long as you are a tax resident of Germany, independent of where your Depot is.

@casdio Жыл бұрын

What happens if we sell at loss? Using your example: Jan 2023 I have 1000e Jan 2024 I have 1100e I pay 3.30e taxes. What if in Jan 2025 I only have 900e and sell at 100e loss?

@johnsonbenson5779 Жыл бұрын

@KATHIMORGAN1 is her user name for help.

@mohammadheidari1888 6 ай бұрын

no tax, no deductions. you just lose money.

@saliafzal 6 ай бұрын

Hello Sir, I wanted to clarify one small thing. I am a doctoral student in Germany and receive tax-free stipend. Meanwhile, I am trading in US stock market with IBKR broker. I am Pakistani national. My capital gains for 2023 is less than 1000 euros. Should I file this year's tax just because I am trading stocks? Because my stipend is already tax-free and my capital gains for this year is also tax free.

@mohammadheidari1888 6 ай бұрын

he said in the vid if you have less than 1000 in profits it is tax free. Enjoy

@alextibrea8850 9 ай бұрын

Should I invest in Dist or Acc, iShares S&P 500 USD ?

@gdi4695 11 ай бұрын

If I understood correctly if I have a profit of 1000 EUR and it doubles every year (absurd case I know but follow me) that would mean that after 10 years I would have just in profits 1.024.000, just over a millionEUR, that means 1024000*2.55%*0.7*0.7*26,375% = 3374EUR which would be the taxes I would have to "preventively" pay for that year right? even if I sum the whole taxation for the 10 years together it would be 6756EUR which I don't find that bad. I am of course also against this preventive tax. Did I understand correclty? thanks a lot!

@jjsdf7sdfhj-xy1lg 6 ай бұрын

What if you sell at a loss? Can that offset other gains? Can you carryover losses to future years?