Trade Republic Taxes and the Vorabpauschale, Step by Step

Which tax entries show up in the Trade Republic export

The CSV export from Trade Republic contains several technically different kinds of tax lines. Before any total makes sense, you need to tell them apart.

• Capital gains tax on sales: charged on realized gains from FIFO-matched sales, either deducted within the trade line or booked as a separate tax line in the same period.
• Withholding tax on dividends: foreign issuers withhold tax at source, and this appears separately from the German capital gains tax charged on the same payout.
• Vorabpauschale: a German tax rule that pre-taxes the assumed annual gain of accumulating funds. In the export it appears as its own line with no share count and no purchase price, because it does not represent a trade.
• Loss-pot refunds: positive tax entries booked when, at year end, a loss pot is offset against tax already paid, easy to mistake for an ordinary credit in the export.

The German loss pots explained

For German capital gains tax, your broker keeps two separate loss pots. The stock pot (Aktien-Topf) holds only losses from selling individual shares. The other pot (Sonstiger Topf) holds all remaining losses, including those from ETFs, funds and bonds.

The restriction works in one direction only. Under section 20(6) sentence 4 of the German Income Tax Act, losses from share sales can only offset gains from share sales, not ETF gains. The reverse is allowed, because losses in the other pot, for example from ETF sales, do reduce gains from share sales. That is why you can owe tax on ETF gains while sitting on losses from individual shares in the same year. This split is not stated explicitly on the account statement, but it can be traced from the FIFO-realized results per security type in the export.

Trade Checker shows realized gains and losses per year from the FIFO calculation, split by security type, so you can see how much flows into each pot without sorting the lines yourself.

The Vorabpauschale and how it is calculated

The Vorabpauschale is an annual advance tax on an assumed minimum return from funds and ETFs. It does not only affect accumulating funds, it affects any fund whose distribution during the year stays below that assumed minimum. Without the rule an accumulating ETF would go untaxed for years, because its income stays inside the fund. It is collected in January of the following year, usually as a direct debit from the cash account.

The calculation is set out in section 18 of the German Investment Tax Act and has four steps.

1. Work out the base return, which is the redemption price of the unit at the start of the year times the base interest rate times 70 percent. The German Federal Ministry of Finance publishes the base interest rate every January, derived from the yield on long-dated federal bonds.
2. Subtract the distributions paid during the year. If a distributing ETF pays out at least the base return, no Vorabpauschale is due at all.
3. Cap the result at the unit's actual increase in value during the calendar year. If the price fell or stayed flat, the Vorabpauschale is zero.
4. Apply the partial exemption, 30 percent for equity funds, and tax what remains at 25 percent capital gains tax plus the solidarity surcharge, to the extent your annual tax-free allowance is used up.

Spotting the Vorabpauschale in the export and offsetting it

Two rules follow from that calculation, and they explain most of the surprises. No increase in value during the year means no Vorabpauschale, and a large price gain alone does not mean a large Vorabpauschale, because the base return stays the ceiling.

In the Trade Republic export the Vorabpauschale appears as its own row with no quantity and no purchase price, because no buy or sell took place. It therefore shows up in no position overview, only in the tax view.

When you later actually sell the fund, the Vorabpauschale you already paid tax on is deducted from the tax on the real gain, so the same increase in value is not taxed twice.

Checking the export against your annual tax certificate

If the totals do not match, check the time period first. The annual tax certificate covers one calendar year, while your export contains more or fewer entries depending on the period you chose.

1. Upload your full CSV export to Trade Checker and open the tax view for the relevant year.
2. Compare the capital gains tax shown there with the total on your annual tax certificate (Jahressteuerbescheinigung).
3. Check withholding tax and Vorabpauschale separately, since the certificate usually lists them on their own lines.
4. If figures differ, check whether the export contains a loss-pot refund or a correction booking that the certificate assigns differently.

What this check does not cover

Trade Checker recalculates the tax entries from your export, but it is not tax advice. A German tax-free allowance (Freistellungsauftrag) is not taken into account, because it does not appear in the CSV export. Special rules for derivatives (Termingeschäfte) are not covered either.

The commonly known German rates, a 25 percent flat tax plus solidarity surcharge and a 30 percent partial exemption for equity funds, serve as general context only and do not replace a review by a tax advisor or the tax office.

Frequently asked questions

Sources

• Section 18 of the German Investment Tax Act on the Vorabpauschale
• Section 20 of the German Income Tax Act on investment income and loss offsetting
• German Federal Ministry of Finance on the flat-rate capital gains tax