AVD or ETF savings plan after tax: the honest comparison

Tilman Freyenhagen

Published on 15 June 2026 · Updated on 15 July 2026 · Managing Director & Partner, Alsterspree Verlag GmbH

The basic question: why the net comparison after tax is decisive

In the comparison between the new Altersvorsorgedepot and an unsubsidised ETF savings plan, only the net return after tax ultimately decides. Although the entire amount is taxed under deferred taxation when the Altersvorsorgedepot is paid out, while with the ETF savings plan only the realised capital gains are subject to capital gains tax, the Altersvorsorgedepot ends up ahead net in many scenarios, thanks to the compound-interest effect of tax deferral and the state subsidy. A purely pre-tax comparison is therefore misleading, since it completely ignores the substantial lever of deferred tax payment and the allowances over time.

• Tax deferral: in the Altersvorsorgedepot, assets grow tax-free during the accumulation phase, since no annual capital gains tax or Vorabpauschale applies.
• Taxation in retirement: payouts from the Altersvorsorgedepot are subject to your personal income tax rate, while with the ETF savings plan only the gains, after partial exemption, are subject to capital gains tax.
• State allowances: the direct state subsidy increases your accumulated savings from the outset and reinforces the compound-interest effect over the entire term.

The fallacy of nominal figures before tax

Anyone who compares only the nominal account values before tax overlooks the fundamentally different tax frameworks of the two systems. During the accumulation phase of the Altersvorsorgedepot, the annual taxation of dividends, interest and rebalancing is completely waived, so the capital can keep working undiminished. With the unsubsidised ETF savings plan, by contrast, tax on distributions or the annual Vorabpauschale can reduce the growth potential. The true financial impact of both options only becomes clear once the actual net payouts in retirement are calculated, taking your personal tax rate in retirement into account.

To calculate these complex effects precisely for your individual situation, our subsidy calculator helps with a transparent comparison of both investment paths. Calculations by Finanztip show that the substantial advantage of tax deferral and the state allowances often more than offsets the later deferred taxation in retirement, provided your personal tax rate in retirement is lower than the tax rate during your active working phase^[1].

Not investment advice within the meaning of § 1 (1a) no. 1a KWG. All mathematical calculations and comparisons are for general illustration only and are non-binding.

The Altersvorsorgedepot (AVD): how does deferred taxation work in retirement?

A key feature of the Altersvorsorgedepot, starting 1 January 2027, is the principle of deferred taxation^[2]. This means you benefit from tax relief and state subsidy during the accumulation phase, while the entire capital paid out in retirement becomes fully taxable. Unlike the unsubsidised ETF savings plan, where you pay in from already-taxed income and only have to tax the gains in retirement, with the subsidised account your personal tax rate applies to the full payout amount. This is the most common counter-argument against the account, which is why a closer look at the mechanics is essential.

The tax mechanics in direct comparison

During the accumulation phase, all dividends, interest and capital gains within the Altersvorsorgedepot remain tax-free, producing a substantial tax-deferral effect. Only on payout, from the statutory age threshold, does the tax office take its share. At that point, the payout is taxed as other income at your individual tax rate in retirement. Because this personal retirement tax rate is usually noticeably below the tax rate during your working life, this produces a systemic advantage over a conventional securities account.

Whether the Altersvorsorgedepot ends up ahead net despite the taxation of the entire capital depends decisively on your term, the level of the state allowances and your tax rate in retirement. Use our subsidy calculator to work through these effects in detail for your personal situation. For self-directed savers who want to structure their retirement provision digitally and cost-efficiently, the Vorsorgedepot-Lotse information portal offers source-based, neutral guidance on the way to the right decision. Not investment advice within the meaning of § 1 (1a) no. 1a KWG. The calculations and tax parameters shown are for illustration only and cannot replace individual tax advice.

The unsubsidised ETF savings plan: how capital gains tax applies to price gains

With the unsubsidised, private ETF savings plan, you invest capital from your already-taxed income. The decisive tax advantage shows up later, in the withdrawal phase: unlike with subsidised retirement provision, it's not the entire payout that's taxed here, but only the capital gains actually earned. This tax treatment means your hard-earned principal remains untouched on payout. Taxation follows the clear rules of German capital gains tax, which makes the calculation particularly transparent for self-directed savers^[3].

• Capital gains tax: the tax on realised price gains is a flat 25 percent.
• Solidarity surcharge: on top comes the solidarity surcharge at 5.5 percent of the tax liability, resulting in a combined tax rate of 26.375 percent (plus church tax where applicable).
• Partial exemption: for classic equity ETFs with an equity allocation of at least 51 percent, 30 percent of gains are tax-free, so effectively only 70 percent of gains are subject to capital gains tax.

Thanks to the 30 percent partial exemption, the effective tax rate on gains from a pure equity ETF drops to around 18.46 percent (excluding church tax)^[3]. At first glance, this looks considerably more attractive than the full deferred taxation of the Altersvorsorgedepot. Even so, detailed calculations show that, over long terms, the ETF savings plan often comes off worse in comparison despite this partial exemption, due to the lack of tax deferral and state subsidy. Further mathematical detail and comparisons of the tax effects can be found in our knowledge section. For an individual calculation of your personal tax situation across both models, our digital subsidy calculator is available, mapping these factors transparently. Please note: all calculations and tax comparisons are for illustration only and do not constitute investment advice within the meaning of § 1 (1a) no. 1a KWG.

Tax deferral during the accumulation phase: why the AVD can grow tax-free upfront

While a regular, unsubsidised ETF savings plan regularly incurs tax deductions during the accumulation phase, the new Altersvorsorgedepot benefits from complete tax deferral. That means all returns, dividends and realised gains within the account remain tax-free for the entire savings period and can therefore be reinvested undiminished. For self-directed savers building wealth over the long term, this is a decisive lever for making the most of the compound-interest effect.

The compound-interest effect from the absence of the Vorabpauschale

With a classic securities account, investors have to pay the so-called Vorabpauschale each year on undistributed gains, once the Sparerpauschbetrag of currently 1,000 euros for single people is exceeded. This ongoing tax burden continuously drains liquidity from the investment process that's then lost to the compound-interest effect. In the state-subsidised Altersvorsorgedepot, by contrast, no capital gains tax or Vorabpauschale applies at all during the accumulation phase, as financial experts also point out^[2]. Every year in which tax is deferred and reinvested instead widens the Altersvorsorgedepot's lead over the unsubsidised savings plan. With our subsidy calculator you can calculate exactly how this compound-interest advantage pays off over your personal term.

The state subsidy: how allowances and the Sonderausgabenabzug boost the net advantage

While with a conventional ETF savings plan every euro comes from already-taxed income, from 2027 the Altersvorsorgedepot gives you a helping hand through a direct state subsidy. These allowances act like an immediate return lever, since they flow straight into the account and benefit from the compound-interest effect there. According to Finanztip analysis, this extra capital, combined with tax deferral, means the Altersvorsorgedepot frequently ends up ahead net over long terms, despite the later full taxation of payouts^[1]. Detailed background reports on these tax mechanisms can be found in the knowledge section.

• Grundzulage of 50 percent on contributions up to 360 euros a year (maximum 180 euros)
• Additional subsidy of 25 percent on further contributions up to 1,800 euros (maximum 360 euros)
• Maximum state Grundzulage of 540 euros a year in total on the full personal contribution
• Kinderzulage of up to 300 euros per child, on a one-to-one match for every euro paid in
• One-off Berufseinsteigerbonus of 200 euros for savers under 25 when the contract starts

Besides the direct allowances, you can claim the contributions up to the statutory maximum as special expenses (Sonderausgaben) on your tax return. As part of the Günstigerprüfung (favourability check), the tax office examines whether the tax saving exceeds the allowances already received. If it does, you get an additional tax refund, which further lowers the net cost of your retirement provision. To calculate this leverage precisely for your personal situation, the subsidy calculator is available to you. Please note that all calculations and projections mentioned are for illustration only. Not investment advice within the meaning of § 1 (1a) no. 1a KWG.

The net comparison table: who comes out ahead?

The debate around the new Altersvorsorgedepot mostly centres on one key aspect: the tax dilemma in the payout phase. While with the classic, unsubsidised ETF savings plan you only pay capital gains tax including partial exemption on price gains in retirement, the subsidised Altersvorsorgedepot is subject to deferred taxation. This means the entire payout amount is taxed at your then-applicable personal income tax rate. To find out which route is more advantageous net for self-directed savers, the effects of the state allowances, the tax deductibility and the tax deferral need to be precisely weighed against each other over the entire term.

The mathematical comparison shows that the Altersvorsorgedepot, despite full taxation in retirement, comes out ahead net in many scenarios^[3]. This is due to the so-called tax-deferral effect: because no tax applies to dividends or price gains during the accumulation phase, the entire capital, including the state allowances, keeps working undiminished. Over a term of 30 years or more, this compound-interest lever often fully offsets the disadvantage of deferred taxation in retirement, especially since the personal tax rate in retirement is usually noticeably lower than during working life. For an exact calculation of your individual situation, you can use the subsidy calculator or read up in detail in our knowledge section.

Note: all calculations and tax assumptions are for illustration and do not constitute investment advice within the meaning of § 1 (1a) no. 1a KWG.

The role of your personal tax rate in retirement

The most common counter-argument against the state-subsidised Altersvorsorgedepot (AVD) concerns taxation on payout. While with the conventional, unsubsidised ETF savings plan only the gains earned are subject to capital gains tax plus solidarity surcharge and, where applicable, church tax, the subsidised Altersvorsorgedepot is taxed under deferred taxation on payout. This means the entire payout amount — both your own contributions and the state allowances and all securities gains — must be taxed at your personal income tax rate^[1].

This drawback, however, is considerably softened once you look more closely at your personal tax rate in retirement. During working life, the marginal tax rate for many self-directed savers is often 30 percent, 42 percent or even higher, due to higher earned income. In retirement, taxable income is usually considerably lower, since the statutory pension or other retirement income falls short of the previous salary. As a result, your personal tax rate in the payout phase also drops noticeably, which considerably eases the burden of deferred taxation on the Altersvorsorgedepot.

For an exact assessment of this tax effect, the interplay of tax deferral and state subsidy is decisive. Because you can claim the contributions to the Altersvorsorgedepot for tax purposes during the accumulation phase, you're left with more net capital to invest. This additional capital works with strong compound interest over the decades in the account. Even when taxes fall due in retirement, the net result in many calculations is still above that of a classic ETF savings plan, thanks to this lever. To analyse your individual situation precisely, it's worth a look at our subsidy calculator, which sets out these tax effects transparently. You'll find further mathematical detail in our Altersvorsorgedepot guide.

Not investment advice within the meaning of § 1 (1a) no. 1a KWG. All calculations, tax-rate assumptions and model calculations are for illustration and information only. They do not replace personal tax or financial advice from qualified experts.

Decision guide for self-directed savers: which route suits you?

For digitally minded self-directed savers, the personal choice between a classic, unsubsidised ETF savings plan and the state-subsidised Altersvorsorgedepot largely depends on your own need for flexibility and your individual tax rate in retirement^[2]. While an unsubsidised ETF savings plan offers maximum freedom and capital can be withdrawn at any time with no adverse tax consequences, the Altersvorsorgedepot ties up the assets consistently until you reach retirement. In exchange, the subsidised account gives you the benefit of state allowances and tax deferral during the savings phase, which triggers a substantial compound-interest effect over long terms.

Flexibility, suitability for the self-employed, and the effective-cost ceiling

Besides sheer availability, other criteria also play an important role in your decision. The Altersvorsorgedepot, for example, is excellent for the self-employed and freelancers, since as part of the private retirement provision reform from 2027 they're fully eligible for subsidy and can flexibly adjust their savings contributions to fluctuating income. An important plus point for self-directed savers is also the statutory cost ceiling: effective costs for certified standard accounts are capped at a maximum of 1.0 percent a year^[2]. This protects your return from the excessive fees that made many Riester contracts unprofitable in the past.

• ETF savings plan: full flexibility at any time and free disposal over the entire capital, in exchange for the regular capital gains tax on all realised price gains.
• Altersvorsorgedepot: tax-free reinvestment of all dividends and price gains, plus direct state allowances, in exchange for capital tied up until retirement.
• Cost protection: the statutory effective-cost ceiling of a maximum of 1.0 percent a year secures the return within the state-certified Altersvorsorgedepot.

To work out the exact impact on your personal net return in detail, you can easily fine-tune your investment strategy with the subsidy calculator. Our calculation tool shows you, in a direct after-tax comparison, how the different tax effects, allowances and cost burdens play out on your final capital over the long term. Additional well-founded analysis and practical guides can also be found in our knowledge section, which is always there as your reliable and neutral guide.