Does the advance lump-sum tax apply to the Altersvorsorgedepot?

Tilman Freyenhagen

Published on 25 July 2026 · Managing Director & Partner, Alsterspree Verlag GmbH

Advance lump-sum tax in the Altersvorsorgedepot: the short answer

No — in the new state-subsidised Altersvorsorgedepot, no advance lump-sum tax applies throughout the entire accumulation phase. While in a freely funded securities account you have to pay tax each year on accumulating fund gains under § 18 of the Investment Tax Act (Investmentsteuergesetz, InvStG), the statutory framework of the Altersvorsorgereformgesetz (Pension Reform Act) shields your returns completely from ongoing taxation^[1]. All dividends, interest and realised price gains stay in the account gross, and are reinvested with no deduction for capital gains tax or advance lump-sum tax. The total capital is only subject to deferred taxation later, in the payout phase, at your personal income tax rate.

The tax distinction in detail

For many self-directed private investors and ETF savers, the advance lump-sum tax is a familiar factor in a standard account. It's calculated at the start of each year based on the Deutsche Bundesbank's base interest rate, to tax theoretical increases in value of accumulating funds in advance. This either reduces the available saver's allowance or requires a direct debit from the settlement account. In the Altersvorsorgedepot, this mechanism doesn't apply at all. As a result, the full earning power of your investment is preserved over the entire investment horizon.

Suspending ongoing taxation produces a noticeable tax-deferral effect. The invested capital grows unhindered, which can make a substantial difference over long terms for retirement saving. If you compare the Altersvorsorgedepot specifically against an unsubsidised account, the tax comparison shows the exact mathematical effects of this compound-interest advantage. Note on context: all tax presentations and comparisons are for transparent information and general guidance only. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

What the advance lump-sum tax means in a normal ETF account

In a regular, taxable securities account, accumulating and partially distributing ETFs are subject to the advance lump-sum tax under § 18 of the Investment Tax Act (InvStG)^[2]. This mechanism was introduced with the investment tax reform to ensure a flat minimum level of taxation on returns at the investor level. The legislator's aim is to offset the tax advantage that intra-year accumulation would otherwise have over distributing funds. In the state-subsidised Altersvorsorgedepot, however, this tax logic doesn't apply: during the accumulation phase, all returns and increases in value stay completely tax-free, so no advance lump-sum tax is due.

Calculation methodology via the BMF base rate

The size of the advance lump-sum tax is tied to the level of interest rates. The calculation basis is the so-called base return (Basisertrag) of an investment fund. This is worked out by multiplying the fund unit's redemption price at the start of the year by 70 percent of the base rate, which the Federal Ministry of Finance (BMF) sets based on the Deutsche Bundesbank's interest-rate structure data^[3]. The base return is capped at the ETF's actual increase in value plus distributions during the calendar year. If performance is negative, or if distributions already cover the base return, no advance lump-sum tax is assessed.

For ETF investors, the advance lump-sum tax creates a regular liquidity need in a normal account. The custodian bank automatically deducts the capital gains tax due, plus solidarity surcharge and, where applicable, church tax, from the settlement account at the start of the following year. When an investor is building wealth for retirement, this ongoing tax deduction reduces the capital available for reinvestment. The Altersvorsorgedepot, by contrast, allows a complete deferral of tax until retirement. As our neutral ETF savings plan comparison shows, doing away with the annual advance lump-sum tax noticeably strengthens the long-term compound-interest effect. (Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.)

Tax treatment of the accumulation phase in the Altersvorsorgedepot

In the state-subsidised Altersvorsorgedepot, no advance lump-sum tax under § 18 of the Investment Tax Act (InvStG) applies during the entire accumulation phase^[1]. Income from investment funds and ETFs, such as distributions, interest and realised price gains, stays fully exempt from capital gains tax until the retirement phase begins. While investors in a regular ETF savings plan have to keep liquidity ready at the start of every calendar year for any advance lump-sum tax, the Altersvorsorgedepot shields the invested assets seamlessly. By law, the tax treatment is systematically shifted to the later payout phase.

Full tax deferral strengthens the compound-interest effect

Doing away with ongoing taxation creates a noticeable liquidity advantage while building your account. Returns stay in the accumulation process in full and go on to generate returns of their own. Even if you realise gains in the Altersvorsorgedepot through regular rebalancing or switching fund units, this doesn't trigger an automatic tax deduction^[4]. The entire capital thus keeps working without return-reducing interruptions from the tax office. Only once deferred taxation kicks in in old age are the payouts taxed at your then-applicable personal income tax rate.

This tax shield fundamentally distinguishes the state-subsidised Altersvorsorgedepot from private investment accounts. For long-term investors, exemption from the advance lump-sum tax and capital gains tax means a reliable planning basis with no annual tax losses. We explicitly note that all tax considerations always depend on your individual overall situation and that legislation can change. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Financial impact: the compound-interest advantage without the advance lump-sum tax

For self-directed ETF savers, the annual advance lump-sum tax under § 18 of the Investment Tax Act (InvStG) is part of the usual tax routine in a regular broker account. It taxes notional minimum returns even when gains haven't yet been realised through a sale. In the new Altersvorsorgedepot, by contrast, the principle of a tax-free accumulation phase applies. The legislator fully exempts the subsidised investment from ongoing income taxation^[7]. All dividends, distributions and price gains stay in the account with no deduction. As a result, the invested capital stays fully invested in the market, undiminished, and develops the full compound-interest effect over long periods.

Liquidity advantage and system comparison over time

Doing away with the advance lump-sum tax gives investors a direct liquidity advantage on top of the higher final-value growth. In a taxable account, the advance lump-sum tax requires free liquidity in the settlement account at the start of the year. If no liquidity is available, banks or neobrokers sell off fractions of ETF units, which reduces the capital held. In the Altersvorsorgedepot, this process doesn't happen at all. While returns in a taxable account are skimmed off step by step, in the Altersvorsorgedepot you benefit from a genuine tax deferral right up to retirement. Our direct tax comparison shows in detail how this deferral-driven return difference can offset the later tax burden in the payout phase.

Legal notice: all calculations and model illustrations are for illustrative purposes only, to demonstrate how the tax treatment works. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Comparison: taxable ETF account versus the Altersvorsorgedepot

In the Altersvorsorgedepot, no advance lump-sum tax applies during the accumulation phase. While investors in an ordinary securities account have to pay tax each year on notional income under § 18 InvStG, dividends, interest and price gains in the subsidised Altersvorsorgedepot stay tax-free until the payout phase^[1]. The Altersvorsorgedepot thus fully shields capital returns from ongoing taxation, allowing the capital paid in to grow undiminished through the compound-interest effect.

Tax mechanisms in the accumulation phase, side by side

Anyone funding an unsubsidised ETF savings plan in a standard account has to keep liquidity ready at the start of every calendar year for the advance lump-sum tax, or accept a tax deduction from the settlement account. On top of that, restructuring or portfolio adjustments immediately trigger capital gains tax on realised gains. The Altersvorsorgedepot, by contrast, allows tax-free rebalancing measures and the full retention of all returns within the account. The direct tax comparison makes clear that taxation only occurs in the payout phase, at your personal income tax rate.

Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG. All tax considerations and comparative figures are for information only and depend on individual personal circumstances as well as future legislative change.

Restructuring and rebalancing in the AVD with no tax deduction

In self-directed ETF wealth building, regular rebalancing is standard practice, to keep to your personal risk allocation in the portfolio. In a classic securities account, however, partially selling fund units with price gains immediately triggers the capital gains tax deduction, and possibly the offsetting of the annual advance lump-sum tax under § 18 of the Investment Tax Act (InvStG). The new Altersvorsorgedepot gives self-directed savers a key advantage here: all returns, dividends and realisations stay tax-free within the subsidised account structure throughout the entire accumulation phase^[9]. If you restructure gains within the Altersvorsorgedepot, this doesn't trigger any tax deduction event.

Comparison: rebalancing and value protection across accounts

This continuous tax shield opens up considerable room for manoeuvre in long-term asset allocation. Anyone who wants to adjust their investment strategy over the decades doesn't need to fear tax cascade effects. This advantage proves especially effective in the gradual transition into retirement: if you gradually reduce your equity allocation and shift units into lower-risk building blocks such as money-market or bond ETFs for value protection, the entire restructured capital stays undiminished within the contract. In an unsubsidised account, by contrast, every sale of gains would reduce the invested sum through immediately due tax.

Because the annual tax deduction doesn't apply, the full capital volume keeps earning interest, which noticeably strengthens the long-term compound-interest effect. Only once the payout phase begins in old age are the amounts distributed subject to deferred taxation at your individual income tax rate. (Note: factual comparison for guidance, not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.)

Taxation in the payout phase under the deferred-taxation principle

Full exemption from the annual advance lump-sum tax and capital gains tax during the accumulation phase by no means means that returns in the Altersvorsorgedepot stay untaxed forever. Instead, the legislator applies the principle of deferred taxation. Throughout the entire wealth-building process, the account balance stays protected from ongoing tax access, which gives the compound-interest effect maximum momentum. Only once the payout phase begins in retirement does the tax liability take effect.

System for taxation in retirement

The tax treatment on reaching retirement depends exactly on how contributions were treated during the accumulation phase. Income tax law draws a strict distinction between subsidised and unsubsidised funds:

• Subsidised contributions and allowances: all payouts based on subsidised personal contributions, state allowances and any increases in value earned are subject to full deferred taxation at your individual income tax rate under § 22 No. 5 EStG.
• Unsubsidised contribution shares: contributions that exceed the eligible maximum amount, or for which no tax subsidy was claimed, are taxed in the payout phase only on the income share (Ertragsanteil).

For self-directed private investors and ETF savers, this system leads to an important trade-off: while free ETF saving requires liquidity to be withdrawn or added each year for the advance lump-sum tax, invested capital in the Altersvorsorgedepot stays undiminished. Because your personal income tax rate in retirement is, in many cases, lower than during your working life thanks to your lost earned income, savers benefit from a double effect of tax deferral and a lower tax rate. You'll find further calculations on the differences in our tax comparison.

Note: tax treatment depends on personal circumstances and can change through future legislation. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

Planning for ETF investors: combining accounts and making use of allowances

For self-directed private investors, the new Altersvorsorgedepot closes an important gap in the portfolio. While distributing and accumulating ETFs in an unsubsidised standard account are subject to the annual advance lump-sum tax under § 18 InvStG^[10], returns in the Altersvorsorgedepot stay completely tax-free throughout the accumulation phase. That means: in the Altersvorsorgedepot, you don't need to keep liquidity ready for annual tax deductions, nor check statements from your custodian bank. Instead, all the capital invested keeps working undiminished through the compound-interest effect. The direct tax comparison therefore shows that combining both account types allows maximum tax efficiency.

Strategic allocation of wealth building and allowances

• Make targeted use of your private ETF account: use your annual saver's allowance (1,000 euros for single people or 2,000 euros for joint assessment) primarily in your normal account for flexible investment goals before retirement.
• Use the Altersvorsorgedepot for the long-term pension: use the subsidised account specifically for retirement. Since no advance lump-sum tax applies here, returns don't use up any of your saver's allowance and don't reduce your annual tax-free amounts.
• Calculate the subsidy precisely: use our subsidy calculator to work out transparently how much personal contribution you need to pay in to capture the maximum state allowance.

The choice between free ETF saving and state-subsidised retirement provision is therefore not an either/or. A structured split protects your everyday liquidity and ensures your retirement saving can grow with no ongoing tax deductions. Note: all model calculations and comparisons are for neutral guidance only and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.