The Federal Ministry of Finance has published the base interest rate for calculating the advance lump-sum payment under the Investment Tax Act for 2023.
The base interest rate used to calculate the so-called “advance lump sum” under the Investment Tax Act (InvStG) for the purposes of taxing funds has been published by the Federal Ministry of Finance for 2023. The base interest rate is derived from the long-term returns on government bonds and is intended to represent the risk-free market rate of return, which has been subject to advance taxation (prior to realization through dividends or sale) since 2018. The base interest rate for the calendar year 2023 has now been set at 2.55%. In 2022, this base interest rate was still negative (as it was in 2021) at -0.05%, which is why there was no taxation of advance lump-sum payments for 2022.
Investors in investment funds are legally required to report the advance lump-sum amount calculated on the basis of this interest rate as taxable investment income from investment funds in the following year (Sections 18, 16 of the Investment Fund Tax Act (InvStG); deemed receipt on January 1 of the following year), even if the investment funds are structured as accumulation funds, i.e., they do not distribute income.
The advance lump-sum tax should therefore be regarded as the minimum tax liability for investment fund investors. Individual, optional partial exemptions are also applicable to this amount. If the investment fund in question does not experience any increase in value, the taxable advance lump-sum tax does not apply, as it is limited to the annual increase in value. Actual dividends also reduce the amount of the advance lump-sum tax.
As a general rule, the flat-rate advance amount to be applied is 70% of this base interest rate, calculated based on the first disclosed redemption price of an investment fund in the respective calendar year.
Source:
