New fund taxes for 2018 – what investors still need to do

With the new year, new rules for the taxation of investment funds will take effect. Much will make it easier for investors – but an intervention of the state should not necessarily enjoy them.

New Year are usually associated with many changes and innovations, even for investors. This time around, there is a particularly large shift to mutual fund and exchange-traded fund indexes, the so-called ETFs: The federal government has long ago decided to completely reform the taxation of these funds – as of January 1, 2018, the law passed for the purpose now in force.

To summarize the numerous changes in a few sentences is impossible. The future tax system is too extensive and complex. For example, the website has compiled a detailed and easily understandable workup. There is also much information and answers to urgent investor questions at the fund association BVI.

In any case, the most important points from the point of view of fund investors are these:

The aim of the reform was, as the Federal Ministry of Finance announced, to simplify the taxation of the funds and to end unequal treatment. Ultimately, this should also mean that investors as well as fund providers, banks and the tax authorities have less work on the tax issue.
So far, there have been different types of tax treatment, for example from German funds to foreign investors, or from equity funds distributing the dividends of the companies they hold to those who reinvest these distributions (“accumulation funds”). This inconsistency will no longer exist in future, all funds are taxed under the same system with the help of an annual lump sum. So also certain tax tricks and loopholes are to be eliminated from the world.
The consequence of the unification is also that investors in the future unencumbered by tax reservations can choose freely from the entire universe offered funds the appropriate investment product for their own needs. So far, some fund buyers shied away from certain foreign funds, because they made more work in the tax return. This will no longer exist in the future, the taxes that investors have to pay for their fund participation, will be paid from 1 January generally by the respective custodian bank to the Treasury.
One important innovation concerns funds that have been in depository accounts for years. These are stocks that were acquired before 2009.
Background: In 2009, the withholding tax on income from investments was introduced. Fund units which were already in the possession of the investors at the time of introduction still enjoy grandfathering – they can still be used for tax-free gains.
However, this protection ends with the start of the new investment taxation at the beginning of next year: as of January 1, the price gains of the old fund units, which were acquired before December 31, 2008, will also be taxed.
However, it is important to know that this only applies to profits that occur from 1 January 2018. Everything that has been gaining in price between 2009 and today remains tax-free. And: For future profits each investor enjoys a tax-free amount of 100,000 euros – only what he also achieved in price gains with his old holdings, gets into the access area of ​​the tax office.