Fictitious fund gains are taxed
You haven't changed anything in your custody account and haven't sold any fund units for a profit? Then you may be surprised when your bank withholds tax for the first time this year.
Anyone who holds shares or equity funds that regularly generate profits knows that tax must be paid on the income unless it remains below the saver's allowance. This year, however, savers whose fund profits are automatically reinvested are also likely to look at their bank documents in amazement. Because they too will be asked to pay tax by the state.
"Taxation of advance lump sums has been introduced for accumulating investment funds," says Erich Nöll from the Bundesverband Lohnsteuerhilfevereine (BVL). Tax is now levied on a theoretical gain that would result from the fund's price performance and a basic interest rate - even if the gain has not been realized through a sale.
Up to now, advance taxation did not apply
Although this regulation has been in place since 2018, the basic interest rate has been negative since then, which is why the advance lump sums have not been taxed. "This will change for 2023, as the prime rate has been set at 2.55%," says Nöll.
The custodian bank is responsible for withholding tax. It calculates the profit for 2023 as of January 2, 2024 and pays the tax due to the tax office.
Withholding tax can cause account overdrafts
The problem with accumulating - i.e. reinvesting - funds is that because the profits are not paid out, they are only notional. "As there is no actual profit from which the custodian bank can withhold tax," it deducts the money for the tax from an account held by the investor, says Nöll. This is usually likely to be the current account. The bank does not need the investor's consent for this.
Please note: The financial institution may collect the tax even if the account is overdrawn as a result. As the withheld capital gains tax usually has to be paid to the tax office by February 10, investors should ensure that they have sufficient funds in their account between January 2 and February 10 to avoid unnecessary overdraft interest.
The only way to avoid withholding tax is to specifically distribute the saver's lump sum of 1000 euros for single people or 2000 euros for married couples assessed jointly. To do this, exemption orders in the corresponding amount must be deposited with the investment institutions. Tax will only be withheld and deducted from the account if these amounts are exceeded.
Incidentally, according to the Bundesverband Lohnsteuerhilfevereine, the regulation does not result in double taxation. The taxation of the advance lump sum is merely an advance taxation. If a profit is actually made on the sale of fund units at a later date, the tax already paid will be taken into account.
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Source: www.ntv.de
