Preliminary flat rate simply explained: What investors need to know about the special tax on ETFs!

How can you optimize or minimize the up-front fee?

One possibility is this Use of Loss Offsetting. If an investor has losses on other investments, these losses can be offset against the pre-determined tax base in order to reduce the tax burden.

Another option is the Choice of tax-free funds. There are funds that are considered “tax-free” because they invest in certain asset classes that are exempt from the pre-tax assessment. These include, for example, funds that invest in emerging countries or in renewable energies.

Distributing funds may also be an option. The distributions reduce the amount to be taxed and thus also the advance lump sum.

Some funds are inherently more tax efficient than others, for example because they invest in companies that have low dividend yields or because they actively pursue tax optimization strategies.

In order to minimize the up-front fee, it may be worthwhile reduce capital gains tax. This can be achieved, for example, by using the savings allowance or by choosing a more favorable tax bracket.

Our recommendation: Note that tax planning is always individual and should be tailored to your personal circumstances and investment goals. Therefore, it is wise to seek advice from a tax advisor or financial professional to determine the best strategy for minimizing the upfront tax base.

ttn-28