In a letter dated 4 January 2018, the Federal Ministry of Finance published the base rate for calculating the advance lump sum in accordance with section 18 of the Investment Tax Act 2018. This is derived from the long-term achievable yield on public bonds and amounts to 0.87%. This value was determined on the basis of the interest rate structure data of the Deutsche Bundesbank.

The advance lump sum is another important innovation for investors in mutual funds. This replaces the distribution-equivalent income, which was previously quite complex to calculate. It is derived from the redemption price of the fund unit at the beginning of the calendar year (recognised at 70%) multiplied by the base rate now published. Future accumulation taxation will therefore take the form of the advance lump sum. Further information can be found in our blogs from 11.01.2017 (https://www.taxgate.com/2017/01/11/internationale-fondsstrukturen-auf-dem-pruefstand-handlungsbedarf-fuer-investoren-und-fondsinitiatoren-nach-dem-neuen-investmentsteuerrecht-ab-2018/) or 19.09.2016 (https://www.taxgate.com/2016/09/19/die-reform-des-investmentsteuerrechts-aus-sicht-des-private-banking/).

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