Altbestand and Bestandsschutz: Pre-2009 Shares, Fund Units Bought Before 2018 and the €100,000 Allowance

What you will learn

• Which assets bought before 1 January 2009 still enjoy full Bestandsschutz.
• How the fictitious sale of fund units on 31 December 2017 splits a gain into a tax-free and a taxable part.
• How the €100,000 allowance for old fund units works, how it is claimed and how the tax office tracks it.
• Why FIFO can consume grandfathered shares first and what a separate custody account changes.

Explanation

Bestandsschutz (grandfathering) means that an old rule continues to apply to assets bought before a law changed. Two reforms matter: the Abgeltungsteuer of 1 January 2009 and the investment tax reform of 1 January 2018. FIFO itself is explained in lesson 1.

Shares and most securities bought before 2009

Before 2009, gains on shares were tax free after a one-year holding period. Shares, bonds and most other securities bought before 1 January 2009 keep this treatment for ever: a sale today produces no taxable gain and no deductible loss. Dividends and interest are taxed normally. Certificates are the exception: Bestandsschutz applies only to certificates bought before 15 March 2007; certificates bought between that date and the end of 2008 lost it if sold after 30 June 2009.

Fund units bought before 2018: the fictitious sale

The investment tax reform treats every fund unit held on 31 December 2017 as sold at the last 2017 redemption price and bought again on 1 January 2018 at that price (§56 InvStG, Investmentsteuergesetz). The gain or loss from this fictitious sale is calculated under the old rules but is only taxed when you really sell. Since 2018: gain = sale price − 2017 price, reduced by the Teilfreistellung (partial exemption, 30 percent for equity funds, covered in the course "ETF Investing"). Your bank handles both parts and withholds on the sale.

Bestandsgeschützte Alt-Anteile and the €100,000 allowance

Fund units bought before 1 January 2009 and held privately since then are bestandsgeschützte Alt-Anteile. For them, the gain up to 31 December 2017 is tax free for ever. The gain since 1 January 2018 is taxable, but only to the extent that it exceeds a lifetime allowance of €100,000 per person (§56 Abs. 6 InvStG). Three practical points:

• The bank does not apply the allowance. It withholds on the post-2018 gain; you reclaim in your return by declaring the gain in the Anlage KAP lines for bestandsgeschützte Alt-Anteile and requesting a review of the withholding.
• The allowance is applied to the gain after Teilfreistellung, and the remaining allowance is formally determined every year by your tax office until it is used up.
• It is personal: a married couple has €200,000.

FIFO and separate custody accounts

If you hold old and new units of the same fund or shares of the same company in one custody account, a partial sale takes the oldest units first. That means the tax-free old units leave first and the fully taxable new ones stay. To sell new units and keep the grandfathered ones, move one group to a second custody account or sub-account (same owner, the bank carries the acquisition data) before the sale, and never let old units be transferred without their purchase data.

Worked example

Hypothetical example, church tax, fees and the Sparer-Pauschbetrag ignored.

Position A: shares bought in 2007 for €20,000, sold in 2026 for €60,000. Bestandsschutz: taxable gain €0.

Position B: units of an equity fund bought in 2005 for €30,000; value on 31 December 2017 €70,000; sold in 2026 for €110,000.

1. Pre-2018 gain: €70,000 − €30,000 = €40,000, tax free for ever.
2. Post-2018 gain: €110,000 − €70,000 = €40,000.
3. Teilfreistellung 30 percent: taxable gain €40,000 × 0.70 = €28,000.
4. Bank withholds €28,000 × 26.375% = €7,385.
5. Tax return: the €28,000 is covered by the €100,000 allowance, so the tax is €0 and the €7,385 is refunded. Remaining allowance: €100,000 − €28,000 = €72,000, formally determined by the tax office.

Without filing, the investor simply loses €7,385. Exclusions: fees and church tax.

Common mistake

Practice activity

On paper: equity fund units bought in 2008 for €50,000; value on 31 December 2017 €80,000; sold in 2026 for €150,000; Teilfreistellung 30 percent; no allowance used before. Calculate the tax-free pre-2018 gain, the post-2018 taxable gain after Teilfreistellung, the bank's withholding at 26.375 percent, the refund after the return and the remaining allowance. Then state what changes if the same units had been bought in January 2010.

Key takeaways

• Shares and most securities bought before 2009 produce no taxable gain, ever; only their dividends and interest are taxed.
• All fund units were fictitiously sold on 31 December 2017; for pre-2009 units the gain up to then is tax free.
• Post-2018 gains on pre-2009 fund units enjoy a personal lifetime allowance of €100,000, claimed only through the tax return.
• FIFO sells old units first; separate custody accounts let you choose which lot to sell.

Next step

The next lesson covers family tax planning: custody accounts for children, gifting securities, gift tax allowances and the rules against abuse.