Optimize Exemption Order: How to Secure Your Saver's Allowance

An exemption order exempts capital gains up to the saver's allowance of €1,000 (single filers) or €2,000 (married couples filing jointly) from capital gains tax. Those who want to optimize their exemption order distribute this tax-free allowance strategically to where the highest interest, dividends, and capital gains are expected. Without an order, the bank retains 25 percent plus solidarity surcharge and remits the amount to the tax authority.

What is an exemption order?

The exemption order is an application to a German credit institution to exempt your capital gains up to a certain amount from tax. The legal basis is provided by the saver's allowance under § 20 para. 9 EStG, often also called saver's tax allowance. If you do not issue an order, your bank will automatically deduct capital gains tax.

Which income is covered?

Exemptible income includes interest from savings accounts and fixed-term deposits, dividends from stocks, distributions from mutual funds and ETFs, as well as realized capital gains. The advance distribution on thesaurizing ETFs is also covered by the exemption order.

The saver's allowance in detail

Since January 1, 2023, a higher saver's allowance applies. The amount increased from €801 to €1,000 for single filers and from €1,602 to €2,000 for married couples. These values remain unchanged in 2026.

How does an exemption order work?

Within your tax-free allowance, the bank pays out your income in full. Only above this threshold does capital gains tax apply. The bank reports the capital gains actually exempted via your tax ID to the German Federal Tax Office.

Rate of capital gains tax

Above the tax-free allowance, a capital gains tax of 25 percent plus a 5.5 percent solidarity surcharge applies, effectively 26.375 percent. For church members, the tax burden is slightly reduced because church tax is considered as a deductible expense.

Why the tax ID is mandatory

Without providing your tax identification number, the bank cannot process the order. The tax identification number has been mandatory since 2011. If it is missing, the credit institution must perform the tax deduction, even though an order is in place.

How to issue the exemption order

Most credit institutions provide a form in online banking. You enter the desired amount, confirm your tax identification number, and specify the duration. The order can be issued for a limited period or indefinitely, i.e., until revoked.

Information you need

• Your valid tax ID of both account holders for joint investments
• The amount to be exempted per institution
• Information on your church tax status for correct taxation

After submission, the exemption typically applies retroactively to the beginning of the year if the order is issued during the current year.

Distributing the exemption order across multiple banks

Those who spread their financial assets across multiple accounts and portfolios must strategically split the tax-free allowance. An exemption order at multiple banks is explicitly permitted: you may split the saver's allowance across any number of institutions.

The key rule for distribution

The sum of all orders issued must not exceed the saver's allowance. If you deposit €700 at the direct bank and €300 at the savings bank, you have fully exhausted the €1,000 tax-free allowance. This rule is monitored centrally by the Federal Tax Office.

How to distribute the exemption order correctly

Place the tax-free allowance where you expect the highest returns. A savings account with high interest income or a portfolio with dividend-paying stocks deserves a larger share than a rarely-used secondary account. A practical distribution for €1,000 looks like this:

• ETF portfolio with dividends and distributions: €600
• Savings account with ongoing interest: €250
• Fund savings plan: €150

This prevents income from being taxed unnecessarily while the tax-free allowance remains unused elsewhere.

Distributing the saver's allowance and aligning your portfolio for tax efficiency

Distributing the saver's allowance is about putting the entire tax-free allowance to work. Portfolio tax optimization begins with an honest estimate of your expected capital gains per investment.

Estimate income realistically

Calculate what interest your fixed-term deposit will yield over its term and what dividends your stocks will pay. Based on this, you plan the distribution. If your investments change, adjust the order accordingly.

Keep an overview

Maintain a list of all exemption orders you have issued. This overview protects you from losing track and accidentally distributing more than the permitted amount. A quick look at each bank's annual tax certificate shows how much of the tax-free allowance was actually used.

Optimize exemption order before year-end

Unused saver's allowance expires at year-end. It cannot be carried over to the following year. Therefore, an annual review is worthwhile, ideally in November or December.

Exhaust unused tax-free allowance

If there is tax-free allowance remaining, you can strategically realize capital gains. Sell stocks or ETFs at a profit and repurchase them after a time interval. This way you use the tax-free allowance without fundamentally changing your investment. Pay attention to transaction costs and ensure sufficient time between the sale and repurchase.

Final deadline in the year

Changes can be made at any time during the year, but usually not retroactively. The last business day of the year, often December 28 or 29, is typically the final deadline to take effect for the current year.

Can I change or revoke the exemption order online?

Yes. Through online banking, you can adjust the amount at any time during the year or revoke the order completely. A revocation takes effect from the time of change, not for income already settled.

How high should the amount be set?

Set the amount so that it covers your expected capital gains at the respective institution without exceeding the overall limit. Set too low, you waste tax-free allowance. Distributed too high, you risk exceeding the limit.

Exemption order exceeded: What happens then?

If multiple banks together report more exempted capital gains than your saver's allowance permits, the excess is flagged at the German Federal Tax Office. Section 45d EStG obligates credit institutions to make this report.

Correction through the tax return

Gains exempted too liberally are adjusted through your income tax return. The tax authority demands payment of the capital gains tax that was wrongly withheld. Conversely, if you paid too much tax because an order was missing, you recover the money through Schedule KAP of your tax return.

No exemption order issued: the consequences

Approximately 16 percent of savers in Germany, one in six, do not issue an exemption order at all, according to a survey cited by n-tv. They thereby waste real money because the bank automatically remits capital gains tax.

Recover money

If you paid too much in previous years, recover the capital gains tax through Schedule KAP of your tax return. The maximum annual savings is around €263.75 per person and approximately €527.50 for married couples.

Can an exemption order be changed retroactively?

For the current year, an exemption issued in January typically applies retroactively to the beginning of the year. However, a prior year that has already been closed cannot be corrected through the order.

Can the order be issued for the past year?

No. No order can be issued retroactively for a past year. The only way to obtain a retroactive refund is through the income tax return and Schedule KAP.

Issue exemption order for children

Children with their own portfolio or savings account also have a claim to the full saver's allowance. Issue the order on behalf of the child using their tax identification number.

Pay attention to the family insurance limit

Starting at approximately €5,460 in capital gains, the premium-free family insurance in statutory health insurance can be jeopardized. Check this threshold carefully if the child has substantial capital assets.

Non-assessment certificate instead of exemption order

For persons with very low income, a non-assessment certificate may be more beneficial than the exemption order. It exempts capital gains beyond the saver's allowance.

When the non-assessment certificate is worthwhile

If your income is below the basic personal allowance of €11,784 (2026), request the non-assessment certificate from the tax authority. Children, students, and retirees with low income benefit because income is paid out completely without tax withholding.

Favorable assessment: If your marginal tax rate is below 25 percent

If your personal marginal tax rate is below 25 percent, request a favorable assessment through Schedule KAP. The tax authority will then tax your capital gains at the lower individual rate instead of the flat-rate capital gains tax.

Exemption order at multiple credit institutions: Special cases

Not every provider accepts an exemption order. Brokers without a German registered office do not process exemptions; you report the income yourself in your tax return.

Thesaurizing ETFs and advance distribution

For thesaurizing ETFs, there is no distribution; tax liability arises only upon sale. However, an annual advance distribution is calculated based on the base interest rate times the fund value. An existing exemption order covers this distribution.

Married couples and shared tax-free allowance

Married couples issue a joint order for €2,000, regardless of who generates the income. An order for €0 can enable cross-spouse loss offset, for example when capital losses of one spouse are offset against gains of the other.

Calculate exemption order: a simple approach

For keeping finances on track, a three-step process is effective. It ensures that no tax-free allowance is wasted and no excess occurs.

1. List all portfolios and accounts and estimate the expected capital gains per investment.
2. Allocate the saver's allowance proportionally, with larger amounts to high-yield institutions.
3. At year-end, check utilization and, if necessary, rebalance or realize gains.

This brief overview does not replace tax advice, but provides reliable guidance in practice.

Common mistakes in portfolio tax optimization

Many investors set up the order once and never adjust it, even though accounts and returns have long since changed. Others deposit the entire tax-free allowance at their main bank while high gains at the broker remain untaxed.

These points deserve regular review

• Outdated amounts that no longer match current investments
• Missing tax ID, which renders the entire order ineffective
• Overlooked interest income from a newly opened savings account
• Double distribution without overview of the total

Optimize exemption order: the key figures

For context, here are the central values for 2026 at a glance:

• Saver's allowance single filers: €1,000 per year
• Saver's allowance couples: €2,000 per year
• Capital gains tax: 25 percent plus 5.5 percent solidarity surcharge
• Effective burden: approximately 26.375 percent above the tax-free allowance
• Maximum savings: up to €263.75 per person

Those who know these figures and consistently use the saver's tax-free allowance will get the maximum tax-free income from their capital assets. A well-maintained exemption order across all credit institutions is the simplest tool for this.

Summary for your practice

Check once a year whether your tax-free allowance goes to where interest and dividends are highest. Keep the distribution in writing and adjust the order whenever you make a significant change to your investments. This ensures your capital gains remain reliably tax-free up to the saver's allowance, and the tax authority only sees what is left over.