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

An exemption order exempts capital gains up to the saver's allowance of 1,000 euros (single filers) or 2,000 euros (married couples filing jointly) from capital gains tax. Those who want to optimize their exemption order strategically allocate this exemption to where the highest interest, dividends, and capital gains accrue. Without an order, the bank automatically withholds 25 percent plus solidarity surcharge and transfers the amount to the tax office.

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 taxation. The legal basis is the saver's allowance under § 20 subsection 9 of the German Income Tax Act (EStG), often also called the saver's exemption. If you do not issue an order, your bank automatically deducts capital gains tax.

What income falls under this?

Taxable income includes interest from savings accounts and fixed-term deposits, dividends from stocks, distributions from funds and ETFs, and realized capital gains. The advance flat rate for accumulating ETFs is also covered by the exemption order.

The saver's allowance in detail

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

How does an exemption order work?

Within your exemption limit, the bank pays out your earnings 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 Federal Central Tax Office (Bundeszentralamt für Steuern).

Capital gains tax rate

Above the exemption limit, capital gains tax of 25 percent plus 5.5 percent solidarity surcharge applies, effectively 26.375 percent. For church members, the tax burden is slightly reduced because church tax is treated as a special deduction.

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 withhold tax 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 set the duration. The order can be issued with a time limit or indefinitely, i.e., until revoked.

Information you will need

• Your valid tax ID and that of both account holders for joint investments
• The exemption amount per institution
• Information about church tax liability for correct taxation

After submission, the exemption usually applies retroactively from the beginning of the year, provided the order is issued during the current year.

Distributing the exemption order across multiple banks

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

The decisive rule for allocation

The total of all exemption orders issued must not exceed the saver's allowance. If you allocate 700 euros to an online bank and 300 euros to your savings bank, you have fully utilized your 1,000 euro exemption. This rule is monitored centrally by the Federal Tax Office (Bundesamt für Finanzen).

How to correctly distribute the exemption order

Place the exemption where you expect the highest earnings. 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 allocation for 1,000 euros might look like this:

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

This prevents earnings from being unnecessarily taxed while the exemption goes unused elsewhere.

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

When distributing the saver's allowance, the goal is to put your entire exemption to work. Tax optimization for your portfolio begins with an honest estimate of your expected capital gains per investment.

Estimate earnings realistically

Calculate the interest your fixed-term deposit will generate over its term and the dividends your stocks will provide. Based on this, plan your allocation. If your investments change, adjust your order accordingly.

Keep an overview

Maintain a list of all exemption orders issued. This record 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 your exemption was actually used.

Optimize your exemption order before year-end

Unused portions of the saver's allowance expire at the end of the year. They cannot be carried forward to the following year. Therefore, an annual review is worthwhile, ideally in November or December.

Use up the unused exemption

If exemption remains, you can deliberately realize capital gains. Sell stocks or ETFs at a profit and repurchase them with a time gap. This allows you to use your exemption without fundamentally changing your investment strategy. Pay attention to transaction costs and allow sufficient time before repurchasing.

Final deadline in the year

Changes are possible at any time during the year, but usually not retroactively. The last banking day, often December 28 or 29, is usually 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 entirely. A revocation takes effect from the time of change, not for earnings already settled.

How high should the amount be set?

Set the amount so that it covers your expected capital gains at each institution without exceeding your overall limit. Set too low, you waste exemption. 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 will be flagged at the Federal Central Tax Office. § 45d of the German Income Tax Act requires credit institutions to report this.

Correction through tax return

You recover excessively exempted gains through your income tax return. The tax office will demand the capital gains tax that was improperly not paid. Conversely, if you paid too much tax because an order was missing, you can recover the money through Attachment KAP of your tax return.

Not issuing an exemption order: the consequences

According to a survey cited by n-tv, approximately 16 percent of savers in Germany—one in six—issue no exemption order at all. They waste money this way because the bank automatically remits capital gains tax.

Getting your money back

If you overpaid in previous years, you can recover the capital gains tax through Attachment KAP of your tax return. The maximum annual savings is approximately 263.75 euros per person and about 527.50 euros for married couples.

Can an exemption order be changed retroactively?

For the current year, an exemption issued in January usually applies retroactively from the beginning of the year. However, a completed prior year cannot be corrected through the order.

Can the order be issued for the previous year?

No. An exemption order cannot be issued retroactively for a previous year. The only way to obtain a refund after the fact is through your income tax return and Attachment KAP.

Issuing an exemption order for children

Children with their own portfolio or savings account also have a right to the full saver's allowance. Issue the order in the child's name using their tax identification number.

Note the threshold for family insurance

Above approximately 5,460 euros in capital gains, the cost-free family insurance in the statutory health insurance system can be jeopardized. Check this threshold carefully if your child has significant capital assets.

Non-assessment certificate instead of exemption order

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

When the non-assessment certificate makes sense

If your income is below the basic exemption of 11,784 euros (as of 2026), request a non-assessment certificate from your tax office. Children, students, and retirees with low income benefit because earnings are paid out entirely 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 Attachment KAP. The tax office will then tax your capital gains at your lower individual rate instead of the flat 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 earnings yourself in your tax return.

Accumulating ETFs and advance flat rate

With accumulating ETFs, there is no distribution; the tax liability arises only upon sale. However, an advance flat rate accrues annually, calculated from the base interest rate times the fund value. An existing exemption order covers this flat rate.

Married couples and joint exemption

Married couples issue a joint order for 2,000 euros, regardless of who generates the earnings. An order for 0 euros can enable loss offset across spouses, such as when one partner's capital losses are offset against the other's gains.

Calculating the exemption order: a straightforward approach

For keeping your finances in order, a three-step approach has proven effective. It ensures that no exemption is wasted and no excess occurs.

1. List all portfolios and accounts and estimate the expected capital gains from each investment.
2. Allocate the saver's allowance proportionally, with larger amounts going to high-earning institutions.
3. Check utilization at year-end and, if necessary, rebalance or realize gains.

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

Common mistakes in portfolio tax optimization

Many investors set up the order once and never adjust it, even though accounts and earnings have changed significantly. Others allocate their entire exemption to their main bank while high gains at their broker go untaxed.

These points deserve regular attention

• Outdated amounts that no longer match your current investments
• Missing tax ID, which renders the entire order ineffective
• Overlooked interest earnings on a newly opened savings account
• Double allocation without overview of the total sum

Optimize your exemption order: the key figures

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

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

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

Summary for your practice

Review once annually whether your exemption flows to where interest and dividends are highest. Keep the allocation in writing and adjust your order whenever your investments change significantly. This way your capital gains remain reliably tax-free up to the saver's allowance, and the tax office only sees what is left over.