Optimize your Freistellungsauftrag: Secure your Sparerpauschbetrag

A Freistellungsauftrag exempts capital gains up to the Sparerpauschbetrag of 1,000 euros (single filers) or 2,000 euros (married couples filing jointly) from capital gains tax. To optimize your Freistellungsauftrag, strategically allocate this tax-free allowance to where the highest interest, dividends, and capital gains occur. Without such an order, your bank automatically withholds 25 percent plus solidarity surcharge and forwards it to the tax authority.

What is a Freistellungsauftrag?

The Freistellungsauftrag is a request to a German credit institution to exempt your capital gains up to a certain amount from taxation. The legal basis is the Sparerpauschbetrag under § 20 para. 9 EStG, often called the Sparerfreibetrag. If you do not issue an order, your bank automatically deducts capital gains tax.

Which income falls under this?

Tax-exempt income includes interest from savings accounts and fixed-rate deposits, dividends from stocks, distributions from funds and ETFs, and realized capital gains. The preliminary surcharge on accumulating ETFs is also covered by the Freistellungsauftrag.

The Sparerpauschbetrag in detail

Since January 1, 2023, a higher Sparerpauschbetrag 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 a Freistellungsauftrag work?

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

Amount of capital gains tax

Above the allowance, 25 percent capital gains tax plus 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 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 Freistellungsauftrag

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 for a limited period or indefinitely, i.e., until revoked.

Information you need

• Your valid tax ID of both account holders for joint investment
• The amount to be exempted per institution
• Information about church tax liability for correct taxation

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

Distribute the Freistellungsauftrag across multiple banks

If your financial assets are spread across multiple accounts and portfolios, you must strategically split the allowance. A Freistellungsauftrag across multiple banks is explicitly permitted: you may split the Sparerpauschbetrag across as many institutions as you like.

The key rule when splitting

The sum of all issued orders must not exceed the Sparerpauschbetrag. If you allocate 700 euros to your online bank and 300 euros to your savings bank, you have fully exhausted the 1,000 euro allowance. The Federal Finance Office monitors this rule centrally.

How to correctly distribute your Freistellungsauftrag

Place your allowance where the highest earnings are expected. A savings account with high interest rates or a portfolio with dividend stocks deserves a larger share than a rarely used secondary account. A practical allocation for 1,000 euros looks 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 unused allowance remains elsewhere.

Distribute the Sparerpauschbetrag and align your portfolio for tax purposes

Distributing the Sparerpauschbetrag is about making your entire allowance work for you. Portfolio tax optimization begins with a realistic estimate of your expected capital gains per investment.

Estimate earnings realistically

Calculate what interest your fixed-rate deposit will generate over its term and what dividends your stocks will pay. On this basis, plan your allocation. If your investments change, adjust the order.

Keep track

Maintain a list of all issued Freistellungsaufträge. This overview protects you from losing track and accidentally distributing more than the allowed amount. A quick look at the annual tax certificate from each bank shows how much allowance was actually used.

Optimize your Freistellungsauftrag before year-end

Unused Sparerpauschbetrag 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 allowance

If allowance remains, you can strategically realize capital gains. Sell stocks or ETFs at a profit and buy them back after a time interval. This way you use the allowance without fundamentally changing your investment. Be mindful of transaction costs and maintain 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 bank, often December 28 or 29, is usually the final deadline to take effect for the current year.

Can I change or revoke my Freistellungsauftrag online?

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

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. If set too low, you forfeit allowance. If distributed too high, you risk exceeding the limit.

Freistellungsauftrag exceeded: What happens then?

If multiple banks together report more exempted capital gains than your Sparerpauschbetrag allows, the excess is detected by the Federal Tax Office. § 45d EStG requires credit institutions to make this report.

Correction through tax return

Recover any excess tax-exempted gains through your income tax return. The tax authority will demand the wrongfully unpaid capital gains tax. Conversely, if you paid too much tax because an order was missing, you recover the money through the Schedule KAP.

No Freistellungsauftrag issued: the consequences

According to a survey cited by n-tv, approximately 16 percent of savers in Germany, or one in six, do not issue a Freistellungsauftrag at all. By doing so, they forfeit money because the bank automatically remits capital gains tax.

Recover money

If you overpaid in previous years, recover the capital gains tax through Schedule 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 a Freistellungsauftrag be changed retroactively?

For the current year, an exemption issued in January usually applies retroactively to the beginning of the year. However, a prior year that has already concluded cannot be corrected via the order.

Can the order be issued for the past year?

No. An order cannot be issued retroactively for a past year. The only way to obtain a refund afterward is through the income tax return and Schedule KAP.

Issue a Freistellungsauftrag for children

Children with their own portfolio or savings account also have a right to the full Sparerpauschbetrag. Issue the order on behalf of the child using their tax identification number.

Note the limit for family health insurance

Starting at approximately 5,460 euros in capital gains, free family health insurance coverage under statutory health insurance may be jeopardized. Carefully review this threshold if the child has significant capital assets.

Nichtveranlagungsbescheinigung instead of Freistellungsauftrag

For individuals with very low income, a Nichtveranlagungsbescheinigung (NV certificate) may be more beneficial than a Freistellungsauftrag. It exempts capital gains beyond the Sparerpauschbetrag.

When the NV certificate makes sense

If your income falls below the basic allowance of 11,784 euros (as of 2026), request the Nichtveranlagungsbescheinigung from the tax authority. Children, students, and retirees with low incomes benefit because earnings are 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 via Schedule KAP. The tax authority will then tax your capital gains at your lower individual rate instead of the flat capital gains tax.

Freistellungsauftrag with multiple credit institutions: special cases

Not every provider accepts a Freistellungsauftrag. Brokers without a seat in Germany do not process exemptions; you report the earnings yourself in your tax return.

Accumulating ETFs and preliminary surcharge

With accumulating ETFs, there is no distribution; the tax arises only upon sale. However, an annual preliminary surcharge is assessed, calculated based on the base interest rate times fund value. An existing Freistellungsauftrag covers this surcharge as well.

Married couples and shared allowance

Married couples issue a joint order for 2,000 euros, regardless of who earns the income. An order for 0 euros can enable cross-spousal loss offsetting, such as when one spouse's capital losses are offset against the other's gains.

Calculate your Freistellungsauftrag: a simple approach

A three-step process works well for keeping your finances in order. It ensures that no allowance is forfeited and no excess occurs.

1. List all portfolios and accounts and estimate the expected capital gains for each investment.
2. Allocate the Sparerpauschbetrag proportionally, with larger amounts going to high-yield institutions.
3. At year-end, check the 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 earnings have long since changed. Others allocate the entire allowance to their main bank, while significant gains at their broker remain untaxed.

Points worth reviewing regularly

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

Optimize your Freistellungsauftrag: the key figures

For reference, here are the central values for 2026 in overview:

• Sparerpauschbetrag for single filers: 1,000 euros per year
• Sparerpauschbetrag 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 allowance
• Maximum savings: up to 263.75 euros per person

Those who know these figures and consistently use the Sparerfreibetrag maximize tax-free income from their capital assets. A well-maintained Freistellungsauftrag across all credit institutions is the simplest tool to achieve this.

Quick summary for your practice

Check once a year whether your allowance is directed to where interest and dividends are highest. Keep the allocation in writing and adjust the order whenever your investments change significantly. This way, your capital gains up to the Sparerpauschbetrag remain reliably tax-free, and the tax authority only sees what is left over.