Optimize Exemption Orders: Secure Your Saver's Allowance

An exemption order (Freistellungsauftrag) exempts capital income up to the Saver's Allowance of 1,000 euros (single filers) or 2,000 euros (married couples filing jointly) from capital gains tax. To optimize the exemption order, you strategically allocate this allowance to where the highest interest, dividends, and capital gains occur. Without an order, the bank retains 25 percent plus solidarity surcharge and remits the amount to the tax office.

What is an exemption order?

The exemption order is a request to a German credit institution to exempt your capital income up to a specified amount from taxation. The legal basis is the Saver's Allowance under § 20 para. 9 EStG, often called the Saver's Tax Exemption. If you do not issue an order, your bank automatically deducts capital gains tax.

Which income falls under this?

Eligible income includes interest from savings accounts and fixed-rate deposits, dividends from stocks, distributions from mutual funds and ETFs, and realized capital gains. The advance lump sum allocation on accumulating 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 801 euros became 1,000 euros for single filers, and 1,602 euros became 2,000 euros 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 does the capital gains tax apply. The bank reports the capital income actually exempted via your tax ID to the Federal Tax Office.

Height of capital gains tax

Above the allowance, 25 percent capital gains tax plus 5.5 percent solidarity surcharge apply, effectively 26.375 percent. For church members, the tax burden is slightly reduced because church tax is considered a special expense.

Why 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 deduct taxes 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 term. The order can be issued for a fixed period or indefinitely, that is, until revocation.

Information you need

• Your valid tax ID of both account holders for joint investments
• The amount to be exempted per institution
• Information on church tax obligation 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 exemption orders across multiple banks

If you spread your financial assets across multiple accounts and depots, you must strategically allocate your tax-free allowance. An exemption order across 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 issued orders must not exceed the Saver's Allowance. If you deposit 700 euros at the online bank and 300 euros at the savings bank, you have fully exhausted your tax-free allowance of 1,000 euros. This rule is monitored centrally by the Federal Tax Office.

How to distribute the exemption order correctly

Place the allowance where the highest income is expected. A savings account with high interest income 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 income from being unnecessarily taxed while your allowance elsewhere remains unused.

Distributing the Saver's Allowance and aligning your portfolio for tax efficiency

When distributing the Saver's Allowance, the goal is to make full use of your tax-free allowance. Portfolio tax optimization begins with a realistic estimate of your expected capital income per investment.

Estimate income realistically

Calculate what interest your fixed-rate deposit will yield over its term and what dividends your stocks will provide. Based on this, you plan the allocation. If your investment changes, adjust your order accordingly.

Keep track

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

Optimize exemption orders before year-end

Unused Saver's Allowance expires at year-end. It cannot be carried over to the following year. This is why 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. Pay attention to transaction costs and allow sufficient time before repurchasing.

Final deadline in the year

Changes are possible any time during the year, but usually not retroactively. The last bank business 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 current year or revoke the order entirely. A revocation takes effect from the time of change, not for income already settled.

How high should you set the amount?

Set the amount so it covers your expected capital income at the respective institution without exceeding the overall limit. Set too low, you forfeit allowance. Distributed too high, you risk exceeding the limit.

Exemption order exceeded: What happens then?

If multiple banks jointly report more exempted capital income than your Saver's Allowance permits, the excess is flagged at the Federal Tax Office. § 45d EStG requires credit institutions to report this.

Correction via tax return

Excess capital gains that were improperly exempted are recaptured through your income tax return. The tax office will demand the capital gains tax that was wrongly not paid. Conversely, if you paid too much tax because an order was missing, you can recover the money via Schedule KAP of your tax return.

No exemption order issued: The consequences

According to an analysis cited by n-tv, about 16 percent of savers in Germany, one in six, issue no exemption order at all. They forfeit real money because the bank automatically remits capital gains tax.

Get money back

If you overpaid in previous years, recover the capital gains tax via Schedule KAP of your tax return. The maximum annual savings is around 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 to the beginning of the year. However, a prior year that has already ended cannot be corrected via the order.

Can an order be issued for the past year?

No. An order retroactively for a past year is no longer possible. The only way to recover after the fact is through the income tax return and Schedule KAP.

Issue exemption orders 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.

Pay attention to family insurance limits

From about 5,460 euros in capital income, the non-contributory family insurance in statutory health insurance can be at risk. For larger capital assets of your child, carefully review this threshold.

Non-assessment certificate instead of exemption order

For individuals with very low income, a non-assessment certificate (NV certificate) may be more worthwhile than an exemption order. It exempts capital income beyond the Saver's Allowance.

When the non-assessment certificate makes sense

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

Favorable assessment: When 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 office will then tax your capital income at your lower individual rate instead of the flat 25 percent capital gains tax.

Exemption order at multiple credit institutions: Special cases

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

Accumulating ETFs and advance lump sum allocation

With accumulating ETFs, there is no distribution; tax only arises upon sale. However, an annual advance lump sum allocation applies, calculated from base interest rate times fund value. An existing exemption order covers this allocation.

Married couples and joint allowance

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

Calculate exemption orders: A simple approach

For finances under control, a three-step process works well. It ensures that no allowance is lost and no overage occurs.

1. List all portfolios and accounts and estimate expected capital income for each investment.
2. Allocate the Saver's Allowance proportionally, with larger amounts going to high-income institutions.
3. At year-end, check utilization and, if necessary, reallocate or realize gains.

This brief overview is not a substitute for 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 income have long since changed. Others deposit the full allowance at their primary bank while a broker holds high gains that go untaxed.

These points deserve regular review

• Outdated amounts that no longer match your current investment
• Missing tax ID, which makes the entire order ineffective
• Overlooked interest income on a newly opened savings account
• Double allocation without oversight of the total amount

Optimize exemption orders: Key figures

For context, 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: around 26.375 percent above the allowance
• Maximum savings: up to 263.75 euros per person

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

Briefly summarized for your practice

Check once a year whether your allowance flows to where interest and dividends are highest. Keep the allocation in writing and adjust your order whenever your investment changes significantly. This way your capital income remains reliably tax-free up to the Saver's Allowance, and the tax office only sees what is left over.