How to make the most of your EUR 1,000 allowance across several custody accounts.
One thousand euros of investment income stays tax-free every year, for every investor in Germany. It sounds modest, and yet it is the single easiest tax advantage there is to claim.
You set it up once and then check it briefly each year. Even so, many people leave it unused, because the one form was never filled in.
The simplest tax advantage is the one you have to apply for only once and can then let work quietly in the background.
Every investor in Germany has a Sparerpauschbetrag (the annual saver’s tax-free allowance on investment income) of EUR 1,000 (EUR 2,000 for married couples). Investment income up to this limit stays tax-free. To use the allowance, you have to file a Freistellungsauftrag (an exemption order instructing the bank to leave income up to the allowance untaxed) with your bank.
Without a Freistellungsauftrag, your bank withholds tax from the very first euro. You can reclaim that tax through your tax return, but it is needless effort.
Anyone holding several custody accounts or bank accounts has to split the allowance across them. The sum of all Freistellungsaufträge may not exceed EUR 1,000.
| Strategy | Advantage | Drawback |
|---|---|---|
| Everything at one bank |
EUR 1,000 for individuals, EUR 2,000 for married couples assessed jointly. The amount has applied since 2023 and is unchanged.
Yes, you can adjust your Freistellungsauftrag with your bank at any time. Keep in mind that the sum of all Freistellungsaufträge may not exceed the Sparerpauschbetrag.
Without a Freistellungsauftrag, your bank withholds Abgeltungsteuer (Germany’s flat 25 percent withholding tax on investment income) from the very first euro of investment income. You can reclaim any overpaid tax through your tax return (Anlage KAP).
| Simple, no splitting needed |
| Little flexibility |
| Proportional to income | Optimal use of the allowance | Requires an annual adjustment |
| Weighted to the main account | A sound compromise | Smaller accounts are taxed |
The Vorabpauschale (Germany’s advance lump-sum tax on accumulating funds) is also counted against the Sparerpauschbetrag. When the Basiszins (the base interest rate set each year that drives the Vorabpauschale calculation) rises, the Vorabpauschale can use up a sizeable part of the allowance.
Estimate the Vorabpauschale you expect for the current year and reserve that amount in the Freistellungsauftrag of the account where the ETFs are held.
| Scenario | Account A (ETFs) | Account B (dividends) | Tax burden |
|---|---|---|---|
| No FSA | Full tax | Full tax | Highest |
| FSA only at A | Tax-free up to EUR 1,000 | Full tax | Suboptimal |
| FSA 400/600 | Vorabpauschale covered | Dividends partly free | Optimal |
Net Amount
EUR 3.945,00Eff. Tax Rate: 21,10%
Kernaussagen
Your allowance at a glance
Investboard shows your investment income across every custody account and makes clear how much of the Sparerpauschbetrag is still free before tax applies.
Check your allowance →