Saver's allowance (Sparerpauschbetrag)
The Sparerpauschbetrag (saver's allowance) is the annual tax-free allowance for capital income in Germany – up to this amount you pay NO flat-rate withholding tax.
Amount in 2025:
• Singles: €1,000 per year
• Married couples (jointly assessed): €2,000 per year
What counts as capital income?
• Interest: overnight money, fixed-term deposits, savings book
• Dividends: shares, ETFs, funds
• Capital gains: profit from selling securities
• Vorabpauschale (advance lump sum): annual taxation of accumulating funds
How do you use it?
• Set up an exemption order (Freistellungsauftrag) with your bank/broker
• Split it across all banks/brokers (total ≤ €1,000)
• Without an exemption order: the bank automatically withholds 26.375% tax – you have to claim it back via your tax return
When is the allowance used up?
• At 3% interest on overnight money: from approx. €33,000 in savings
• At a 2% dividend yield (equity ETF): from approx. €50,000 portfolio value
An estimated 30% of investors don't set up an exemption order and give away up to €264 in taxes per year.
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