Freistellungsauftrag: the German tax exemption order for your bank

German banks and brokers deduct tax from investment income before you see it: 25 % Kapitalertragsteuer (§ 43a EStG), plus a 5.5 % solidarity surcharge on that tax and church tax if you pay it. A Freistellungsauftrag switches this off for income up to the amount you enter (§ 44a (1) EStG). If you have just moved to Germany and opened an account, this is usually one of the first forms the bank asks for. Status: October 2026.

How it works

The exemption order is not an extra allowance. It is how the saver’s allowance (Sparer-Pauschbetrag) reaches your account during the year. The allowance is €1,000 per person and year, or €2,000 combined for spouses assessed jointly (§ 20 (9) EStG).

• Split it: you can spread the amount across several banks, as long as the total stays within €1,000 or €2,000.
• Tax ID: the order only works with your German tax identification number (Steuer-ID); a joint order for spouses needs both numbers (§ 44a (2a) EStG).
• Reporting: every bank reports to the Federal Central Tax Office how much income it paid out tax-free under your order (§ 45d EStG), so an over-allocation shows up.
• Joint orders: with a joint order the bank also offsets the losses of both spouses against each other (§ 43a (3) EStG).

If your total income is so low that you owe no income tax at all, you can ask the tax office for a Nichtveranlagungs-Bescheinigung instead. It is valid for at most three years (§ 44a (2) EStG).

Example: €1,000 split well and badly

Lea expects €300 interest in 2026 on a savings account at bank A. Her brokerage account at broker B will produce €900 of taxable income (after the Teilfreistellung). Together that is €1,200.

Split	Tax withheld at B	Result
A: €300, B: €700	€200 × 26.375 % = €52.75	correct, nothing to reclaim
A: €1,000, B: €0	€900 × 26.375 % = €237.38	€700 of allowance unused at A

In the second case Lea overpays €184.63 during the year. She only gets it back by filing a tax return with Anlage KAP; the law names exactly this case, an allowance that was not fully used (§ 32d (4) EStG). The 26.375 % is 25 % tax plus 5.5 % surcharge on it, without church tax.

Common mistakes

• Old orders stay put. After switching banks the allowance often still sits at an account that barely pays anything. Check the split once a year.
• The total is too high. More than €1,000 or €2,000 is not allowed, and the § 45d reports make it visible.
• Forgetting the Vorabpauschale. Accumulating ETFs still create a taxable amount every year, debited in January. The order at your broker covers it; the Vorabpauschale calculator shows how much.
• Children have their own allowance. An account in a child’s name needs its own order with the child’s tax ID.
• It does not lower tax above the allowance. Income above it pays the Abgeltungsteuer. On a very low income, the Günstigerprüfung can produce less tax.

What it means for your plan

The exemption order does not change how much tax you owe for the year. It changes when you pay it and whether you need a tax return to get money back. For planning, what counts is the allowance itself: up to €1,000 of investment income a year stays tax-free, €2,000 for a married couple. The ETF savings plan calculator applies it when it works out the tax on your returns.