Saver's allowance (Sparerpauschbetrag): €1,000 of investment income tax-free
The saver's allowance (Sparer-Pauschbetrag) is a flat amount deducted from your German investment income each year: €1,000 per person, €2,000 for spouses assessed jointly (§ 20 (9) EStG). Income up to that amount is tax-free; actual costs cannot be deducted on top.
Also: Sparerpauschbetrag · Sparer-Pauschbetrag · Sparerfreibetrag · German capital gains allowance
In 2026 the saver’s allowance is €1,000 per person and €2,000 for spouses assessed jointly (§ 20 (9) EStG). It was raised from €801 and €1,602 by the Annual Tax Act 2022. No change has been decided for 2027. It applies to anyone taxed in Germany, so expats with a German broker account get it too. Status: October 2026.
How it works
Legally it is a flat allowance for expenses: €1,000 is deducted from your investment income and only the rest is taxed. Real costs such as custody fees or interest on a securities loan cannot be deducted in addition. The deduction is capped at your income, so it never creates a loss (§ 20 (9) sentence 4 EStG).
For a married couple the joint amount is first split half and half. If one partner earns less than €1,000, the unused part moves to the other (§ 20 (9) sentence 3 EStG).
For the allowance to work during the year, give your bank a Freistellungsauftrag. Without it the bank withholds tax and you reclaim it with your tax return (§ 32d (4) EStG).
How much money does €1,000 cover?
It depends on the investment. Three 2026 examples, each for one person’s allowance:
| Investment | Taxable income | Balance up to which it stays tax-free |
|---|---|---|
| Savings account paying 2 % | 2 % of the balance | €50,000 |
| Accumulating equity ETF (Vorabpauschale only) | 3.20 % × 70 % × 70 % = 1.568 % | about €63,800 |
| Distributing equity ETF paying 2 % | 2 % × 70 % = 1.4 % | about €71,400 |
The 70 % comes from the Teilfreistellung for equity funds (30 % tax-free). The Vorabpauschale also counts only 70 % of the 3.20 % base rate, and only if the fund gained at least that much during the year.
The allowance never saves more than €263.75 of tax a year: €1,000 × 25 % flat tax × 1.055 for the solidarity surcharge, without church tax.
Example: selling with a €10,000 gain
You sell equity ETF units with a €10,000 gain. 70 % is taxable, so €7,000. After the allowance €6,000 remains, taxed at 26.375 %: €1,582.50. Without the partial exemption and the allowance it would be €2,637.50.
Common misunderstandings
- “It applies per account.” No, it applies per person and year, however many banks you use.
- “Unused allowance carries over.” No. What you do not use in a year is lost. Some investors therefore realise gains up to the allowance and buy back; whether that pays depends on trading costs.
- “It covers rent or business income.” No, only investment income held privately.
- “Children share their parents’ allowance.” No, each child has their own.
In your plan
For a small portfolio the allowance removes a large share of the tax; for a large one it hardly matters. When you draw on savings in retirement, spreading sales over several years lets part of the gain fall into the allowance each year. The ETF savings plan calculator and the compound interest calculator show when your returns pass the allowance. What lies above it is covered by the Abgeltungsteuer.