Tax-Advantaged Savings: Who Qualifies and What You Get

This scheme allows you to earn a certain amount of profit from your investments without paying taxes on those gains.

👤Who it's for

This scheme is open to all investors. Whether you are managing personal savings or planning for long-term goals, this allowance is available to anyone who earns capital gains through their investment activities.

🎁What you get

You receive a tax-free allowance on your capital gains. This means that when you earn profit from your investments, you can keep up to €1,000 of those gains every single year without paying any tax on them. This allowance is designed to protect a portion of your investment income from being taxed by the government.

💰What it costs you

There is no direct monetary fee required to access this benefit. However, it does require a small amount of administrative time from you. To ensure you receive the benefit, you must file a 'Freistellungsauftrag' with your bank. A 'Freistellungsauftrag' is simply an official instruction you give to your financial institution to tell them how much of your investment income should be exempt from tax.

⚠️The catch to know

The most important thing to understand is that this tax exemption is not applied to your account automatically by the government. If you do not proactively file the required form with your bank, they will follow standard tax regulations and automatically deduct tax from your gains as they are earned. To keep your full profit, you must take the initiative to set up the exemption yourself.

📝How to apply

1. Log into your online banking platform or contact your bank directly to discuss your tax settings.
2. Look for the specific section regarding tax exemptions or the 'Freistellungsauftrag'.
3. Enter the amount you wish to exempt, ensuring you do not exceed the annual limit.
4. Submit the digital or physical form to your bank to ensure your tax-free status is active for the current year.