Freistellungsauftrag strategy: splitting across banks, joint accounts, the NV-Bescheinigung and using unused allowance before year-end

What you will learn

• How to split the Sparer-Pauschbetrag across several banks using an income forecast.
• Which income types should receive the allowance first and why.
• When a Nichtveranlagungs-Bescheinigung replaces the allowance entirely.
• How to use unused allowance in December with a sell-and-rebuy that raises your cost basis for free.

Explanation

The Sparer-Pauschbetrag (saver's allowance) is €1,000 per person and €2,000 for jointly assessed spouses per calendar year (as of 2026; check the current amount). The allowance applies automatically in the tax return, but a bank only applies it during the year if you give it a Freistellungsauftrag (FSA, exemption order). An FSA needs your Steuer-Identifikationsnummer (tax ID); banks report all FSA amounts to the BZSt, which checks that your total across banks stays within the limit. Keep a written list.

Splitting. You may split the €1,000 freely across banks and change the split during the year. A change for the current year is accepted until the bank's processing deadline, often early or mid December; an FSA cannot be reduced below the amount already used at that bank. Unused allowance at one bank never moves to another bank; it can only be recovered through the tax return (Anlage KAP, lesson 5).

Forecasting. Estimate for each account: interest, dividends and fund distributions, the Vorabpauschale (charged in early January for the previous year) and realised gains you plan. Two rules of thumb follow from the bank's processing order in lesson 1: give the allowance first to accounts with domestic income (interest, German dividends, accumulating ETFs with a Vorabpauschale) because foreign dividends carry a withholding-tax credit that would be wasted if the allowance covers them; and keep some allowance at the broker where you expect to realise gains, because gains are the easiest income to time.

The January effect. Accumulating funds generate the Vorabpauschale on the first business day of January. If your FSA at that bank is zero, the bank withholds tax in January; a new FSA must be in place before the end of the previous year.

Spouses and children. Jointly assessed spouses give a joint FSA of up to €2,000; it covers individual and joint accounts at that bank, and at year-end the bank nets losses of one spouse against gains of the other. A joint account of unmarried partners cannot receive an FSA; each partner uses the allowance in the tax return. Children have their own €1,000 allowance and tax ID; the FSA on a Junior-Depot is signed by the guardians (lesson 11).

NV-Bescheinigung. If a person's total income, including capital income, stays below the Grundfreibetrag (basic tax-free amount, €12,348 for a single person in 2026) plus allowances, the tax office issues a Nichtveranlagungs-Bescheinigung (NV certificate) on application. It is valid for up to three years; a bank holding it withholds no tax at all, without the €1,000 limit. Typical cases: students, children with larger custody accounts and retirees with small pensions.

Using leftover allowance. The allowance does not carry forward: €400 unused on 31 December is gone. Banks show the used amount in online banking. If you have unrealised gains, sell units with a taxable gain equal to the unused allowance and buy them back: the gain is tax-free and the repurchased units carry a higher acquisition cost, so the future taxable gain is permanently smaller. The only costs are two transaction fees and the spread. For an equity ETF only 70 percent of the gain is taxable, so the gross gain can be larger than the unused allowance.

Worked example

Hypothetical example: a jointly assessed couple expects the following 2026 income. Fees and spreads are ignored.

Total expected: €2,200 against a €2,000 joint allowance, so €200 will be taxable somewhere; the question is where. If the uncovered €200 falls on Bank B's US dividends, the German tax on them (€50) is largely absorbed by the US withholding-tax credit (15 percent of the dividend), so almost nothing is withheld. If it falls on Bank C's interest, the full €52.75 (26.375 percent) is due. Allocation: Bank A €700, Bank C €600, Bank B €700.

Second case: on 1 December a single investor has used only €350 of her €1,000 FSA at her broker. Unused: €650. She holds an equity ETF with €2,000 of unrealised gain. Each euro of gross gain creates €0.70 of taxable gain, so she sells units with a gross gain of €650 / 0.70 = €928.57 and buys them back. Tax saved compared with selling those units in a later year: €650 × 26.375 percent = €171.44. Cost: two orders at, say, €1 each. Her cost basis is now €928.57 higher.

Common mistake

Practice activity

On paper: a single investor receives €150 interest at Bank X and €1,200 of German dividends at Bank Y. On 10 December she has an FSA of €500 at each bank; €150 is used at X and €500 at Y. (a) How much allowance is unused? (b) What change should she request, and what is the saving if Bank Y accepts it for the current year? (c) If Bank Y no longer accepts changes, how else can she recover the money?

Key takeaways

• Split the €1,000 / €2,000 allowance by forecast income, and revise it each December and after opening accounts.
• Let the allowance absorb domestic income first; foreign dividends already carry a withholding-tax credit.
• Spouses use one joint FSA; unmarried joint accounts cannot have one; children have their own allowance and may qualify for an NV-Bescheinigung.
• Unused allowance is lost at year-end; a sell-and-rebuy converts it into a permanently higher cost basis.

Next step

Lesson 3 explains the loss pots that the bank fills and empties before the allowance is even applied.