German Withholding Tax for Traders: How the Exemption Order Works
The saver's allowance is the statutory tax free amount on investment income; the exemption order is the instruction telling your bank to apply it. Without that order a German broker withholds tax even when your annual gain sits well below the allowance. You get the money back only through your tax return, and that takes a year.
What separates the allowance from the exemption order?
The two terms get conflated constantly but describe different things.
The saver's allowance is yours by law. It exists whether or not you do anything, and it takes effect at the latest in your tax return.
The exemption order is a declaration you file with your bank. It ensures the allowance is applied already at the withholding stage rather than a year later at assessment.
In practice: without an exemption order you lose nothing, but you hand your broker an interest free advance on tax you do not actually owe.
Who the difference genuinely matters to comes down to one question: do you file a tax return anyway? If you do, a missing exemption order costs you only time, because the allowance gets applied there automatically. If you do not, the order is the only route to the allowance at all, and then it is not optional but the entire effect.
How large is the allowance?
It stands at 1,000 euros per year for individuals and 2,000 euros for jointly assessed spouses or civil partners. That level has been unchanged since 2023 and was not adjusted for 2026 either.
It is a genuine allowance rather than a threshold. Someone with 1,200 euros of investment income is taxed only on the 200 euros above it, not on the entire amount. That is an important contrast with other limits in German tax law, such as the one applying to private sale transactions.
What gets withheld without an exemption order?
A German broker withholds 25 percent capital gains tax on taxable investment income, plus a 5.5 percent solidarity surcharge. Note the base of that surcharge: the 5.5 percent is calculated on the tax, not on your gain. Anyone liable for church tax pays that in addition, at a rate set by their federal state.
The legal basis sits in section 32d of the Income Tax Act and the withholding provisions. The exemption order itself is governed by section 44a.
How do you split it across several brokers?
You can file an exemption order with several banks. The only constraint is that the sum of all orders must not exceed the allowance.
Two sensible approaches exist for splitting. Either place the entire amount with the institution where you expect most of your income, or divide it roughly by expected income when several providers regularly produce some.
What to avoid is splitting by instinct into many small amounts. If part goes unused because one broker produced less income than expected, you do recover it through your tax return, but you have incurred exactly the effort the exemption order was meant to save.
Until when can you file or change it?
An exemption order can be filed and amended during the current calendar year, up to 31 December depending on your bank's cut off. Banks no longer accept orders for tax years that have already ended.
A practical rule follows: check in autumn whether your split still matches your actual income, and correct it while you still can. The second date worth noting in that period is 15 December for the loss certificate, covered in offsetting trading losses in Germany.
In which order do loss pools and the allowance apply?
This question rarely appears in guides and still explains many surprising statements. Your bank offsets within the loss pools first and applies the exemption order only to whatever remains as a gain afterwards.
An example with illustrative figures: with 3,000 euros of gains and 2,500 euros of offsettable losses, 500 euros remain. The allowance is applied only to those 500 euros, so your exemption order stays largely unused.
That is not a disadvantage, but it explains why a generously sized exemption order has no effect in a loss making year. Which losses fall into which pool is covered in the article linked above.
What counts as investment income?
The allowance covers not only price gains but the entire category of investment income under section 20 of the Income Tax Act. That includes, among others:
- gains from selling securities
- dividends and distributions
- interest on deposits and bonds
- income from funds and certificates
- results from derivatives
One consequence gets overlooked regularly: the allowance is not granted per asset class but once for all of that income combined. Earning interest on a savings account and gains in a brokerage account means both share the same amount.
That is exactly what turns splitting the exemption order into an arithmetic exercise rather than a formality. When a savings account reliably produces interest while your brokerage results fluctuate, it often makes sense to cover the predictable part first and place the remainder where income is expected.
What applies with a foreign broker?
There is no exemption order there, because the institution does not withhold German capital gains tax. You declare the income in your tax return instead, and the allowance is applied at that point.
So the allowance is not lost, only its timing shifts. What is added is effort: your own schedule, your own declaration, your own evidence. How much that difference weighs depends on your trading volume and belongs among the criteria for choosing a broker, see comparing trading brokers.
When is a non assessment certificate worthwhile?
It is the special case for people whose total income falls below the basic tax free amount, such as students or those on a small pension. With that certificate the bank exempts investment income from withholding even beyond the saver's allowance.
In that situation it replaces the exemption order and is applied for at the tax office. Whether you meet the conditions depends on your total income, and that is exactly the kind of question to settle with a qualified tax adviser or directly with the tax office.
What applies to crypto assets?
None of this. Crypto held privately falls outside the flat withholding regime and under private sale transactions instead. There is no exemption order, no withholding by the exchange, and no saver's allowance.
A separate holding period and a separate threshold apply instead, and complete documentation sits with you. Understanding that separation cleanly prevents the most common confusion in this area.
What should you document?
Four entries suffice, and they cost you a few minutes once a year:
- Which amount sits with which institution? With the date of the last change.
- How much was actually used? Your annual tax statement shows it.
- Where did allowance go unused? That is the basis for correcting next year's split.
- Which income came through foreign providers? It appears on no German statement.
The fourth is what costs time in spring when it is missing. Anyone already recording their trades continuously has the basis for it, see trading journal.
Conclusion
The allowance is yours regardless; the exemption order merely collects it earlier. It stands at 1,000 euros for individuals and 2,000 for jointly assessed couples, can be split across banks and amended during the year. Loss pools apply before the allowance, which is why it stays largely unused in loss making years. Neither foreign brokers nor crypto assets work this way.
Disclaimer: this article gives a general overview as of August 2026 and is not tax or legal advice. The example figures are illustrative. Tax law changes, and treatment depends on your personal circumstances. Discuss your situation with a qualified tax adviser.
Read next: Switching Brokers: Which Trading Records You Lose in a Transfer
Whether your allowance was actually used up only becomes visible in the annual statement. For reading your annual tax statement item by item, see the dedicated guide.