⏱️ 21 min read · 4,183 words · Updated Jun 24, 2026

Understanding Freistellungsauftrag Germany explained is essential for making informed decisions in today’s market.

Let’s get something straight right away. If you have a brokerage account with a German bank or a broker that operates in Germany, you’ve probably seen the term “Freistellungsauftrag” and either ignored it or clicked through it without reading. That’s a mistake.

“A quiet, expensive mistake that costs investors hundreds of euros every single year.”

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The Freistellungsauftrag is Germany’s way of letting you claim your personal capital gains tax exemption. In 2025, that exemption is 1,000 euros per person (or 2,000 euros for married couples filing jointly). That might not sound like much, but if you’re reinvesting dividends, selling ETFs at a profit, or trading stocks, it adds up fast. And if you don’t have a valid Freistellungsauftrag on file with your broker, they will withhold 26.375 percent of every single capital gain the moment it hits your account.

This article is your Freistellungsauftrag Germany explained Guide. No fluff, no filler. Just what you need to know to stop leaving money on the table.

Throughout this guide, we’ll explore Freistellungsauftrag Germany explained and how it directly impacts your financial future.

What Exactly Is a Freistellungsauftrag? – Freistellungsauftrag Germany explained

The word itself translates roughly to “exemption order.” That’s actually a pretty good description. It’s a document you submit to your bank or broker that tells them: “Hey, I want to use my personal capital gains tax exemption, please don’t withhold tax on my gains up to the allowed amount.”

Under German tax law, specifically the Abgeltungsteuer (the flat capital gains tax), every resident taxpayer gets a Sparerpauschbetrag. That’s the 1,000 euro annual allowance. Gains below this threshold are tax-free. But here’s the thing. Your broker doesn’t automatically apply this exemption. By default, they withhold the full tax on every gain. You have to actively claim it.

The Freistellungsauftrag is that claim. Without it, you’re overpaying taxes and then have to file your annual tax return (Steuererklärung) to get the money back. Which means waiting months for a refund from the Finanzamt. Most people don’t even bother filing for the refund, so the tax office just keeps their money.

I think that’s one of the most frustrating parts of the German tax system. The money is yours by law, but the system is designed so you either jump through hoops to get it or you just let it go.

How the Freistellungsauftrag Actually Works in Practice

Here’s where it gets slightly complicated, and where most people mess things up.

You can submit a Freistellungsauftrag to one financial institution. Or you can split it across multiple institutions. But the total across all institutions cannot exceed your annual allowance. So if you’re single, the sum of all your Freistellungsauftrag allocations across all brokers must be 1,000 euros or less.

Let’s say you have accounts at Trade Republic, ING, and Scalable Capital. You could allocate 500 euros to Trade Republic, 300 euros to ING, and 200 euros to Scalable Capital. That adds up to 1,000 euros. Perfect. But if you accidentally set 1,000 euros at each broker, you’ve over-claimed by 2,000 euros. The Finanzamt will notice, and you’ll owe tax on the excess.

Most brokers make this easier than they used to. Trade Republic, for example, lets you set your Freistellungsauftrag directly in the app. You go to your profile, find the tax settings, and enter the amount. It takes about 30 seconds. ING and DKB have similar processes, though their interfaces are, let’s say, less modern.

“The Freistellungsauftrag is the single most overlooked tax document for retail investors in Germany. Every year, billions in over-withheld tax sit unclaimed because people never filed one.”

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The 2025 Numbers You Need to Know

The Sparerpauschbetrag changed in 2025. It used to be 801 euros for singles and 1,602 euros for married couples. As of January 1, 2025, it doubled to 1,000 euros and 2,000 euros respectively. This was part of the Wachstumschancengesetz (Growth Opportunities Act) passed by the German government.

The withholding tax rate on capital gains in Germany is 25 percent base rate plus 5.5 percent solidarity surcharge, which comes to 26.375 percent. If you’re subject to church tax (Kirchensteuer), add another 8 or 9 percent on top of the solidarity surcharge portion, bringing the total to around 27.8 or 27.9 percent depending on your state.

So on a 1,000 euro gain, without a Freistellungsauftrag, your broker would withhold roughly 263.75 euros. With a properly filed Freistellungsauftrag, that withholding is zero. That’s real money, especially if you’re compounding gains over years.

The math gets more interesting when you think about it over a decade. If you’re generating 500 euros in annual capital gains, that’s 5,000 euros over ten years. At 26.375 percent, that’s 1,318.75 euros in unnecessary tax if you never filed the exemption order. For a single person, all of that should have been tax-free.

Who Needs a Freistellungsauftrag?

If you’re a tax resident in Germany and you hold any investment account, ETF portfolio, stock portfolio, or even a savings account that generates interest, you need a Freistellungsauftrag. It applies to:

– Capital gains from selling stocks, ETFs, or mutual funds
– Dividend income
– Interest from fixed-term deposits (Festgeld) and savings accounts
– Gains from bonds sold before maturity

It does not apply to real estate gains, business income, or income from self-employment. Those fall under different tax categories entirely.

One thing that surprises people: even expats living in Germany who aren’t sure about their tax residency status may still be considered tax residents under German law. If you’ve lived in Germany for more than 183 days in a year, you’re almost certainly a tax resident. That means the Freistellungsauftrag applies to you too.

And here’s something people forget. If you moved to Germany mid-year, your allowance is prorated. You don’t get the full 1,000 euros if you were only tax resident for six months. The Finanzamt calculates this based on your exact period of residency.

How to Set Up Your Freistellungsauftrag Step by Step

Setting it up is straightforward, but the process varies slightly depending on your broker. Here’s the general approach.

First, log into your brokerage or bank account. Look for sections labeled “Steuer” (tax), “Freistellungsauftrag,” or “Sparerpauschbetrag.” Most German brokers have this somewhere in the settings or profile area.

Second, decide how much of your allowance you want to allocate to this particular institution. Remember, the total across all institutions cannot exceed your annual limit.

Third, enter the amount and confirm. Some brokers require you to confirm via a TAN (transaction authentication number) or push notification. Others just save it immediately.

Fourth, check that it’s actually active. This is where people slip up. They set it up once and forget about it. But some brokers require you to renew the Freistellungsauftrag annually. Trade Republic, for instance, carries over your setting from the previous year, but it’s worth double-checking every January. DKB and ING have historically required annual renewal, though their processes have gotten better.

Fifth, if you have multiple brokers, keep a simple spreadsheet. Record the broker name, the amount allocated, and the date you set it up. This takes five minutes and saves you a headache at tax time.

Common Mistakes That Cost You Money

Mistake number one: setting 1,000 euros at every broker. I’ve seen this happen more times than you’d think. Someone opens a Trade Republic account, sets their Freistellungsauftrag to 1,000 euros. Then they open a Scalable Capital account and do the same. Then they move their ING savings account and set it there too. Now they’ve claimed 3,000 euros in exemptions when they’re only entitled to 1,000. The tax office will catch this, and you’ll owe the difference plus potential interest.

Mistake number two: forgetting to update it after a life change. Got married? Your allowance just doubled to 2,000 euros, but only if you update your Freistellungsauftrag to reflect your new filing status. Got divorced? Your allowance drops back to 1,000 euros. Moved abroad and gave up German tax residency? You need to cancel your Freistellungsauftrag entirely.

Mistake number three: assuming your broker handles everything. Some brokers apply the exemption only to gains realized after the Freistellungsauftrag is submitted. If you had gains earlier in the year before submitting it, those gains were already taxed. You can potentially reclaim them through your tax return, but it’s extra work.

Mistake number four: not understanding the difference between a Freistellungsauftrag and an Freistellungsauftrag für Kapitalertragsteuer. They’re the same thing. The longer name just specifies it’s for capital gains tax. Don’t let the terminology confuse you into thinking you need two separate forms.

Freistellungsauftrag at Major German Brokers: A Comparison

Different brokers handle the Freistellungsauftrag differently. Here’s how the major players compare as of 2025.

| Broker | Where to Set It | Auto-Renewal? | Partial Allocation? | Notes |
|—|—|—|—|—|
| Trade Republic | App under Profile > Tax Settings | Carries over annually | Yes, enter any amount | Simplest process of any German broker |
| ING | Online Banking under > Steuern | Must renew annually | Yes, enter any amount | Interface is dated but functional |
| DKB | Online Banking > Wertpapierdepot > Steuer | Must renew annually | Yes, enter any amount | Can be hard to find in the menu |
| Scalable Capital | App/Web under Settings > Tax | Carries over annually | Yes, enter any amount | Works for both Broker and Prime Broker |
| Comdirect | Online Banking > Depot > Steuer | Must renew annually | Yes, enter any amount | Requires TAN confirmation |
| Consorsbank | Online Banking > Verrechnungskonto | Must renew annually | Yes, enter any amount | Part of ING Group, similar process |

The trend is clearly toward making this easier. Trade Republic and Scalable Capital lead the pack with their modern interfaces and auto-renewal features. The traditional banks are catching up, but their processes still feel like they were designed in 2008.

What Happens If You Don’t Have One?

Without a Freistellungsauftrag, your broker withholds the full Abgeltungsteuer on every capital gain. Every single one. Dividends, realized gains from selling securities, interest income. All of it gets hit with the 26.375 percent withholding.

You can reclaim this through your annual tax return by filling out the Anlage KAP (capital gains attachment). The Finanzamt will calculate whether you overpaid and issue a refund. But here’s the reality. Most people don’t file a tax return at all. In Germany, you’re only required to file if your total income exceeds certain thresholds or if you have specific types of income. Many retail investors simply don’t file, which means the overpaid tax stays with the government.

Even if you do file, the process takes time. Refunds from the Finanzamt can take 6 to 12 weeks, sometimes longer. That’s your money sitting in government accounts earning nothing for you.

There’s also the psychological factor. Getting a tax refund feels good, but it means you gave the government an interest-free loan for months. It’s better to not overpay in the first place. That’s exactly what the Freistellungsauftrag does.

Freistellungsauftrag and ETF Investors

If you’re a Passive ETF investor, the Freistellungsauftrag matters just as much as it does for stock pickers. Maybe more so, because ETF investors tend to hold diversified portfolios that generate regular dividend payouts.

Consider a typical scenario. You hold a MSCI World ETF and a FTSE All-World ETF in your portfolio. Over the course of a year, you receive dividends totaling 400 euros. You also rebalance once, selling some of your holdings for a gain of 300 euros. Your total capital income is 700 euros. With a Freistellungsauftrag of 1,000 euros, none of this is taxed. Without it, you’d lose 184.63 euros to withholding tax.

Now scale that up. As your portfolio grows, your annual gains and dividends will eventually exceed 1,000 euros. At that point, only the amount above your allowance gets taxed. But you still want to claim the full 1,000 euros. Every euro of exemption you leave unclaimed is money you’re handing to the state for no reason.

The Freistellungsauftrag also interacts with the Teilfreistellung (partial exemption) for certain ETFs. Equity funds with at least 51 percent stock allocation get a 30 percent tax-free allowance on gains. So on a 1,000 euro gain from an equity ETF, 300 euros is tax-free regardless of your Sparerpauschbetrag, and the remaining 700 euros counts against your Freistellungsauftrag. It’s a layered system, but it works in your favor.

Can You Change or Cancel Your Freistellungsauftrag?

Yes, and you should whenever your circumstances change. You can increase it, decrease it, or cancel it entirely at any time. The change takes effect immediately or at the start of the next processing cycle, depending on your broker.

If you realize in March that you’ve already used up your full 1,000 euro allowance through gains and dividends, you should reduce your Freistellungsauftrag to zero for the rest of the year. Otherwise, your broker might apply the exemption to gains that should actually be taxable.

This is a nuance most guides don’t mention. The Freistellungsauftrag is an advance on your exemption. If your actual gains exceed the exemption amount, you need to adjust. Otherwise, you’ll end up with an incorrect tax position and potential issues with the Finanzamt.

Married couples have an additional consideration. You can each claim 1,000 euros separately, or you can file jointly and claim 2,000 euros combined. The allocation between spouses is flexible. You could put the full 2,000 euros at one broker if that’s where your joint investments are held.

“Most German investors overpay capital gains tax every year. Not because the law requires it, but because they never set up a Freistellungsauftrag. It takes 30 seconds and saves hundreds of euros.”

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The Freistellungsauftrag and Non-German Brokers

This is where things get interesting and where I have to push back on some common advice.

You’ll often hear people say you should only use German brokers because they handle the Freistellungsauftrag automatically. That’s outdated advice. Brokers like Interactive Brokers, Trade Republic (which is technically German but serves all of Europe), and even some international platforms now support the German Freistellungsauftrag.

If you use a non-German broker, they won’t automatically withhold German capital gains tax. You’re responsible for declaring and paying your German tax obligations through your annual tax return. This means you need to keep meticulous records of all your gains, dividends, and interest, and report them yourself using the Anlage KAP.

Some people prefer this approach because it gives them more control. Others find it a nightmare. It depends on your comfort level with German tax forms and your willingness to do the paperwork.

Interactive Brokers, for example, provides detailed tax reports that you can use to fill out your German tax return. But the process of converting their reports into the format the Finanzamt expects is not trivial. You’ll need to understand the difference between the tax treatment of US-domiciled ETFs and Ireland-domiciled ETFs, the US withholding tax on dividends (15 percent under the tax treaty), and how to claim foreign tax credits.

My honest take: if you’re investing in Germany, use a German or Germany-friendly broker for at least your core portfolio. The tax simplicity is worth any minor differences in trading fees.

What About the Vorabpauschale?

The Vorabpauschale (advance lump sum) is a synthetic tax that applies to certain accumulating ETFs. It was introduced in 2018 and it confuses people to this day.

Here’s the short version. If you hold an accumulating ETF that distributes no dividends (or very low dividends), the German tax authorities assume a fictional distribution and tax it. The assumed amount is based on the fund’s value and a government-set base yield. For 2025, the base yield is 1.31 percent of the fund’s value as of January 1.

The Vorabpauschale counts against your Freistellungsauftrag just like real dividends and gains do. So if your Vorabpauschale for the year is 200 euros and your dividends are 300 euros, you’ve used 500 euros of your 1,000 euro allowance. You only have 500 euros left for realized capital gains.

This is another reason to keep track of your Freistellungsauftrag usage throughout the year. The Vorabpauschale is calculated and withheld by your broker automatically. You might not even notice it happening unless you check your transaction history.

Freistellungsauftrag for Married Couples and Families

Marriage changes the equation. As I mentioned, married couples filing jointly get a combined allowance of 2,000 euros. But you need to make sure both spouses have their Freistellungsauftrag set up correctly.

If only one spouse has a brokerage account, they can claim the full 2,000 euros at that broker. The exemption is per tax household, not per individual account. So even if the other spouse has no investments, their allowance can be used by the investing spouse.

For children, the rules are different. Children under 18 generally don’t get their own Sparerpauschbetrag. Their investment income is typically attributed to the parents under the Kinderfreigeld rules and the parents’ exemption applies. Once a child turns 18, they get their own 1,000 euro allowance and can set up their own Freistellungsauftrag.

This is actually a useful planning point. If you’re investing on behalf of a child, be aware that gains above your remaining allowance will be taxed at the full rate. It might make sense to hold children’s investments in tax-efficient vehicles or to spread them across both parents’ accounts to maximize the combined exemption.

Deadlines and Timing

There’s no hard deadline for submitting a Freistellungsauftrag. You can do it at any time during the year. But the sooner you do it, the less tax gets withheld unnecessarily.

Ideally, set it up at the beginning of each calendar year. January 1 is the perfect time. Your allowance resets, and your broker can apply the exemption from the first gain or dividend of the year.

If you set it up mid-year, your broker will apply it going forward. They won’t retroactively refund tax withheld on earlier gains in the same year. You’d need to claim those through your annual tax return.

One practical tip. If you’re switching brokers mid-year, don’t forget to cancel your Freistellungsauftrag at the old broker and set it up at the new one. Otherwise, you might end up with no active exemption at either institution.

Freistellungsauftrag Germany Explained: The Bigger Picture

The Freistellungsauftrag exists because of a fundamental tension in the German tax system. The law says you’re entitled to a tax-free allowance on capital gains. But the system is built around withholding, not self-assessment. Your broker takes the money first, and you have to ask for it back.

Other countries handle this differently. In the UK, your ISA (Individual Savings Account) wrapper means you never pay tax on gains at all. No forms, no withholding, no reclaim process. In the US, your broker reports your gains to the IRS and you pay or get refunded based on your annual tax return. There’s no separate exemption order to file.

Germany’s system is somewhere in between. The Freistellungsauftrag is the bridge between the withholding system and your legal right to the exemption. It’s not elegant, but it works if you use it.

The 2025 increase to 1,000 euros was a meaningful improvement. At 801 euros, the old allowance barely covered the annual gains of a modest portfolio. Now, with 1,000 euros, more investors can stay fully tax-free on their capital income. For a couple with a combined 2,000 euro exemption, it’s enough to cover most passive investment strategies.

What the Freistellungsauftrag Doesn’t Cover

It’s important to understand the limits. The Freistellungsauftrag only covers capital gains tax (Abgeltungsteuer). It doesn’t exempt you from other taxes or obligations.

Income from employment is taxed separately through your wage tax (Lohnsteuer). Rental income is taxed as income from letting and leasing (Einkünfte aus Vermietung und Verpachtung). Business income falls under Einkommensteuer progression.

The Freistellungsauftrag also doesn’t cover church tax or solidarity surcharge on gains that exceed your allowance. Those are calculated on top of the base capital gains tax.

And if you’re a day trader, generating hundreds of thousands in gains annually, the 1,000 euro allowance is irrelevant to you. You’ll be paying the full rate on virtually all your gains. The Freistellungsauftrag is designed for retail investors, not professional traders.

Practical Tips Most Guides Don’t Mention

Keep a screenshot of your Freistellungsauftrag confirmation. Brokers occasionally have technical glitches, and having proof that you submitted the form on a specific date can save you a dispute with the Finanzamt.

If you use multiple brokers, set a calendar reminder for December 15 each year to review your allocations. You want to make sure you haven’t over-claimed before the year ends. Adjustments after December 31 are too late.

When you file your tax return, check the Anlage KAP carefully. Make sure the Freistellungsauftrag amounts reported by your brokers match what you actually allocated. Discrepancies happen more often than you’d expect.

If you discover you over-claimed your exemption in a previous year, don’t panic. File a corrected return or mention it in your next annual return. The Finanzamt is generally reasonable about honest mistakes, especially if you self-report.

Finally, don’t let the complexity scare you off investing. The Freistellungsauftrag is one form, one setting, one small piece of administrative work. The cost of not doing it is far greater than the cost of doing it.

FAQ

What is the Freistellungsauftrag in simple terms? – Freistellungsauftrag Germany explained

It’s a form you submit to your bank or broker telling them to apply your personal capital gains tax exemption. Without it, they withhold 26.375 percent of every capital gain. With it, gains up to 1,000 euros per year (or 2,000 euros for married couples) are tax-free.

Do I need a Freistellungsauftrag for every broker? – Freistellungsauftrag Germany explained

You need to allocate your total allowance across all your brokers. You don’t need a separate form for each one, but you do need to set the correct amount at each institution so the total doesn’t exceed your annual limit.

Can I set up the Freistellungsauftrag online?

Yes, most German brokers let you set it up through their app or online banking portal. Trade Republic, Scalable Capital, ING, DKB, and Comdirect all support online setup. It typically takes under a minute.

What happens if I forget to renew my Freistellungsauftrag?

If your broker requires annual renewal and you forget, they’ll stop applying the exemption. Your gains will be fully taxed until you submit a new one. Some brokers auto-renew, but it’s safest to check every January.

Is the Freistellungsauftrag the same as the Sparerpauschbetrag?

Not exactly. The Sparerpauschbetrag is the actual tax-free allowance (1,000 euros in 2025). The Freistellungsauftrag is the document you file to claim it. Think of the allowance as the right and the Freistellungsauftrag as the paperwork that activates it.

Can I split my Freistellungsauftrag between my spouse and myself?

If you file jointly, you get a combined 2,000 euro allowance. You can allocate it however you want between your accounts. If you file separately, each person gets their own 1,000 euro allowance.

Does the Freistellungsauftrag apply to crypto gains?

Crypto gains in Germany are tax-free if held for more than one year. If sold within a year, they’re taxed as private disposal gains (private Veräußerungsgeschäfte), not under the Abgeltungsteuer. The Freistellungsauftrag doesn’t apply to these gains. However, the 1,000 euro exemption still applies to private disposal gains, though the mechanism is different.

What if I have a loss during the year? Does the Freistellungsauftrag still matter?

Yes. Losses and gains are calculated separately in many cases. Your Freistellungsauftrag protects your gains from withholding regardless of whether you also have losses. However, you can offset losses with gains on your tax return, which may reduce your overall tax liability further.

Sources

• German Federal Ministry of Finance on Sparerpauschbetrag
• Trade Republic Help Center on Freistellungsauftrag
• Bundessteuerblatt on Abgeltungsteuer regulations

Conclusion

The Freistellungsauftrag is one of those things that’s easy to ignore and expensive to forget. Here’s what you should do right now.

Log into every brokerage and bank account you have. Check whether your Freistellungsauftrag is active and set to the correct amount. If you have multiple accounts, make sure the total doesn’t exceed your annual allowance. If you’re married, confirm you’re using the correct joint filing amount.

Set a calendar reminder for January 1, 2026, to review everything again. The allowance resets each year, and your allocation should reset with it.

If you’ve been investing in Germany for years without a Freistellungsauftrag, consider filing a tax return for previous years to reclaim overpaid tax. You can go back four years in most cases, and sometimes longer. That’s money you’re entitled to.

The system isn’t perfect. It puts the burden on you to claim what should arguably be automatic. But that’s the reality of investing in Germany, and understanding it puts you ahead of most people who just let the tax office take more than it should.