What are my German capital accumulation benefits?

In your working life, you rarely get a gift, so you have to invest your assets as much as possible so that they can bear "fruits" from which you will also benefit. But what are capital accumulation benefits at all and what do they have to do with tax

Capital accumulation benefits - Paid by the employer to your advantage

Your employer may provide you with capital accumulation benefits, either voluntarily or not at all. This is because there is no legal obligation for him to do so. However, if you are lucky and your employer grants you this advantage, then you can choose between different forms of investment approved by the legislature for capital accumulation benefits which are listed under § 2 of the German Capital Accumulation Act. You can freely choose the investment form as well as the provider. Below is a description of how the benefits are to be taken into account in the tax return.

Your employer does not pay you capital accumulation benefits but makes them available to the provider you choose. You can also add something to the appropriate capital investment from your own pocket if you want. The investment period for capital accumulation benefits is generally 7 years, of which the first 6 years represent the savings phase.

The investment forms allowed for capital accumulation benefits can be divided into building society savings contracts and investment savings. While you may invest in equity investments or shares, the savings are ultimately used to acquire real estate property. It is particularly interesting in that, in addition to the employee savings allowance, you may also receive housing subsidies from the state.

When is the employee savings allowance granted?

In the case of an employee savings allowance, you will receive 20% of a maximum of 400 Euros for singles and 800 euro for married people. You will receive a maximum of 80 or 160 Euros. The taxable income may not exceed 20,000 Euros (or 40,000 Euros for married people)

In the case of building society savings contracts, the employee savings allowance is 9% of a maximum of 470 and 940 Euros respectively. You will receive a maximum of 43 or 86 Euros if your taxable income does not exceed 17,900 euro (singles) or 35,800 euro (married).

How you get the allowance

You must apply for an employee savings allowance with the tax return. To do this, you must submit the so-called capital accumulation benefits Appendix together with the tax return. You must submit the application at the latest four years after the end of the respective savings year. In general, you will receive the capital accumulation benefits Appendix completed by the institute where your capital accumulation benefits is created. Otherwise, you can ask for them at the tax office.