Exemption for Interest Withholding Tax

Capital Gain in Germany is taxed just like in Britain and the USA. And, like in the USA, German Banks must also withhold a percentage of an account holder’s profits made from capital gains (withholding tax). Fortunately, just like in the USA, this backup withholding by the bank can also be exempted, at least up to a certain amount. Unfortunately, starting in 2007 the German Exemption for Withholding Tax (Freistellung) has been reduced to a limit of only € 750 / € 1,500 (single / married). The good news is that, following the trend in improved electronic banking services, an application for exemption from withholding tax (Freistellungsantrag) can now be made to a bank online. And, you are allowed to split the exemption amount between two or more accounts. The advantage is that you do not have to fill out the tax paperwork in the following year and wait to get your refund on the exempted amount for withholding tax. .


If this is something for you, check your banks website or ask your banker if they already support such online assignment. Do not worry to place such declaration online. It will be safe, because you will need your PIN and TAN – just like online transfers! The Federal Ministry of Finances has already given its okay.


It will be easy to file an exemption, but so will making a mistake be easier. So, keep an overview of all your applicable exemptions by creating a table something like this one:

Exemption Application of

Bank Name
Amount of Exemption
Jan 5, 06
No. 1
March 15, 07
No. 2

Published on the old CMS: 2007/1/9
Read on the old CMS till November 2008: 1,381 reads

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