Employee savings allowance

The employee savings allowance is a state savings subsidy that is paid to employees whose employer invests capital-forming benefits within the meaning of § 2 of the Fifth Asset Formation Act (VermBG) for them. Beneficiary forms of investment are: Company forms of savings such as equity funds or employee equity participation building loan contract Loan repayment for owner-occupied property open-ended investment funds Business credits at registered cooperatives The employee savings allowance is only paid if certain income limits are not exceeded, the taxable income may not exceed 20,000 euros in the calendar year of the capital-forming benefits or 40,000 euros in the case of joint assessment. Lower income limits apply to home savings contracts (17,900/35,800 euros). The employee savings allowance amounts to 9 percent of an amount of a maximum of 470 euros per year for certain expenses in connection with housing savings and housing subsidies and 20 percent of a maximum of 400 euros for capital-forming benefits of a different kind. The employee savings allowance is determined on request by the tax office responsible for taxing the employee according to income. The determination of the employee savings allowance is usually applied for with the income tax return. Entitlement to the employee savings allowance arises at the end of the calendar year in which the capital-forming benefits were invested. It is determined by the tax office of his place of residence at the request of the employee. The payment of the employee savings allowance requires a six- or seven-year commitment period. However, this does not mean that deposits have to be made over the entire term. The employee savings allowance is paid out with the expiry of the blocking period prescribed for the respective form of investment, upon expiry of the blocking and repayment periods specified in the Housing Premium Act or in the Ordinance on the Implementation of the Housing Premium Act, with the allocation of the home savings contract, or in cases of harmless disposition.

The application for the determination of the employee savings allowance is usually made with the income tax return. Electronic applications and forms can be created and submitted free of charge via the online portal of the tax administration (ELSTER). Paper forms for the income tax return are available at all tax offices in the state of Rhineland-Palatinate. In addition, the forms are available for download on the homepage of the State Office for Taxes.

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Last update or date of publication
20.03.2020