In 2024, there will be some tax changes in Germany that will enable employees to receive accumulative benefits. In many cases, this can be done with minimal effort. Starting from 2024, anyone eligible for capital-forming benefits will simply need to check a box on their tax declaration.
Related topic: Are civil benefits available to pensioners in Germany
This will allow individuals to receive additional funds from the government in certain cases—a small but welcome bonus provided by the state to support the creation of wealth for citizens.
Who and how can apply for accumulative benefits in Germany:
Up until now, the state has only supported low-income workers with this accumulative benefit. Income restrictions have been quite stringent, with eligibility limited to single individuals:
- With income less than 20,000 euros;
- Couples with a combined income below 40,000 euros.
Currently, this has affected approximately 8 million people. As these limits will be doubled from 2024, an additional 14 million employees will now have the opportunity to apply for the benefit along with their tax declaration.
Applying for the savings benefit is straightforward:
- One just needs to check the box next to the "Determination of savings benefits for the employee" on the main form (cover sheet) of the tax declaration.
- Then, in line 42, enter "1" for oneself and one's partner.
The relevant evidence will be automatically sent to the tax office by the financial institution with which the contract for capital-forming services was concluded. The ultimate savings rate depends on the size and type of capital-forming benefits.
For equity capital funds, one can receive up to 20% of the annual amount paid by the government, provided it does not exceed 400 euros. For building savings contracts, it is 9%, and the services received here cannot exceed 470 euros.
Employees who use both forms of investment, i.e., have a building savings contract and contribute to equity funds, can receive savings supplements for both. For equity capital funds:
- This can be up to 80 euros per year;
- For building savings contracts, up to 43 euros.
Overall, employees will receive benefits of up to 123 euros per year. While the amount may be relatively small, these extra funds will be welcomed by many.
Related topics:
Starting from 2024, pensioners in Germany might also be eligible for these tax changes that allow employees to receive accumulative benefits, as the eligibility criteria for these benefits are expected to expand.
With the upcoming changes in 2024, pensioners who meet the new eligibility requirements could potentially benefit from checking the appropriate box on their tax declarations, just like current employees do.
