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From 2023, the traffic light coalition wants to increase the saver's allowance from 801 to 1000 euros per person and year.
Double for married couples.
What this means for you: You can save even more money if you do it right.
Since hardly any interest is paid on fixed-term deposits and call money, it currently makes sense to focus your saver's allowance on the deposit.
But how does one do it?
In fact, you can save a tidy sum over time when investing if you tax income every year and use the tax-free allowance for it.
With the current allowance of EUR 800, a return of at least EUR 12,000 can be generated over 15 years without having to pay taxes.
If the return is not in the form of interest, but rather as a dividend or as a price gain on certain investment funds and ETFs, there is even more to it, because there is a special tax regulation for them.
In the case of equity funds, only 70 percent of the income is tax-deductible.
With the EUR 801 tax-free allowance, you can collect EUR 1,144 in dividends and capital gains tax-free every year.
Married couples as always double.
I have chosen two examples to illustrate this:
The investor has deposited EUR 10,000 in the securities account and then transfers another EUR 200 every month with a savings plan.
Let's assume that the depot is free of charge (easily possible) and the execution of the savings plan does not cost anything either.
It's not that easy, but even at low cost it hardly makes a difference.
After 15 years, the woman has paid in 36,000 euros in installments, with the 10,000 euros at the beginning, so a total of 46,000 euros.
A portfolio with an ETF on the MSCI World has achieved an average return of seven percent per year in recent decades.
After 15 years, around 90,000 euros would come out.
If she then sells everything, she would have to pay a lot of taxes.
It works out like this:
Deposit balance: 90,000 euros
minus 10,000 euros deposit at the beginning
minus 36,000 euros in installments
makes 44,000 euros.
She may have had to pay a few euros in flat-rate taxation beforehand.
This lump-sum taxation on the so-called advance lump sum has existed since 2018. It is actually intended to tax part of the fund income in advance, but is based on an interest rate set by the Bundesbank every year.
In the current phase of low interest rates, it is super small and is now even at zero percent for the second year.
So the flat rate is practically on pause.
That's why I'm counting here without further.
With our model calculation, the investor has a profit of 44,000 euros. With an ETF, withholding tax for funds is due at 25 percent, plus here always the solidarity surcharge, so a total of at least 26.4 percent taxes. However, with such funds, the tax office only credits the taxes to 70 percent of the sales profit. As a result, about 8120 euros in taxes are due.
If the lady had now wanted to use her entire saver's allowance each year for the deposit, she would have sold so many shares in December that the profit corresponds to the allowance.
Then she would have had to buy the shares again.
In this way, she could ensure that a total of around 17,160 euros in profit would be tax-free, 15 times 1144 euros.
Instead of 44,000 euros, only just under 26,840 euros are then taxable, the tax burden falls to just under 5000 euros.
Tax savings over 3100 euros.
If the saver's allowance increases to 1000 euros in the future, dividends and capital gains of 1429 euros per year can be collected tax-free with the same model and then immediately reinvested - a quarter more.
Accordingly, the tax burden with this method is even reduced by almost 4000 euros.
Buy more quickly
In practice, however, there is a small challenge for the investor: How do I find out when I have made 1144 euros in income from a sale or 1429 euros in the future?
After all, the tax office assumes with every sale that I am selling and paying tax on the oldest shares in the portfolio, i.e. those with the highest profit share.
Fifo means in technical jargon: First in, first out.
Answer: I don't have to be that precise.
Even if I sold and bought a little too many shares for this, the advantage remains the same.
Two other things are crucial, firstly that I put on the boat again straight away.
Because if I put off re-entry and even get the idea of waiting for "more favorable prices", the stock market can thwart my plan.
Better to invest quickly and think about it.
And secondly, that I keep the documents because in case of doubt I have to prove to the tax office that I have sold in the meantime and have already paid taxes.
The second example:
The second example:
Our investor inherited EUR 30,000 and invests it in the ETF. As in the example above, it returns seven percent every year, of which around two percent is dividends and five percent is price gains. In the first year, therefore, a dividend of 600 euros (110 euros for taxes) and 1,500 euros of book profit due to the price increase. Of this, she realizes 544 euros by selling shares with a current value of 11,420 euros before the end of the year and buying them again directly, and thus stays within the scope of her savings allowance. Over the next few years, the use of their lump sum gradually shifts, because the dividends account for a larger share as the portfolio value increases. In the 14th year, the dividend income even completely fills the savings allowance. Accordingly, she can reduce her amounts for partial sale and repurchase in order to get the 1144 euros yield.
If you want to use some of the money, just do that and just deposit the rest of the withdrawal back into the deposit. The tax saving mechanism remains.
If the saver's allowance increases to EUR 1,000 from 2023, the investor can in principle collect EUR 1,429 in income from the custody account tax-free every year.
That means she should sell shares for around 17,500 euros in the first year, collect the income tax-free and buy the shares again.
In the second year, the oldest remaining 12,500 euros in the depot would yield almost 1,300 euros in return, so they are sold, the profit taken tax-free and reinvested.
The same works again in year three.
From year four, the investor would have to look at how much yield is already in the oldest security shares and can reduce the sale and purchase sums accordingly.
Why you might not take full advantage of the savings
There are still three important variables to consider.
transaction costs for purchase and repurchase
In the case of neo-brokers, nothing at all or only a symbolic euro is due here.
With direct banks, on the other hand, with a sales volume of 5000 euros, fees of the order of 10 to 20 euros can be expected.
that I mentioned above.
At the moment it is at zero, but of course it can rise again.
And if the flat-rate taxation has an effect, the investor has to sell and buy back correspondingly less.
Other changes in tax law over the next 15 years could also affect the calculation.
And thirdly, the
development of the stocks
The seven percent annual return is of course only an average value.
Sometimes share prices rise more sharply over the year, but some years there will also be price losses.
If our investor is confronted with price declines right at the beginning and this only levels out again in the later years, she can of course no longer realize quite as much tax-free profit.
After all, the allowances for the first few years cannot be used.
In both models, with optimal selling and buying back, a tax saving of 210 euros per year can currently be achieved (double that for married couples).
In the future it will be a good 260 euros.
Once the routine works, it's a useful exercise with a high hourly wage.