Employee savings allowance

The employee savings allowance is a state savings incentive paid to employees whose employer invests capital-forming benefits for them within the meaning of Section 2 of the Fifth Capital Formation Act (VermBG).

Beneficiary forms of investment are

• company savings schemes such as equity funds or employee capital participation
• building society savings contract
• Loan repayment for owner-occupied property
• open-ended investment funds
• business assets in registered cooperatives

The employee savings allowance is only paid if certain income limits are not exceeded. From 2024, taxable income may not exceed EUR 40,000 in the calendar year of the capital-forming benefits or EUR 80,000 in the case of joint assessment.

The employee savings allowance amounts to 9 percent of a maximum amount of EUR 470 per year for certain expenses in connection with housing savings and housing construction subsidies and 20 percent of a maximum amount of EUR 400 for other types of capital-forming benefits.

The employee savings allowance is determined on application by the tax office responsible for taxing the employee's income. The assessment of the employee savings allowance is usually applied for with the income tax return.

The 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 employee's local tax office upon application. Payment of the employee savings allowance requires a six or seven-year commitment period. However, this does not mean that payments must be made over the entire term. The employee savings allowance is paid out

• on expiry of the lock-in period prescribed for the respective investment form,
• on 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,
• upon allocation of the building society contract, or in cases of harmless disposal.