Everything you need to know about Vermögenswirksame Leistungen

Two baskets: how to get €122.30 instead of €80

The most common oversight: people open a single contract and receive a single additional payment. Meanwhile, the law establishes two independent baskets, and they are added together.

In total, with a contribution of €870 a year (€72.50 a month), a single employee receives 122,30 € in state top-up; spouses filing a joint tax return receive up to 244,60 €. This is an instant return of 14.1 % even before any market growth.

There is one condition: you need two different contracts — a fund savings plan and a Bausparvertrag. The two bonuses cannot be combined in one contract.

Where no extra payment is due at all

Almost nowhere is this written about, and the difference in money is significant. The law lists the types of contributions by number, and the state top-up is tied to only some of them:

This doesn’t mean that insurance or a bank plan is a bad choice: they have different objectives and a different logic. But you shouldn’t count on a state top-up with this kind of investment, and when comparing options, this difference needs to be taken into account.

Fund requirements

For the fund to entitle the holder to the 20 % supplementary payment, the proportion of shares in it must be at least 60 % per the annual report. Standard global market index funds meet this condition, but the specific list of available funds is determined by your provider — check before opening the agreement.

How to apply and how to receive the additional payment

1. Take out a contract with a provider — a bank, Bausparkasse (building society) or investment platform. You will receive a VL contract number.
2. Get the form for the employer from the provider and pass it on to the accounts department. Important: the employer transfers the money directly to the provider, from its own account — you cannot pay into a VL contract from your personal account.
3. Give the provider consent to the electronic transmission of data and provide your tax ID (Steuer-ID). Without this, there is no right to the additional payment at all.
4. Tick the box for the allocation of the Arbeitnehmer-Sparzulage on your tax return. The paper enclosure Anlage VL is no longer submitted — data is sent to the Finanzamt (tax office) electronically by the provider.

Watch out for outdated sources: some official portals still display income limits of €17,900 and €20,000 — these are the rules from before 2024. The current limits are €40,000 and €80,000.

Employer not paying VL? You still have rights

The employer is only obliged to pay a VL when this is stated in the collective agreement, the company agreement or your employment contract. There is no general statutory obligation.

But there is a rule that almost nobody knows about. Section 11 of the Vermögensbildungsgesetz: pursuant to the employee’s written request the employer is obliged to conclude an agreement on investing a portion of the salary. That is, even if the firm does not add a single euro, you have the right to demand that a part of your own salary be transferred into a VL agreement — and the state top-up is payable in full on these amounts.

It is also worth knowing about the sectors where traditional VL no longer exists. In the metal and electrical industry, VL under collective agreements has been replaced since 2006 by payments into pension products, and in the chemical industry by contributions to an industry pension fund. The state top-up for such payments is not paid. If your collective agreement belongs to one of these sectors, the option under § 11 may be the only way to get the top-up.

Two more practical details

Taxes. VL is part of the salary: it is subject to tax and all social security contributions. The net amount decreases slightly, but pension rights increase. The state supplement itself is free of social security contributions and tax-exempt.

Minijob (marginal employment). VL count towards the secondary employment limit — in 2026 this is €603 a month. If VL push you over this limit, you lose your Minijob status. Check the calculation before submitting the application.

Seven years: how the lock-in period is calculated and when you can access the money early

The phrase “six years saving, waiting on the seventh” describes a practice, but not a law. Legally speaking, it is a single seven-year period starting on 1 January of the year in which the contract is concluded. The obligation to pay contributions is six years from the date of conclusion.

Practical consequence: a contract concluded in December “ages” almost a year faster than one concluded in January.

A trap that voids the contract

If within a full calendar year no contributions are received into the contract — neither from the employer nor from you — the contract is considered terminated and cannot be continued. This is a direct provision of the law, and it hits those who go on parental leave, are off sick for a long time, or change jobs with a gap. If the gap threatens to span a whole year, pay in at least the minimum amount yourself.

When early termination is possible without losing the additional payment

The law provides an exhaustive list of six grounds:

1. death or total incapacity for work of the employee or their spouse occurring after the conclusion of the contract;
2. marriage — but only if it takes place after the contract was concluded and the time elapsed since the start of the seven-year period is at least two years;
3. unemployment that has lasted continuously for at least a year and is still ongoing when the money is withdrawn;
4. professional development — if funds are used within three months for training outside the enterprise, going beyond standard workplace adaptation;
5. transition to self-employment — giving up employment and starting your own business;
6. sale of securities with reinvestment into other eligible securities until the end of the following month.

Moving abroad is not on this list. Early termination due to departure results in the loss of the top-up payment, and any amount already received will have to be returned. At the same time, the actual entitlement to the top-up payment is retained by those who pay taxes in Germany, even if they live abroad. A sensible strategy upon departure is not to terminate the contract, but to let it run until the end of the term.

Technical detail: if you still terminate the contract early and consciously, in the application you usually need to explicitly write the word prämienschädlich (detrimental to the bonus) — otherwise the provider will reject the application citing the seven-year period.

Fees: where the state bonus gets eaten up

The €80-a-year state bonus looks convincing right up until you look at the product fees.

Practical conclusion. If the employer pays a small amount, it makes sense to top up the contribution to €400 a year with your own money: fixed fees are then spread out, and the state top-up reaches its maximum. And choose the product based on the total of all fees, rather than the bank’s name.

Life situations