German taxpayers to receive €300 lump sum for energy costs

After a meeting late on Wednesday evening, the German government managed to agree on a package of relief measures for households struggling with energy costs, including cut-price transport tickets and a one-off energy allowance.

A woman adjusts the thermostat on her radiator.
A woman adjusts the thermostat on her radiator. Photo: picture alliance/dpa | Marcus Brandt

The new measures, which include a one-off €300 energy allowance for workers, should offer quick and unbureaucratic relief for low- and middle-income earners, the government said on Thursday.

When the allowance comes in, all employed persons liable to income tax will be paid a one-time flat-rate energy allowance of €300 as a supplement to their salary.

In their original proposals, the SPD had envisioned this money being paid out via the 2023 tax return, which would have the disadvantage of not reaching consumers’ pockets for another two years.

But the government is working on quicker way to release the money to struggling households via monthly salary payments for employees or a cut in advance tax payments for the self-employed. 

People on social welfare such as unemployment benefits are also set to receive a €200 lump sum this year ahead of a review in the living costs allowance.

In addition to the one-time payouts, the traffic-light coalition is also planning a tax cut on fuel for drivers, improved energy efficiency measures and more relief measures for middle- and low-income families.

It will also introduce the SPD’s plans for a ‘child bonus’ on €100 per child, similar to the one introduced during the height of the Covid crisis. 

READ ALSO: Key points – Germany’s proposals for future energy relief

Public transport ticket

There are also plans to slash prices on public transport with a 90-day ticket for just €9 in an attempt to encourage financially burdened car drivers to switch to greener transport options. 

“Taking the bus and train will probably never have been cheaper in Germany,” said Green party co-leader Ricarda Lang. 

The traffic-light coalition of the SPD, Greens and FDP had met at 9pm on Wednesday to thrash out a package of measures that each of the parties would be happy with.

Many of the measures were hotly debated within the cabinet.

One of the most controversial plans – a proposal for a petrol rebate put forward by Finance Minister Christian Lindner (FPD) – didn’t make it into the finalised package. 

Announcing the measures on Thursday morning, the coalition promised that the “middle” of society would be relieved efficiently and in a socially just manner.

FDP leader Christian Lindner said the agreement of the coalition leaders was proof of the government’s ability to take decisive action. 

“The coalition is convinced that we have to protect the people and the economy in the face of these enormous price increases in the short term and for a limited period of time,” he said.

The coalition had agreed on a first relief package in February before the outbreak of the Ukraine war.

Among other things, it provided for the abolition of the Renewable Energy Act (EEG) surcharge, worth billions, on electricity bills from July.

Previously, this was planned for the beginning of 2023. The package also included an increase in the commuter allowance for long-distance commuters.

READ ALSO: EXPLAINED: What Germany’s relief package against rising prices means for you

Member comments

  1. Not sure I am a fan of constantly using tax payer money to support flawed policies. In the end the message is don’t work too hard and earn more as the government will just take it from you and pass it along to others. How about reducing the size of government in Germany, it has to have the most tax payer representatives per capita of any developed country.

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Why German bank customers could soon pay less for their account

A major German bank is set to scrap fees on large balances - and a number of others look set to follow. Here's why people in Germany may be paying less for their savings or current account in the near future.

Why German bank customers could soon pay less for their account

What’s going on? 

Interest rates have been at rock-bottom levels for years, making it much harder for people to get returns on their savings.

In recent years, many banks have even been levying what’s known as negative interest rates on customers. If interest normally incentivises people to save by helping them to grow their money, negative interest basically does the opposite.

If you have a certain amount of money in the bank, your bank will charge you negative interest via a deposit holding fee, which will usually be a certain percentage of your balance.

With N26, for example, balances of over €50,000 are subject to a 0.5 percent fee each year. For a balance of exactly €50,000, that equates to €250 in bank charges just for keeping your money there. 

Some banks even charge a deposit holding fee for balances as low as €5,000 or €10,000 in a current account. 

On Tuesday, ING Deutschland became the first bank to announce that it would be scrapping negative interest rates for the vast majority of its customers.

From July 1st, new customers of ING will be able to deposit up to €500,000 in their account without being charged for it, while existing customers will automatically have the fee-free amount raised to €500,000 from the current €50,000. 

Now, it seems a number of other German banks are planning similar moves. 

Why is ING Deutschland ending the holding fee?

Not entirely out of the goodness of its own heart – though that doesn’t stop it being good news for customers.

The European Central Bank (ECB) is set to make a decision on interest rates in the bloc this July, and most people expect that the bank is poised to increase interest rates from minus 0.5 percent to zero. 

Since banks have basically been passing on the ECB’s fees to their own customers, a hike in the ECB’s interest rate would spell the end of most negative interest-rate accounts in any case. But ING Deutschland said it wanted to pass on the positive interest rate trend to its customers even earlier.

READ ALSO: EXPLAINED: How to save money on your taxes in Germany

“With the increase in the fee-free allowance for credit balances on the current and extra accounts, the deposit fee is no longer applicable for 99.9 percent of our customers,” said Nick Jue, chief executive officer of ING in Germany. “We were one of the last banks to introduce a deposit holding fee and one of the first to virtually abolish it.”

He added that the bank had already kept its promise to abolish the holding fee for almost all customers before the European Central Bank made its decision.

Does this have anything to do with that court decision on bank charges?

That’s definitely a factor. According to a decision in Germany’s Federal Supreme Court last year, credit institutions have to obtain the consent of their customers when making changes to their fees and conditions.

That means that financial institutions have to ask for consent to current fees retrospectively if they don’t want hoards of people trying to claim their money back.

If a customer doesn’t consent to the fees, the bank will usually close that customer’s account.

Man signs a contract

A man in a suit fills in an official form. Photo: picture alliance/dpa/Pixabay | hnw-Gruppe

According to ING Deutschland, the scrapping of negative interest rates on balances up to €500,000 may help to sway those customers who have not yet agreed to the latest terms and conditions – including the deposit holding fee.

Anyone who agrees to the Ts&Cs will automatically be given the higher allowance as of July 1st.

“ING Deutschland expects that the increase in the allowances will convince in particular those customers who have not yet agreed to the General Terms and Conditions including the holding fee, and that the bank will thus terminate fewer customers than last planned,” ING said in a press release. 


What other banks are planning to do this?

According to reports in Bild and Bialo, the other banks planning on ending negative interest rates (or raising the threshold for fee-free balances like ING Deutschland has done) include:

  • Deutsche Bank
  • Commerzbank
  • Deutsche Apotheker- und Ärztebank (Apobank)
  • Dortmunder Volksbank
  • Hamburger Sparkasse (Haspa
  • Frankfurter Sparkasse
  • Frankfurter Volksbank
  • Mittelbrandenburgische Sparkasse
  • Nassauische Sparkasse (Naspa)
  • Ostsächsische Sparkasse Dresden
  • Sparda-Bank München
  • Sparda-Bank Südwest
  • Sparda-Bank West
  • Sparkasse Hannover
  • Sparkasse Pforzheim Calw
  • Volksbank Stuttgart

What does this mean for my savings?

There’s good news and bad news.

The good news is that, from July, you’ll no longer have to pay exorbitant charges just to store your money in a safe place – and you won’t be penalised for saving more. The bad news, on the other hand, is that low interest rates aren’t going away anytime soon.

So while you won’t be losing money hand over fist, you won’t be earning much of a return on your savings either.

Banks in Frankfurt

Skyscrapers in the financial district of Frankfurt am Main. Photo: picture alliance/dpa/dpa-Zentralbild | Fernando Gutierrez-Juarez

“If the interest rate environment continues to develop positively, we will also let our customers participate in this development,” said ING Deutschland’s Nick Jue. “However, the low-interest phase will continue for the time being and broadly diversified investments will remain important.”

Getting a securities account where your money is invested is one way to try and grow your savings, as is investing in property.

Of course, people with mortgages and other loans benefit from the low interest rates – which could be why the German property market is currently booming. 

READ ALSO: Five ways Germany’s soaring inflation could affect your life