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MONEY

The key dates to know for Germany’s energy relief payouts

The government is set to roll out around €30 billion in relief to help struggling households with their energy bills this year. But with many people seeing the impact of the rising prices already, when will the changes come into force?

Many people in Germany are eager to know how they can save cash during the energy crisis.
Many people in Germany are eager to know how they can save cash during the energy crisis. Photo: picture alliance/dpa/dpa-Zentralbild | Patrick Pleul

Russia’s invasion of Ukraine has compounded an already volatile energy market and left many households in Germany wondering how they can cover their rising bills. 

At the same time, the rising energy costs have had a knock-on effect on prices across the board, from supermarket goods to mobility. 

In January and February, the government announced two packages of relief measures designed to offset some of this lost spending power.

On Wednesday, the cabinet signed off on the bill to introduce the measures, but this will still need to be passed in the Bundestag and Bundesrat sometime in May with the aim of introducing the first measures in June. 

But there has been criticism of the fact that the impact of much of the financial support may not be felt for some time. 

So, what help can families expect over the coming months – and what are they likely to have to wait for? Here’s what you need to know.

June

June will see the introduction of two major mobility-focussed measures – the €9 monthly transport ticket and a tax cut on fuel – and potentially another relief measure aimed at taxpayers.

  • €9 transport ticket: From June 1st, people will be able to get a monthly travel card for just €9 per month. If all goes to plan, the offer will apply all over Germany for the duration of summer, giving people the chance to enjoy budget public transport during the warmer months. So far, it looks like the measure is due to end in September, but the government is hoping it will help ease the burden of higher fuel costs and encourage a transition to greener transport – at least for the time being
  • Fuel tax cut: For car owners, the government is slashing the energy tax which is normally levied on fuel from June 1st. If all of the savings are passed onto consumers, the price of petrol could go down by as much as 30 cents, and the price of diesel will be reduced by around 14 cents. This measure will also apply for a duration of three months
  • €300 heating allowance: Thought this isn’t set in stone yet, the Finance Ministry is hoping that a €300 energy allowance for taxpayers will be paid out in June on top of employee’s salaries. Self-employed people, on the other hand, will either have to wait until their next advance tax payment or the submission of their tax return next year

READ ALSO: How will Germany’s €9 monthly travel ticket work?

A man turns the radiator on

A man turns the radiator on. Photo: picture alliance/dpa | Fabian Sommer

July

  • Adults who receive social benefits, Hartz IV or social support for asylum seekers will receive two payments of €100 to support them with their energy bills, and an additional €20 per month for each of their children from July
  • The scrapping of the Renewable Energy Act (EEG) levy – a green tax levied on energy bills – has been brought forward to July 1st, 2022. The EEG levy was already halved on January 1st this year, but still costs households around 3.72 cents per kilowatt hour of energy, which equates to around €74 per year for a household using 2,000 kilowatt hours of electricity. The levy will end completely in summer

READ ALSO: Will freelancers benefit from Germany’s €300 energy allowance?

Late 2022: 

  • Climate money: The traffic-light coalition wants to return state funds that have been raised through the CO2 back to the people and has set a deadline of the end of this year to come up with a way to calculate payments via the tax ID. It’s unlikely that the payments will actually start this year, but by 2023 we should know more about how this would work
  • Heating allowance for benefits claimants: Single households who receive housing benefit should get €270 paid on top of their usual welfare payments, while couples will get €350, plus €35 for each additional family member. This may not land in people’s bank accounts for a while though, with the end of 2022 looking like a tentative deadline
  • Kinderbonus: Parents can expect to get a “child bonus” payment of €100 per child, which will be paid out by the Familienkasse (family insurance funds) and offset against the child allowance in the same way as in 2020 and 2021 during the Covid crisis. It’s unclear when this will be paid out, but it’s likely to be some time this year

From 2023: 

A number of the traffic-light coalition’s measures will only take effect in the form of a rebate in the 2022 tax return, meaning it will be at least a few months into next year before people see an impact on their wallet – depending on when they submit their tax return.

These include:

  • Special expenses: The employee lump sum (Arbeitnehmer-Pauschale) – an assumed amount of work-related expenses that the tax office writes off each year without requiring proof – has been retrospectively increased to €1,200 from €1,000
  • Tax-free allowance: The basic tax-free allowance will increase by €363 to €10,347 to compensate for inflation 
  • Commuter allowance: People who travel more than 20km to work will get to write off a higher amount of travel expenses in their tax return next year. From the 21st kilometre onwards, they can write off 38 cents per kilometre as opposed to 35 cents

READ ALSO: Everything you need to know about your German tax return in 2022

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MONEY

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. 

READ ALSO:

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

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