Vermögenswirksame

Vermögenswirksame Leistungen, often abbreviated as VL, are a German legal construct that allows employees to receive employer contributions towards specific savings plans. These contributions are generally made on top of an employee's regular salary. The purpose of VL is to encourage savings and wealth accumulation among the workforce.

To qualify for vermögenswirksame Leistungen, an employee must have an employment contract. The specific amount of the employer's contribution is often negotiated in collective bargaining agreements or individual employment contracts, though there are statutory maximums. The employee can choose from a range of approved savings products, including building savings contracts (Bausparverträge), savings accounts, or investment funds.

A key feature of vermögenswirksame Leistungen is that the employer's contributions are usually tax-free and exempt from social security contributions for the employee, up to certain limits. Furthermore, depending on the chosen savings product and the employee's income, the state may provide additional subsidies in the form of housing bonuses (Wohnungsbauprämie) or employee savings bonuses (Arbeitnehmersparzulage). These subsidies are intended to further incentivize savings, particularly for lower and middle-income earners. The savings must typically be held for a minimum period, often six or seven years, before they can be accessed without losing the associated benefits.