When we think about our children's future, big dreams often come to mind: a driving license, their first home, a year abroad or studying without financial burdens. All of this costs money - and the earlier you start making provisions for your children, the more relaxed you can be about the future. Many parents underestimate how much potential even small amounts have if they are invested wisely.
Having your own children's account is more than just a modern piggy bank: it is a real tool for long-term wealth accumulation and an underestimated tax advantage. This is because children also have their own tax-free allowance, which makes it possible to legally save capital gains tax-free.
If you use the right accounts, find out about the conditions and follow a few important rules, you can achieve a lot with little effort. In this article, you'll find out how you can invest money in your child's name and save tax in the process - without any stress.
We'll help you find the right investment for your child!
Children have their own allowances - and you should use them!
When it comes to investing money, many parents think of themselves first - but children often offer unexpected tax opportunities. This is because children are also taxable persons with their own rights - and that means they also have their own saver's allowance of 1,000 euros per year. If you make clever use of this, you can secure investment income without the state intervening. A great advantage that many families miss out on!
📌 What does the saver's allowance mean for your child?
If you invest money in an overnight money account, fixed-term deposit account or ETF savings plan in the child's name, the interest or income from funds and shares is allocated to the child for tax purposes - and not to you as the parent. This means that your child is entitled to 1,000 euros of tax-free investment income every year. This can quickly add up to a significant sum when building up long-term assets.
📊 Example: This is how much remains tax-free
Example calculation:
A call money account for your child earns 3% interest per year on a balance of € 30,000. This results in €900 interest - which remains completely tax-free if the saver's allowance is used.
💡 Tip: All you have to do is submit an exemption order to the bank - in the name of the child.
💡 Good to know:
- The tax-free amount applies per child - regardless of the parents' income.
- Without an exemption order, the bank automatically deducts capital gains tax (25% + solidarity surcharge + church tax if applicable).
- A non-assessment certificate may also be useful - more on this in the next section.
So if you are already putting money aside for your child, the right tax framework is doubly worthwhile. Not only will you save tax - you will also ensure that your child receives more of their own earnings. And it's completely legal.
The non-assessment certificate: When the compound interest effect really takes off
As soon as your child's savings grow - for example through regular savings, gifts of money from grandparents or one-off payments - it may happen that the 1,000 euro saver's allowance is no longer sufficient. Then there is the threat of capital gains tax. But don't worry: with a so-called non-assessment certificate (NV certificate), you can continue to avoid the tax authorities.
🧾 What is an NV certificate?
The non-assessment certificate is a document that you can apply for from the tax office. It confirms that your child has no or only very little income and is therefore not assessed, i.e. not subject to income tax. As soon as you submit this certificate to the bank, it is not allowed to withhold tax on investment income - no matter how high the interest or profits are.
✅ Requirements at a glance
- The child is a minor and has income below the basic tax-free allowance (2025: €12,096 per year).
- There is no other taxable income (e.g. from jobs, rental income, etc.).
- The investment income comes from investments in the child's name (e.g. call money account, fund custody account, fixed-term deposit account).
📬 This is how it works:
- Apply for a non-assessment certificate at the local tax office informally or using the official form
- After issue (valid for 3 years) deposit directly with the bank
- Tax-free wealth accumulation can begin!
💡 Tip: Particularly worthwhile for larger investments or when several gifts of money from relatives come together. This way, everything stays in the children's account in the long term - and nothing goes to the tax office.
The right account: Overnight money, fixed-term deposit or custody account?
Anyone who invests money for their child is quickly faced with the question: where to put the money? The good old savings book has had its day - today there are many ways to park your child's assets safely, flexibly and with the prospect of a return. But not every form of investment is suitable for every goal. Here is an overview of which accounts and investments are really worthwhile for children and young people.
🏦 The children's call deposit account - flexible and secure
A call money account in the child's name is ideal if you want to keep the money available at all times - for example, for last-minute wishes, larger purchases or spontaneous gifts of money from relatives.
Advantages:
- Interest on the deposit - currently up to 3 % depending on the bank
- No notice periods, daily access possible
- Very low risks, as there is no price loss
💡 Perfect for pocket money, small savings and first steps towards building up assets.
🔒 Fixed-term deposit: Higher interest rates for long-term goals
A fixed-term deposit account is well suited for plannable goals such as a driving license or your first big trip. The money is "parked" for a fixed term - and usually earns slightly more interest than overnight money.
Important: As a rule, you cannot access the money early.
✔ Tip: Combine fixed-term deposits with call money to remain flexible and profitable at the same time.
📈 Depot with ETFs or funds - for real yield fans
If you are thinking long-term for your child (e.g. education, studies), it is hard to avoid a children's custody account with ETFs or funds.
Advantages:
- High potential returns
- Automated savings plans from € 25
- Ideal for periods from 10 years
📌 Please note: Investments in shares are subject to fluctuations in value - good advice can help here.
🔍 Take a close look: There is a suitable solution for every goal. Many parents opt for a combination of call money, fixed-term deposits and a custody account - this allows them to remain flexible, take advantage of tax benefits and promote their child's long-term wealth accumulation.
Giving with brains: Clever use of allowances
Whether for a birth, christening, first day at school or Christmas - many children regularly receive gifts of money from grandparents, relatives or godparents. These gifts are more than just kindly meant: invested correctly, they make a significant contribution to wealth accumulation. But here too, if you plan tax wisely, you can get more for your offspring - without any additional costs or burdens.
🎁 The gift allowances - a great opportunity
German tax law has generous gift allowances that you should definitely take advantage of:
- 400,000 per parent to each child - tax-free every 10 years
- 200,000 per grandparent to grandchildren
- 20,000 € allowance for other relatives and friends
💡 This means that if both parents transfer €400,000 each to their child, a total of €800,000 remains tax-free - an enormous sum, especially with regard to long-term investments.
⚠️ Important: Transferring ownership correctly
For the tax office to recognize the gift, the money must really be in the child's name. This means that
- The account must be a real child account
- The child becomes the account holder - you merely manage the assets on a fiduciary basis
- You may not use the money for your own purposes
📌 Checklist: How to do it right
- ✅ Open a child account or custody account in the child's name
- ✅ Transfer money to this account
- ✅ Document the gift if necessary (e.g. informal letter)
- ✅ Keep an eye on allowances
If you make regular gifts and invest wisely, you not only create financial security - but also tax advantages for the whole family.
What you need to consider when accessing and managing
Opening an account in your child's name is a great thing - but it also comes with responsibilities. Because although you as the parent usually have power of attorney and can manage the child's account, the money belongs to your child. You are therefore not allowed to simply withdraw it or use it for your own purposes - not even "just for a moment".
👩⚖️ Legal requirements at a glance
According to the law, as a parent you are obliged to manage your child's assets carefully and exclusively in the interests of the child. For example, you may use it for:
- Education and training costs
- Necessary purchases such as school materials or laptops
- Child-friendly insurance (e.g. accident insurance)
❌ Not allowed: Using money from the child account for parents' vacation trips or private purchases.
🕒 And when does the child decide for themselves?
Your power of disposal ends automatically on your 18th birthday - the child then becomes the sole account holder and can freely dispose of all the assets. If you are worried that everything will be "squandered", you should take a closer look at point 7 on the right of disposal with Invest4Kids later on.
💡 Tip: If you invest larger sums, always document the purpose - this will also protect you in the event of queries from the tax office.
Save taxes - but with responsibility
The idea of saving tax via a child account is perfectly legal - if everything is done correctly. However, the tax office now looks very closely at whether the assets actually belong to the child or whether it is a hidden savings measure by the parents.
🔍 The tax office checks these points in particular
- Is the account opened in the child's name?
- Was the money clearly a gift and therefore transferred?
- Do you really only use the proceeds for the child?
- Is investment income properly reported?
If the tax office has any doubts, it can attribute the investment income to you as the parent - and that means: additional payments, capital gains tax, possibly even interest and fines.
📌 5 simple rules to stay on the safe side:
- Always keep the account in the child's name
- Use exemption order or non-assessment certificate
- Document donations well
- No private use of income
- If you are unsure: Ask a tax consultant or specialist advisor
💡 Saving tax for your child is a smart thing to do - but it's also one where diligence counts. With a little attention, you can save your child more money, fewer deductions - and yourself a peaceful night.
We'll help you find the right investment for your child!
- An additional $25,703 per child, thanks to our modern ETF strategy
- Find the perfect ETF investment for your child in a 30-minute video conference from the comfort of your own home.
- Sit back and watch your child's assets grow – our experts will take care of the rest.
Invest4Kids: If you want more than just a children's account
Traditional solutions such as call money or custody accounts make sense - but they reach their limits if you think long-term and want maximum flexibility and security. This is exactly where Invest4Kids comes into play: a clever investment especially for children that is ideal for long-term wealth accumulation - and makes full use of your tax advantages.
🌟 What makes Invest4Kids so special
Invest4Kids essentially works like an ETF savings plan - but offers many exclusive advantages that traditional children's accounts or custody accounts do not:
- No capital gains tax for strategy changes
- Income can be reinvested tax-free
- Right of determination from the age of 18: You retain control, even if your child is of legal age
- Only 50% taxation on payment after the child reaches the age of 62
- Securing conditions: protection against tax and legal changes
- No custody account or transaction fees
- Free, independent advice - individually tailored to your family situation
👪 What parents say about Invest4Kids
"I wanted a secure gift for my daughter - Invest4Kids gave us exactly that: security, flexibility and great advice." - Julia, mother from Berlin
"We were skeptical at first because of the acquisition costs - but in the long term, Invest4Kids is much cheaper than any custody account." - Thomas, father of two daughters
"The ability to secure the money even after their 18th birthday was the decisive factor for us." - Lisa & Markus, parents of a teenager
💡 Tip: With Invest4Kids, you don't have to worry about everything yourself. Our experts will help you find the best solution for your child - free of charge and without any technical jargon.
📞 Getpersonal advice now - and make provisions for real future dreams with Invest4Kids!
We'll help you find the right investment for your child!
- An additional $25,703 per child, thanks to our modern ETF strategy
- Find the perfect ETF investment for your child in a 30-minute video conference from the comfort of your own home.
- Sit back and watch your child's assets grow – our experts will take care of the rest.
Start early, save smart - and give your child real opportunities
Financial provision for children is more than just a well-intentioned resolution - it is an investment in real opportunities. Whether it's a driving license, university studies or their first home, starting to invest savings wisely at an early age gives your child valuable financial freedom - and often saves on taxes legally.
With allowances, non-assessment certificates and the right choice of children's account, call money or custody account, you can make the most of interest and investment income. Invest4Kids offers you even more advantages: maximum flexibility, tax efficiency and personal support from real experts.
💡 Remember: every euro counts when it comes to shaping your child's future. And the earlier you get started, the greater the effect of compound interest.
Take the next step now - for your child, for their dreams, for you as a family. Your path to smart saving starts right here.
