Putting money in your children's accounts: A way to save on taxes!
When we think about our children’s future, big dreams often come to mind: a driver’s license, their first home, a year abroad, or a college education without financial burdens. All of this costs money—and the sooner you start saving for your children, the more confidently you can look to the future. Many parents underestimate how much potential even small amounts of money can have when invested wisely.
A separate children's account is more than just a modern piggy bank: it's a real tool for long-term wealth building and an underrated tax advantage. After all, children also have their own tax-free allowance, which makes it possible to legally secure investment income tax-free.
If you choose the right accounts, familiarize yourself with the terms and conditions, and follow a few key rules, you can achieve a lot with minimal effort. In this article, you’ll learn how to invest money in your child’s name and save on taxes—all without any stress.
We'll help you find the right investment for your child!
Children have their own tax allowances—and you should take advantage of them!
When it comes to investing, many parents think of themselves first—yet their children often offer unexpected tax advantages. After all, children are also taxpayers with their own rights—and that means they also have their own Annual tax deduction of 1,000 euros. If you use this wisely, you can protect your investment income from government taxes. It’s a major advantage that many families overlook!
📌 What does the child savings allowance mean for your child?
If you deposit money into a checking account, a savings account, or an ETF savings plan on the Child's name when you invest, the returns generated there Interest or income from mutual funds and stocks tax-deductible for the child—not for you as a parent. This means your child is entitled to 1,000 euros in tax-free investment income over time. This can quickly add up to a significant amount when building wealth over the long term.
📊 Example: This much is tax-free
Sample calculation:
A savings account for your child earns 3% interest per year on a balance of €30,000. That amounts to €900 in interest—which is completely tax-free, when the standard deduction for savers is claimed.
💡 Tip: All you have to do is Direct debit authorization with the bank submit – in the child's name.
💡 Good to know:
- The exemption applies per child – regardless of the parents' income.
- Without an authorization form, the bank will automatically Capital gains tax (25% + solidarity surcharge + church tax, if applicable) from.
- One Certificate of Non-Taxation may also be useful—more on this in the next section.
So if you’re already setting aside money for your child, having the right tax structure in place pays off twice over. Not only do you save on taxes—you also ensure your child gets to keep more of their own earnings. And it’s all completely legal.
The NV Certificate: When the compound interest effect really kicks in
As soon as the Your child's savings grow—for example, through regular savings, cash gifts from grandparents, or one-time payments—it may happen that the €1,000 standard deduction for savers is no longer enough. Then there is a risk that Capital gains tax. But don't worry: With a so-called Certificate of Non-Taxation (NV Certificate) you can continue to keep the tax authorities out of it.
🧾 What is an NV certificate?
The NV certificate is a document that you need when Tax Office can apply for. It confirms that your child no income or very little income has and therefore not assessed, meaning it is not subject to income tax. Once you submit this certificate to the bank, it may do not withhold taxes on investment income – no matter how high the interest rates or profits are.
✅ Overview of requirements
- The child is underage and has Income below the basic tax exemption (2025: €12,096 annually).
- There is no other taxable income (e.g., from jobs, rental income, etc.).
- The investment income is derived from investments in Child's name (e.g., checking account, mutual fund account, certificate of deposit).
📬 Here's how it works:
- Apply for an NV certificate at your local tax office either informally or using the official form
- After issuance (valid for 3 years) directly from the Deposit at a bank
- It’s time to start building your wealth tax-free!
💡 Tip: This is especially worthwhile for larger investments or when you receive several cash gifts from relatives. This way, you can also ensure long-term Everything in the children's account—and nothing at the tax office.
The Right Account: Checking Account, Savings Account, or a Brokerage Account?
Anyone who invests money for their child soon faces the question: What should I do with the money? The good old savings account has had its day—today, there are many ways to invest a child’s savings safely, flexibly, and with the potential for a return. But not every type of investment is right for every goal. Here’s an overview of which accounts and investments are suitable for Children and adolescents is really worth it.
🏦 The Children's Daily Savings Account – Flexible and Secure
A A savings account in the child's name is ideal if you want to keep your money readily available—for example, for last-minute purchases, larger purchases, or spontaneous gifts of money from relatives.
Advantages:
- Interest on the deposit – currently up to 3% depending on the bank
- No notice period; access available every day
- Very low risk, as there is no loss in value
💡 Perfect for pocket money, small savings, and taking your first steps toward building wealth.
🔒 Fixed-term deposits: Higher interest rates for long-term goals
A Fixed-term deposit account is well suited for specific goals, such as getting a driver’s license or taking your first big trip. The money is “parked” for a fixed term—in return, you usually earn slightly higher interest than with a money market account.
Important: You generally can't access the money early.
✔ Tip: Combine a fixed-term deposit with a money market account to stay flexible and earn a good return at the same time.
📈 A portfolio of ETFs or mutual funds – for investors seeking real returns
Anyone who thinks long-term about their child (e.g., vocational training, college) will inevitably come to a Kids' Account with ETFs or Fund barely over.
Advantages:
- High potential returns
- Automated savings plans starting at €25
- Ideal for children aged 10 and older
📌 Note: Investments in stocks are subject to fluctuations in value – this is where good advice comes in handy.
🔍 Take a closer look: There’s a solution for every goal. Many parents opt for a combination of money market accounts, fixed-term deposits, and brokerage accounts—this allows them to stay flexible, take advantage of tax benefits, and support their child’s long-term wealth accumulation.
Smart Gift-Giving: Making the Most of Tax Deductions
Whether it's for a birth, a baptism, the first day of school, or Christmas—many children regularly receive Cash gifts from grandparents, relatives, or godparents. These Gifts are more than just a kind gesture: When implemented correctly, they play a key role in Wealth building ... However, the same applies here: Anyone who plans wisely from a tax perspective...can get more out of the young players—and that without any additional costs or burdens.
🎁 Gift tax exemptions – a great opportunity
German tax law provides for generous Gift tax exemptionsthat you should definitely take advantage of:
- €400,000 per parent to every child – tax-free every 10 years
- €200,000 per grandparent to grandchildren
- €20,000 Exemption for other relatives and friends
💡 That means: If both parents transfer €400,000 to each of their children, leaving a total of €800,000 tax-free – a huge amount, especially when it comes to long-term investments.
⚠️ Important: Transfer ownership correctly
So that the tax office can Recognizes a donation, the money must really the child's name run. That means:
- The account must be a a real kids' account to be
- The child will Account holder – You manage the assets solely in a fiduciary capacity
- You can keep the money Do not use for your own purposes
📌 Checklist: Here's how to do it right
- ✅ Open a children's account or brokerage account in the child's name
- ✅ Transfer money to this account
- ✅ Document the donation if necessary (e.g., an informal letter)
- ✅ Keep track of tax-free allowances
Those who give regularly and invest wisely not only build financial security—but also secure tax benefits for the whole family.
What you need to keep in mind when accessing and managing
If you have an account on the Your child's name opening one is a great thing—but it also comes with responsibilities. Because even though, as a parent, you usually have a Power of Attorney if you have and are allowed to manage the children's account, then Money for your child. So you can Do not simply take or use for your own purposes – not even “just for a minute.”
👩⚖️ Overview of Legal Requirements
By law, as a parent, you requiredyour child's assets carefully and solely in the child's best interests to manage. For example, you can use it for:
- Education and training costs
- necessary purchases such as school supplies or a laptop
- Insurance policies tailored to children (e.g., accident insurance)
❌ Not allowed: Using money from the child's account for the parents' vacations or personal purchases.
💡 And at what age does the child start making their own decisions?
Your parental authority automatically ends when your child turns 18 – at that point, the child sole account holder and can have full control over all assets. Anyone here who is worried that everything will be "squandered" should refer to point 7 later Right of disposal with Invest4Kids take a close look.
💡 Tip: If you invest large sums of money, always document the purpose—this will protect you in case the tax authorities ask for information.
Save on taxes—but do so responsibly
The idea behind the children's account Save on taxes... is completely legal – if everything goes smoothly. But the tax office is now scrutinizing very closely whether the The assets actually belong to the child or whether it is a a hidden cost-cutting measure by the parents deals with.
🔍 The tax office pays particular attention to these points
- Is the account in the child's name Opened?
- Was the money clearly a gift and thus transmitted?
- Are you really using the proceeds solely for the child?
- Are investment income reported correctly?
If the tax office has any doubts, it may attribute the investment income to you as a parent—and that means: Additional payments, capital gains tax, and possibly even interest and fines.
📌 5 simple rules to stay safe:
- Always keep the account in the child's name
- Use an exemption request or an NV certificate
- Keep good records of donations
- No personal use of the proceeds
- If you have any questions, consult a tax advisor or a specialist.
💡 Save on taxes for your child is a smart idea—but it’s also one where care matters. With a little attention, you can ensure your child’s safety More money, fewer deductions – and peaceful nights for you.
We'll help you find the right investment for your child!
- €25,703 more per child, thanks to our modern ETF strategy
- Find the perfect ETF investment for your child in a 30-minute video call from the comfort of your own home
- Sit back and watch your child’s wealth grow—our experts will take care of the rest
Invest4Kids: When you want more than just a kids' account
Traditional solutions like money market accounts or brokerage accounts make sense—but they have their limits if you’re thinking long-term and want maximum flexibility and security. This is exactly where Invest4Kids Enter: a smart investment plan designed specifically for children, which is ideal for the long term Wealth building is suitable – and in doing so takes full advantage of your tax benefits.
🌟 What makes Invest4Kids so special
At its core, Invest4Kids works like an ETF savings plan—but offers many exclusive benefitsthat traditional children's accounts or brokerage accounts do not offer:
- No capital gains tax when changing strategies
- Revenue can reinvested tax-free will be
- Right to decide from age 18: You remain in control, even after your child turns 18
- Only 50% tax if the payment is made after the child turns 62
- Condition Save: Protection against changes in tax and legal regulations
- No account maintenance or transaction fees
- Free, independent advice – tailored to your family’s specific situation
👪 What parents say about Invest4Kids
“I wanted a safe investment for my daughter—Invest4Kids gave us exactly that: security, flexibility, and excellent advice.” – Julia, a mother from Berlin
“We were skeptical at first because of the upfront fees—but in the long run, Invest4Kids is significantly cheaper than any other investment account.” – Thomas, father of two daughters
“The ability to keep the money even after turning 18 was the deciding factor for us.” – Lisa & Markus, parents of a teenager
💡 Tip: With Invest4Kids, you don't have to handle everything yourself. Our experts will help you the best solution for your child available—free of charge and without any technical jargon.
📞 Get a personalized consultation today—and secure your future dreams with Invest4Kids!
We'll help you find the right investment for your child!
- €25,703 more per child, thanks to our modern ETF strategy
- Find the perfect ETF investment for your child in a 30-minute video call from the comfort of your own home
- Sit back and watch your child’s wealth grow—our experts will take care of the rest
Start early, save smart—and give your child real opportunities
Saving for your children's future is more than just a well-meaning intention—it's an investment in real opportunities. Whether it's a driver's license, college, or their first apartment: if you start early, Investing Your Savings Wisely...gives their child valuable financial flexibility—and often saves money in the process paying taxes legally.
Through tax deductions, non-taxable income certificates, and the right choice of Children's account, money market account, or brokerage account This allows you to make the most of interest and investment income. It offers you even more benefits Invest4Kids: maximum flexibility, tax efficiency, and personalized support from true experts.
💡 Remember: Every euro countswhen it comes to shaping your child’s future. And the sooner you start, the greater the impact of compound interest.
Take the next step now – for your child, for their dreams, for you as a family. Your journey to smart saving starts right here.
