One of the biggest advantages of a child investment account is tax. A child has their own allowances, even if only a few months old. This article explains how much stays tax-free, what a non-assessment certificate is and what the advance lump sum is about.
Three allowances for every child
- Saver's allowance: 1,000 €. Capital income up to this amount is tax-free. An exemption order at the bank is enough.
- Basic allowance 2026: 12,348 €. This much income stays untaxed. If the child has no other income, capital income can use this allowance.
- Special expenses allowance: 36 €.
Together that gives up to 13,384 € of tax-free capital income per year. For equity ETFs only 70 % of the returns are taxable anyway because of the partial exemption. A sale gain of around 19,000 € can therefore stay tax-free.
Exemption order or non-assessment certificate?
Without further documents, the bank automatically deducts 26.375 % flat tax including solidarity surcharge on income above 1,000 €. The bank does not know about the basic allowance.
The solution is the non-assessment certificate (NV-Bescheinigung). You apply for it at the tax office with a short form. Condition: the child is not expected to pay income tax. The certificate is valid for up to three years. Once you give it to the bank, the bank deducts no tax at all.
If you forgot the certificate, the money is not lost. You can reclaim overpaid tax through a tax return for the child with the most-favourable-treatment check (Günstigerprüfung).
The advance lump sum
For ETFs that do not distribute their returns but reinvest them (accumulating), a small notional tax base is calculated every year: the advance lump sum (Vorabpauschale). It depends on the base rate, 3.20 % in 2026. The bank collects it at the beginning of January.
In a child's account this is almost never a problem: the advance lump sum is small and usually below the 1,000 € saver's allowance. With an exemption order, no tax is due. On a later sale, the advance lump sums already taxed are deducted from the gain, so nothing is taxed twice.
Example: child versus parents
A savings plan of 150 € a month from birth grows to about 56,024 € by the 18th birthday at 6 % return and 0.2 % costs. In the child's account the child pays 0 € tax on it if they have no other income.
If the same money sits in the parents' account and their saver's allowance is already used up, around 4,362 € of tax is due. That is the tax advantage of the child's account.
If the child already has income in the payout year, for example 12,000 € of apprentice pay, the advantage shrinks. In the example, around 2,043 € of tax is then due – still less than with the parents.
Tip: sell in parts
The allowances apply anew each year. Selling a large account over two or three years instead of all at once uses them several times. Often even a large account then stays completely tax-free.
In the calculator you can see, for your own numbers, how much tax is due in the child's account and in the parents' account. The Capital Gains Tax Calculator shows how the flat tax works in detail. The information is simplified and does not replace tax advice.