Exemption order - do children have to pay capital gains tax?

Exemption order – capital gains tax for children?

Nobody spares tax money when building up wealth. This also applies to babies, children and adolescents.

However, the exemption order for capital gains tax for children offers the possibility to save tax-free up to a certain amount.

Capital gains tax and saver lump sum

For interest income on investments, which includes the Tagesgeld account for children, the capital gains tax is due. It is known as withholding tax because, if no exemption request has been made, it is calculated, retained and remitted to the tax authority directly by the bank where the call money account is kept. Currently the tax rate is 25% plus solidarity surcharge. However, every investor can claim a tax deduction for the interest income, the saver lump sum. The amount is annually 801 euros or 1,602 euros for married people who are assessed together. If a savings account is opened for babies or children, then the child also has its own allowance (801 Euro) if it is registered as the account holder. Save with a release order capital gains tax for children, is the motto.

Further allowances and important information

Even children are allowed to earn an income. If this income is to remain tax-free, it may not exceed the current limit of 8841 euros. This already includes the saver’s lump sum and the special expenses lump sum. However, it is advised that the parents act far-sighted and do not fully exploit this amount, otherwise the co-insurance of the child through the parents in the statutory health insurance is no longer possible. Here the monthly income of the child may not exceed the amount of 365 euros. The income threshold for child benefit must also be observed.

What is still to be considered in the exemption order for children

The child has its own release order and thus the investment accounts are under surveillance, even if that is often not so aware of the parents. The tax office attaches particular importance to the fact that money placed in children’s accounts is actually intended for children or used for such purposes, otherwise the tax authority may impose a misuse of the tax advantage. For example, if parents have money from their children‘s account for their own purposes, such as buying a car, then the tax office will listen. Parents should be aware that a child day money account is primarily a money account for the future of the children and is not used for their own interests. The exemption application – capital gains tax for children is an issue that should be considered before opening a corresponding savings account, e.g. through savings goals, which can also be fixed in writing.

Several savings accounts for children and the exemption order

For children also several savings accounts are created. It should be noted that the exemption order for the capital gains tax applies to all interest income together, i. the amount should be split accordingly and an exemption order should be submitted for each account if the accounts are maintained at different banks.

Child day allowance in comparison

However, so that children can use their tax credits, the account must run on their name. In our comparison, we introduce to you the banks that offer daily allowances also for minors.

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