The contributions you save for your child are not tax-deductible. What matters for tax purposes are the returns, and your child has their own allowances for those: a saver's allowance (Sparerpauschbetrag) of 1,000 euros per year, and, for children with little to no income, a non-assessment certificate (NV-Bescheinigung). To make use of this, the money needs to be held in the child's name.
Many parents hope that saving for their child works like an insurance premium or charitable donation, something you can deduct from your taxes. That is not the case. The good news: there is a real tax benefit to be had, just not where you might expect it.
The contributions themselves are not deductible
Money you set aside for your child is neither a special expense (Sonderausgabe) nor a business deduction (Werbungskosten). It does not reduce your income tax, regardless of how you save. That is a sober fact worth knowing, so you do not wait for a benefit that does not exist.
Tax applies to the returns, not the contributions
Where it gets interesting is the returns: interest, dividends, or capital gains. These are generally subject to withholding tax (Abgeltungsteuer). Your child, however, has their own allowances here that families often do not fully use.
You cannot deduct the contributions. The tax benefit comes through your child's personal allowances.
Your child's saver's allowance (Sparerpauschbetrag)
Every person, including your child, has a saver's allowance (Sparerpauschbetrag) of 1,000 euros per year. Returns up to this amount are tax-free, provided the bank holds a tax exemption order (Freistellungsauftrag). If the account is in the child's name, this allowance is available in addition to your own.
For higher returns: the non-assessment certificate (NV-Bescheinigung)
If returns exceed 1,000 euros and your child has little other income, you can apply at the tax office (Finanzamt) for a non-assessment certificate (NV-Bescheinigung) and submit it to the bank. The bank then withholds no tax at all. Combined with the basic personal allowance (Grundfreibetrag), much more often stays tax-free than most parents realize.
Requirement: the money is held in the child's name
These benefits only apply if the account or investment is held in the child's name. This does have consequences for access and availability, since the money belongs exclusively to the child once they turn 18. We compare the pros and cons of using the child's name versus the parent's name here: Money in the child's name or the parent's name?
When in doubt, get a quick check
Tax is detail work, and your situation is individual. This is general information, not tax advice. For specific questions, it is worth getting a tax advisor involved, which we are happy to arrange.
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Request a free first consultationFrequently asked questions
Can I deduct saving for my child from my taxes?
How do my child's returns stay tax-free?
What is a non-assessment certificate (NV-Bescheinigung)?
Does the money need to be held in the child's name?
This article is for general information and educational purposes only. It is not tax or legal advice, and not a personal recommendation. Which approach fits your family is something we work out together in a personal conversation, on tax matters together with a tax advisor.