Kinderdepot or parents' account? Tax, gifts, BAföG and family health insurance

Basics12 min read · updated 18 October 2026 · 21 sources

A Kinderdepot (children's investment account) is held in the child's name: the money belongs to the child, and the parents only manage it until the 18th birthday. For tax purposes this is attractive, because the child has its own allowances. In 2026, a child with no other income can receive up to €13,384 of investment income a year tax-free. In return, the gift is final, and once the child comes of age, it alone decides. Here you can see when this pays off, what to watch out for with BAföG (state student finance) and family health insurance, how the Frühstart-Rente fits in and how much tax a savings plan over 18 years can save. Not tax or legal advice.

Kinderdepot or parents' account: the difference

With a Kinderdepot, the child is the account holder; the parents act as its legal representatives, because parental responsibility also covers the child's assets and representing the child (BGB (1896), §§ 1626, 1629). With a parents' account, the parents save in their own name “for the child”. Legally, it is their money, taxed as theirs, and they can give it away later or keep it. The choice determines taxes, access and social benefits:

Tax in a Kinderdepot: up to €13,384 a year tax-free

A child is a taxpayer in its own right. If it has no other income, three amounts apply to its investment income: the basic tax-free allowance (Grundfreibetrag), which is €12,348 in 2026 (EStG § 32a 2009), the saver's allowance (Sparer-Pauschbetrag) of €1,000 (§ 20(9) EStG (2009)) and the lump-sum allowance for special expenses of €36 (EStG §§ 10, 10a, 10c 2009). Together, they give the limit up to which no income tax is due:

The parents give the exemption order (Freistellungsauftrag) for €1,000 on the child's behalf; for this, the bank needs the child's tax identification number (§ 44a(2a) EStG §§ 43, 43a, 44a (2009)). If the income is higher, the NV certificate (Nichtveranlagungsbescheinigung, non-assessment certificate) helps: the tax office issues it if it can be assumed that no tax will arise even with the most-favourable assessment (Günstigerprüfung); it is valid for at most three years and ends with a calendar year (§ 44a(1) sentence 4 and (2) EStG §§ 43, 43a, 44a (2009)). Without it, the bank deducts 26.375%, and the child only gets the money back after filing a tax return.

Child benefit (Kindergeld) is not affected by any of this: in 2026 it is €259 a month, and the child's own income plays no role. After a first course of training or study, only employment of more than 20 hours a week is harmful (EStG §§ 32, 66 2009).

Gifting to the child: final, with an allowance

• Allowance: every child can receive €400,000 tax-free from each parent and €200,000 from each grandparent (ErbStG (1997), § 16). All gifts from the same person within ten years are added together (§ 14). More on this in Inheriting and gifting a portfolio.
• Notification: in principle, a gift must be reported to the tax office within three months, by the donor too (§ 30 ErbStG, the Inheritance and Gift Tax Act). With regular contributions far below the allowance, no tax is due.
• Genuinely transferred: investment income is only attributed to the child if the money has passed permanently into the child's assets and the parents manage it like someone else's assets. Withdrawals for their own purposes count against this (BFH 2016).
• Manage, don't spend: parents must invest the child's money according to the principles of sound asset management (BGB (1896), § 1642). Income that is not needed for managing the assets goes first towards the child's maintenance (§ 1649).
• Taking it back: only in narrow cases, for example if the donor later becomes impoverished, at most ten years after the gift (§§ 528, 529 BGB, the German Civil Code), or in the event of gross ingratitude (§ 530). A contractual right to reclaim the gift is possible; whether it works for tax purposes is something an adviser should check.
• From 18: on coming of age (§ 2 BGB), the parents' authority over the child's assets ends. The child can close the account, reallocate it or give it away.

Family health insurance, BAföG and other consequences

Family health insurance: children are covered free of charge under their parents' statutory health insurance as long as their total income does not regularly exceed one seventh of the reference value (Bezugsgröße) per month (SGB V (1988), § 10). In 2026 that is €3,955 / 7 = €565 a month (Deutsche Rentenversicherung 2025; vdek 2025). Investment income counts here even if it is subject to the flat-rate tax, reduced by the saver's allowance (GKV-Spitzenverband 2022). Over a year, €565 a month equals €6,780, so with the saver's allowance €7,780 of investment income. If you realise large gains in one year, check beforehand with the health insurer how they will be counted.

BAföG: the student's own income and assets are offset against their needs, but for the parents only their income (BAföG (2010), § 11). €15,000 of the student's own assets stay exempt, €45,000 from age 30 (§ 29); what counts is the market value at the time of application (§ 28). Anything above that is spread over the months of the award period, usually twelve (§§ 30, 50).

Frühstart-Rente: status as of October 2026

The Frühstart-Rente (early start pension) is not a Kinderdepot in the usual sense, but a subsidised retirement savings account (Altersvorsorgedepot) for the child. The Bundestag passed it on 16 October 2026 (Bundestag, Frühstartrente 2026); according to a statement by the German Pension Insurance (Deutsche Rentenversicherung) on 19 October, this did not yet complete the legislative process (Deutsche Rentenversicherung 2026). The key points of the version passed:

• €10 a month from the state for children aged 6 to 18, i.e. 12 × 12 × €10 = €1,440 per child. The subsidy is to start with children born in 2020; according to the Pension Insurance, the money will flow from 2027, initially for children born in 2020 and 2021 (Deutsche Rentenversicherung 2026).
• The money is invested in a contract under the rules for the standard account; without a contract, from 1 January 2028 collectively in a federal special fund (Sondervermögen), only in broadly diversified global equities or equity funds (Bundestag, Frühstartrente 2026; Finance Committee 2026).
• Parents and others may pay in up to €6,840 a year on top; as a rule, payouts start only from age 65, and the income is tax-free until then (Bundestag, Frühstartrente 2026).

For the classic Kinderdepot, this means that the Frühstart-Rente does not replace it, because the money is locked up until retirement age. For a driving licence, training or a first flat, you still need a freely accessible account. More on the calculation over 59 years in the article Aktienrente.

Worked example: tax savings over 18 years

Illustrative figures: €150 a month into an equity ETF, simplified as €1,800 at the start of each year, a 6% return per year after costs, 18 years from birth. In the parents' account, the parents have already used up their saver's allowance with their own investments. We leave out the Vorabpauschale (advance lump-sum taxation), because it only brings the tax forward (see Vorabpauschale).

With high contributions, the advantage shrinks if the child sells everything at once. If the child spreads sales over several years or realises gains each year up to the limit (selling and immediately buying back), it stays tax-free even then, provided the income stays below the family health insurance limit for as long as that cover is needed. If, on the other hand, the parents still have their saver's allowance available, they can themselves realise gains of up to €1,000 / 0.7 = €1,428.57 tax-free each year; the lead of the Kinderdepot is then much smaller.

For advanced readers: the most-favourable assessment for a child

The 25% flat-rate tax is almost always too high for a child with no other income. On application, the tax office includes the investment income in the normal income tax scale if that is more favourable (§ 32d(6) EStG (2009)). Above the basic allowance, the scale starts with a marginal tax rate of 14%; in 2026 it only reaches a 25% marginal rate at around €20,774 of taxable income (EStG § 32a 2009). Because the first €12,348 are tax-free, the average tax burden stays below 25% for much longer:

By our calculation, the income tax scale remains more favourable than the flat-rate tax for a child up to about €65,400 of investment income a year (calculated without solidarity surcharge and church tax). The solidarity surcharge does not apply to the amounts in the example anyway, because the income tax is far below the exemption limit of €20,350 (SolZG 1993). In practice, this means that even a large Kinderdepot costs less tax when sold in one year than the same portfolio held by parents who have used up their saver's allowance.

A second point is attribution. The BFH (Federal Fiscal Court) requires that parents do not treat the Kinderdepot as their own (BFH 2016). A separate cash account in the child's name, no withdrawals for family expenses and a documented gift make this verifiable.

What research shows

There is little research on children's investment accounts in Germany, but a lot on child accounts with automatic deposits. In the SEED for Oklahoma Kids experiment, randomly selected newborns received a savings account with an automatic initial deposit. Huang et al. (2014) analysed 2,704 families randomly assigned to a control group and a programme group: at about four years old, the children with an account showed slightly better social-emotional development, more clearly so in low-income families. Seven years after the start, Clancy et al. (2016) found a large effect on savings for education, mainly because of the automatic deposit and its returns.

Studies on retirement saving also show that automatic mechanisms work: using data from Denmark, Chetty et al. (2014) found that around 85% of people save passively and barely respond to tax incentives, but do respond to contributions that flow without any action on their part. For the Frühstart-Rente, the German Council of Economic Experts (Sachverständigenrat) therefore recommended enrolling all children automatically and providing a low-cost default fund (Malmendier et al. 2025). For parents, this means that a savings plan that runs by itself matters more than the perfect starting point.

Limitations and common mistakes

• Wanting the money back: if you are not sure that your child should have free access to the money at 18, you are better off saving in your own account. The gift can hardly be undone.
• Overlooking BAföG: a Kinderdepot above €15,000 can reduce the student finance or prevent it entirely. A parents' account, by contrast, does not count.
• Family health insurance: investment income above around €7,780 a year can put the free co-insurance at risk. Better to realise gains in small steps.
• No NV certificate: without it, the bank withholds tax on income above €1,000; you only get it back by filing a tax return.
• Using the child's money for family expenses: this jeopardises the attribution for tax purposes and is only permitted within narrow legal limits.
• Costs: a junior account with fees for savings plans eats a lot of return when contributions are small. Over 18 years, this has a compounding effect (see compound interest).

This article is not tax or legal advice. Family law, social security law and tax law interact here; if in doubt, professional advice is worthwhile.

How Portfolio Lab calculates

Portfolio Lab does not model a Kinderdepot with the basic allowance and the income tax scale: the tax module calculates with the flat-rate tax of a private account, without the most-favourable assessment. As an approximation, you can raise the saver's allowance in the Backtest under “Include German taxes” (0 to €10,000 a year is allowed). This shows how much tax a higher allowance saves, but stays below the €13,384 a child actually has tax-free. You calculate the savings plan itself in the backtest with a monthly contribution and savings plan fees.

In Financial goals you can plan the contribution up to the 18th birthday and a goal such as training or a driving licence; there, the saver's allowance can only be set to €1,000 or €2,000. Monte Carlo shows how much the final values can vary. More on the tax module in the tax calculation methodology.

This article explains a method; it is not investment or tax advice. Worked examples are simplified and rounded. All terms in the glossary.