Family Tax Planning: Junior-Depot, Gifting Securities, Schenkungsteuer Allowances and the Rules Against Abuse

What you will learn

• How much capital income a child can receive tax free in 2026.
• The gift tax allowances per donor and ten-year period and the duty to notify the tax office.
• What happens to acquisition costs and dates when you transfer securities as a gift.
• The health insurance, BAföG and abuse rules that limit the idea.

Explanation

Every person in Germany is a separate taxpayer with their own allowances, including a baby. A Junior-Depot (custody account in the child's name, managed by the parents as legal guardians) therefore gives the family a second set of allowances. NV-Bescheinigung and Freistellungsauftrag are explained in lesson 2; here we apply them to a child and add gift tax. General orientation only; check with a Steuerberater.

The child's tax-free capacity

A child without other income can receive capital income up to the sum of the Grundfreibetrag (basic allowance, €12,348 in 2026), the Sparer-Pauschbetrag (€1,000) and the Sonderausgaben-Pauschbetrag (€36) without paying income tax, about €13,384 per year as of 2026. The bank only knows the €1,000 Freistellungsauftrag; for the rest the parents obtain an NV-Bescheinigung (certificate of non-assessment, valid up to three years) from the tax office, and the bank withholds nothing. Without it, the parents reclaim the tax through a return for the child with Günstigerprüfung (lesson 6).

Gift tax

Schenkungsteuer (gift tax) uses personal allowances per donor and recipient that renew every ten years: €500,000 between spouses, €400,000 from each parent to each child, €200,000 from each grandparent to each grandchild, €20,000 between most other people. Above the allowance, tax class I starts at 7 percent for the first €75,000 and rises in steps. Donor and recipient must notify the tax office of a gift within three months, formally even below the allowance; a notification protects you. Banks also report every free-of-charge custody transfer to the tax office.

Transferring securities

You can gift securities directly by an unentgeltlicher Depotübertrag (free-of-charge custody transfer with change of owner). The securities keep their original purchase date and cost; nothing is realised, §23 holding periods continue and Bestandsschutz survives. If the child later sells, the gain is taxed at the child's position, usually zero within the limits above.

The limits

• Abuse rules. The money must really belong to the child. If the parents take it back, use it for household costs or treat the account as their reserve, the tax office treats the arrangement as a sham or as Gestaltungsmissbrauch (§42 AO) and attributes the income to the parents, with back taxes. At 18 the child controls the money.
• Health insurance. A child is co-insured free of charge in the statutory family insurance only while its total income stays below a limit of €565 per month (€6,780 per year) in 2026; capital income counts, generally after the Sparer-Pauschbetrag. Above that, the child needs paid insurance. This is often the binding limit.
• Student aid. BAföG has an asset limit for the student (as of 2026 €15,000 below age 30); a large Junior-Depot can reduce or remove it later.
• Kindergeld is not affected by the child's income since 2012.

Worked example

Hypothetical example, 2026 figures, church tax and fees ignored. Parents transfer ETF units worth €30,000, bought for €18,000 three years ago, to their daughter.

1. Gift tax: €30,000 is far below the €400,000 allowance per parent; €0, but the three-month notification applies.
2. Transfer: no sale, no tax. The daughter's account shows cost €18,000; the unrealised gain of €12,000 moves with the units.
3. Distributions of €900 per year: covered by the daughter's €1,000 Freistellungsauftrag, €0 tax.
4. Two years later the daughter, still without other income, sells all units with a gain of €12,000. With an NV-Bescheinigung the bank withholds nothing; without it, it withholds €12,000 × 26.375% = €3,165, refunded through the return because €12,000 is below her €13,384 capacity. Had the parents sold, the family would have paid €3,165.
5. Family insurance: €12,000 − €1,000 = €11,000 exceeds €6,780, so the sale year could cost her the free co-insurance; spreading the sale over two years avoids this.

Exclusions: fees, the Vorabpauschale in the holding years, future threshold changes.

Common mistake

Practice activity

On paper: a grandmother wants to give her grandson €250,000 in securities in 2026. (a) Calculate the gift tax if she gives everything herself. (b) Suggest a split with the grandfather and calculate the tax. (c) The grandson, a student without other income, receives €7,500 of distributions in the year after the gift; which limit is at risk?

Key takeaways

• A child has its own Grundfreibetrag and Sparer-Pauschbetrag; an NV-Bescheinigung lets the bank pay income gross.
• Gift tax allowances are per donor and recipient and renew every ten years; notify the tax office within three months.
• A free-of-charge custody transfer carries purchase date and cost to the child; nothing is realised.
• The money must stay the child's, and family health insurance and BAföG limits are often tighter than the tax limits.

Next step

The next lesson is about documentation: tax certificates, income statements, foreign-broker records, retention periods and software.