In the case of loan relationships between related parties, special features must be taken into account. If capital assets are transferred to the children, this means that - if the transfer is recognized for tax purposes - the income from the capital investment is attributable to the child.
If the child has no other taxable income, the child's taxable income remains Assessment period 2025 Income in the amount of € 13,132 (basic tax-free allowance € 12,096 + saver's allowance € 1,000 + special expenses allowance € 36) tax-free. Prerequisite is that the parents, when setting up the custody accounts in favor of their children, express unequivocally that they wish to irrevocably transfer assets to their children. This intention must be clearly recognizable to the bank. The children must be named as contractual partners and account holders in the account opening sheets and no special creditor agreements to the contrary may be made. The appointment of a supplementary guardian is not necessary in the case of a pure gift. In this respect, there is no detrimental in-sure transaction between the parents as donors and representatives of the donee (children). This is because the regulation does not apply if the legal transaction merely benefits the minor. This can always be assumed in the case of a gift of money (or the transfer of bonds, etc., securities that only grant creditor rights but no corporate rights).
The attribution of capital assets and income also requires that the parents manage these - separately from their own assets - as if they were the child's assets. This is not the case if, after a few years, part of the money is used for joint living expenses.
Important is also that the donee can exploit market opportunities with his assets. This is not the case if a shareholder provides a relative with an interest-free loan (debited to the capital account), which subsequently becomes due as a loan to the company.
Inflow of revenue
Section 11 EStG regulates when the income from capital assets has been received. The inflow (usually through actual payment or offsetting) is assumed when the recipient receives the economic power of disposal over the income. If the capital income is paid by means of a credit note, it is deemed to have accrued when it is credited to the recipient's account (in the books of the party obliged to pay). Despite crediting, there is no inflow if the debtor is not liquid. Income is also deemed to be received for tax purposes if it is credited to a blocked account.
Individual cases regarding the inflow of capital income
- Discounted securities
On redemption/sale of the security, the capital gain is accrued in the amount of the difference between the issue price and the redemption amount/sale price. - Bank transfer
When the amount is credited to the recipient's account, an inflow is generally assumed, as the recipient can then dispose of the amount. - Building society savings
Interest is deemed to accrue annually even if it is not paid out but added to the building society savings balance. If bonus interest from a home loan and savings contract is only shown in the accounts on a bonus account, this does not yet constitute an inflow. - Dividend coupons
Dividends accrue to the shareholder when the dividend coupons are redeemed. - Profit distributions
In principle, profit distributions are credited. Exceptions: The distribution is already attributable to the sole shareholder at the time of the distribution resolution if a payment/credit note is made later.
In the case of controlling shareholders, an inflow is to be assumed as soon as it is credited to a clearing account of the company or when it is due and the company is able to pay. - Novation: In the case of novation (= renewal), the previous debt is converted into a new debt relationship. This can also result in an inflow.
Practical example (inflow through novation)
The profit share of € 5,000 is not paid out to a silent partner, but credited to his capital contribution account as agreed. The increased contribution is now the silent partnership interest. The silent partner has received the profit share of € 5,000 by novation when it is posted to the contribution account.
Documents for determining income
Investment income is regularly generated through savings deposits, securities or forward transactions that are managed in accounts or custody accounts at domestic or foreign banks, credit institutions and financial companies. In these cases, the capital income and the associated taxes and disposal costs are derived from the banks' records.
These are in particular
- Tax certificates (only for domestic institutions)
- Interest/dividend credits
- Purchase/sale settlements of securities,
- Settlements of forward transactions and the like,
- Income statements and
- if applicable, deposit statements.
In connection with the change in investment taxation on January 1, 2018, investors received further documents that are important for taxation. In the case of business relationships with foreign institutions, the capital income - with the exception of the tax certificates and the special certificates for the investment tax reform - is also derived from the above-mentioned documents.
Practical tip:
Tax certificate with entry aids: The tax certificates issued by domestic banks generally contain instructions on the lines to be completed in the KAP annex.
For capital income from sources that are not managed by the bank (e.g. interest from private loans, profit distributions from a limited liability company, income from dormant companies or tax refund interest), the type and amount of income can be determined from other documents (e.g. statements or tax certificates). Tax certificates should always be kept and presented to the tax office on request.