- Sunday 20 April 2025
We’re frequently asked about so-called “Child Gifting Accounts” — structures marketed to parents or grandparents as an easy way to invest the annual €3,000 Small Gift Exemption for a child’s future. The concept sounds appealing: invest today, let it grow, and provide a financial head start down the line. But is a special “account” necessary? And what does Revenue have to say?
Recently, one of our clients took the smart decision to actually reach out to Irish Revenue with a question: if a grandparent, parent or guardian gifts €3,000 to a child, and the family wants to invest it in a fund or similar vehicle — but can’t easily open an account in the child’s name — how should they proceed?
Below is an edited version of the genuine Revenue interaction, which sheds light on how the tax authorities view these situations. (Names have been removed to protect privacy)
The Question:
"My son received €3,000 from his grandfather. Rather than leave it in a savings account, I want to invest it prudently, with the hope it’ll be worth more by the time he’s older. But I can't open an account in his name. So I’d like to open one in my name, just for his funds, with clear records. I’m worried that by moving the money into my name, it might count as a gift to me — and again as a gift from me back to him later. I don’t want any Capital Acquisitions Tax (CAT) issues. Can you confirm if this is okay?"
Revenue’s Response:
“Gifts up to €3,000 per year from any one person are exempt from CAT. If the child is a minor, this can be held by a parent without it being treated as a second gift. Just keep good records to show that the money was received from the grandfather, and that it remains earmarked for the child.”
“Revenue does not authorise or prescribe the type of account that should be used. The key requirement is that the purpose of the transaction is clear in your records — such as by putting a note on the bank transfer. That’s all that’s needed to claim the Small Gift Exemption.”
The Takeaway: Transparency Over Structure
Despite the hype, Revenue does not require a “Child Gifting Account” or other structured product for this exemption to apply. What matters most is clear documentation:
- The gift can be held by a parent on the child’s behalf.
- It should not be mixed with other funds (“no intermingling”).
- The origin of the gift (e.g., “gift from grandfather”) should be noted clearly in your records.
- No CAT return is required for gifts under €3,000 per donor per year.
In other words, Revenue is focused on substance over form.
Our View: What Matters is the Outcome, Not the Wrapper
There’s nothing wrong with opening a dedicated account to invest for a child. In fact, it can be a disciplined way to grow funds over time. But don’t be misled into thinking a specific “Child Gifting Account” is needed to comply with Revenue guidance. In most cases, this is a marketing concept rather than a legal or tax requirement.
If you’re planning to gift to a child or grandchild and want to grow that money tax-efficiently, the simplest solution often works best — as long as you keep clear and accurate records.
If you're unsure how to proceed in your own situation, we're always happy to help
