Taxes of underage children
For purposes of taxation, minors are children who are under the age of 17 at the beginning of the year.
There is no need to inform the Tax Administration when a child is born in Finland
When a child is born in Finland, the Tax Administration receives information on the child from the Population Information System. In other words, you do not need to report the child’s birth separately.
If a child is born abroad, the parents must report the birth to the Digital and Population Data Services Agency (DVV): Registering a child born abroad in Finland
The number of children may affect tax assessment
The number of underage children may affect their parents’ tax assessment, for example as regards the credit due to child maintenance obligation.
For purposes of taxation, a child may be
- your biological child
- your spouse's child whom you support
- your or your spouse's adopted child or foster child.
Parents and guardians can manage the taxes of an underage child in MyTax
As a guardian, you can manage the taxes of your underage child in MyTax until the child turns 18. After logging in to MyTax, select “Act on behalf of someone else”.
You can use MyTax to:
- request a tax card
- check the tax return and make corrections if necessary.
The Tax Administration receives the information that you are your child’s guardian from the DVV’s basic register. A guardian does not need a separate authorisation to manage the taxes of a child under their guardianship.
When a child turns 18, they can authorise their parents, for example, to manage their taxes on their behalf. To grant the required authorisation, they will need online banking codes or a mobile certificate. Read more about Suomi.fi authorisations for tax matters
How is a child’s income taxed?
An underage child’s income is taxed separately from their parents’ income. The income may be wage income, other earned income or capital income.
A child’s earned income
A child can earn income starting from birth. For example, a child can receive a survivors' pension.
However, wage income and comparable earned income are a minor's personal income only if the child has actively participated in the work for which the income is paid.
Example: If a 1-year-old child is photographed for an advertisement, the income they receive is taxed as the parents’ income, not the child’s income. This is because here the parents are considered to have performed the actual work. The child cannot have actively participated in the work for which the income has been paid.
A child’s capital income
A child owning property receives capital income if the property generates income. For example, a child may have received a gift of securities or an apartment and therefore receive dividends or rental income. This income is treated as the child's taxable capital income.
See tax rates on capital income
Deductions from a child’s income
Deductions are made on the income of an underage child in the same way as on the income of others.
If the amount of deductions exceeds the child’s income, the exceeding part cannot be deducted from the parents' income.
Donations to a child – remember to file a gift tax return
An underage child can receive a gift of money or other property. In order that the gift would be exempt from tax, the total amount of gifts from the same donor must be less than €5,000 in a 3-year period. If the total amount is €5,000 or more, the person receiving the gift must file a gift tax return and pay gift tax.
For example, if the parents have given their underage child a gift, the parents must file a gift tax return in the child’s name. The child will receive a gift tax decision, stating the amount of tax to be paid.
When a child has received property as a gift, the property can generate income for them. For example, the child may receive dividend income on shares. This income is the child’s taxable income.
Gifts given to a child must be recorded in the child's name. For example, a cash deposit to a child must be deposited into a bank account that is in the child's name. Correspondingly, shares donated to a child must be recorded in the child's book-entry account.
Instructions for filing and paying gift tax
What kind of gifts are subject to tax?
For purposes of taxation, a gift means that a donor makes a deposit for another person or transfers property to them. The donor may, for example,
- deposit money, securities or other movable property in a bank
- deposit securities in a brokerage firm
- transfer book-entry shares to another person’s book-entry account.
The deposit or transfer made to a bank or securities broker must be in the gift recipient’s name.
When do I need to pay gift tax?
Gifts and income are taxed according to the actual situation
Tax assessment is always based on the actual situation.
If the donation does not correspond to the actual situation and purpose, the income generated by the property is taxed as the income of the child’s parent.
Example: Lasse has apparently donated shares that entitle to the possession of an apartment to his underage child. In fact, the apartment remains in Lasse’s possession and he collects the rental income for himself. The rental income is taxed as Lasse’s – not the child’s – capital income.
Read more about gifts and gift tax
Who makes contracts and manages property on behalf of a child?
As regards the management of a minor’s property and any agreements regarding the property, the child is usually represented by one or more guardians, often the child's parents. The guardian usually accepts a gift, for example, on behalf of and in the name of the underage child and takes care of the practical matters.
To attend to various agreements on the minor's property and related liabilities, however, the guardian often needs a permission from DVV. In addition, mutual transactions between the child and their parent require that a substitute should be assigned to the guardian.
Read more about the guardianship of a minor on dvv.fi
Child support, and credit due to a child maintenance obligation
If you are a child's guardian and receive child support for the child's maintenance, it is not your or your child's taxable income.
If you pay child support for your child, you may be entitled to a credit due to your maintenance obligation. Read more about credit due to a child maintenance obligation
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