DistantNews
Support us
🇦🇹 Austria /Economy & Trade

Parents may soon be allowed to invest tax-free in shares for their children

From Die Presse · () German

Translated from German and summarized by DistantNews. Read the original for the full story.

At a glance

Explainer Official statement New plan
  • Austrian Chancellor Christian Stocker has proposed children's investment accounts allowing annual contributions of up to 5,000 euros.
  • No capital-gains tax would apply until the child turns 18, and the child could then withdraw the account's full value tax-free.
  • The proposal's eligible securities, switching rules and participating banks remain undecided, while investment returns could vary with market performance.

Austria's proposed children's investment account would let parents build a portfolio for a child without paying capital-gains tax before the child turns 18.

Chancellor Christian Stocker outlined the idea during an ORF summer interview. Parents could reportedly open a future account for a child under 18 from next year and contribute up to 5,000 euros annually. The account would be tax-free until the child's 18th birthday, after which the child could withdraw its full value without tax.

From relatively small monthly amounts, big opportunities can emerge over the years.

— Christian StockerThe chancellor described the proposed account as a way for parents to build financial resources for their children.

Stocker presented the account as a way to turn modest monthly savings into money for education, starting a business or a first home deposit. Government calculations suggest that investing 150 euros a month could produce 63,000 euros after 18 years at an assumed average annual return of about 6.7 percent, including an estimated 8,500 euros in avoided tax. Investing the full annual allowance could produce 175,000 euros under the same assumed average return.

With the future account, parents can give their children a financial foundation, for an education, starting a business or the down payment on their first home.

— Christian StockerStocker outlined the intended uses of the savings.

Those figures are not guaranteed. Poor market periods or unsuitable security choices could reduce the outcome. The accounts are also intended to be fee-free, with participating banks expected to cover the costs, although the banks have not yet been named.

The government has not settled which securities will qualify or whether investors could switch holdings without triggering tax. The plan is expected to allow shares, exchange-traded funds and other securities, while derivatives could be excluded. Thomas Niss of Sunrise Securities said Austria's rules on protecting minors' assets are among the country's strictest, and many customers currently open separate accounts while retaining legal ownership themselves.

We have one of the strictest regimes in Austria when it comes to protecting minors' assets.

— Thomas NissThe investment manager described the legal constraints that currently affect investing directly for children.
About this summary

Originally published by Die Presse in German. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

More Stories

From Our Blog