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So, having two little ones, I decided to set up investment accounts for them. The idea is that these would be focused on long term buy&hold (mostly dividend growth stocks).

Since I live in Austria/EU, the resources online are scarce, and I was wondering if anyone has some helpful advice on how to go on about this.

Several issues come to mind:

  1. Does the broker location matter for tax purposes on dividend income?
  2. What account type would be recommended for this purpose?
  3. Does the equity location matter for tax purposes on dividend income? (i.e. is there any difference between dividends coming from US and EU companies)
  4. Is there any type of account/scenario available to EU citizens where the dividends would not automatically be subjected to US witholding tax, and additionally, EU-state tax difference on top of that?
  5. Anything else I forgot to consider?

From what I gather, the abovementioned taxes are unavoidable for EU adults, but is there any option that "forgives" this taxation for children? (even if it has attached constraints)

In general, I see plenty of good options for US citizens, but can't find almost any information for EU. Any help would be appreciated.

quetzy
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1 Answers1

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I am not tax consultant so it is not investing recommendation.

According to my research for German taxes, we can dedicate some money for children on separate junior-depot-account, but I personally found no additional tax benefit -- children are included in the tax declaration of parent caring about them.

On big scale or active trading there can be tax benefits (10k per year tax free) but also risks. https://finanzglueck.de/steuern-sparen-junior-depot/ https://hausinvest.de/de/wissen/ratgeber/junior-depot/

What account type would be recommended for this purpose?

Children Depo

for example, Comdirect Bank

Deports comparison:

Is there any type of account/scenario available to EU citizens where the dividends would not automatically be subjected to US witholding tax, and additionally, EU-state tax difference on top of that?

As far I can see, taxes are charged anyway (when dividends are paid or when I trade with profit). But I can submit tax declaration in the end of the year or rather Nichtveranlagungsbescheinigung.

Anything else I forgot to consider?

  • Health care insurance -- they ask if your child has an income > 5901 EUR/year.
  • Private pension plan for child.
  • BaföG
Eugene Kaurov
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