Germany introduces limited tax-free investment accounts for children

Starting July 1, 2027, parents in Germany will be able to open a 'Zukunftsdepot' (future depot) for their children to invest in securities. While the government promised a tax- and fee-free environment for investments up to 5,000 euros per year, the actual implementation includes several restrictions.

Capital gains tax exemptions will apply only to price increases, not to ongoing income such as interest or dividends. Additionally, while participating banks cannot charge depot fees, they are permitted to charge ongoing fund fees (capped at one percent) and third-party transaction costs.

Investment options are also limited to federal securities and UCITS funds, which include common ETFs. Individual stocks and cryptocurrencies are excluded from the account. This follows the lessons learned from the 'Zukunftsvorsorge' product of the 2000s, which failed to provide significant benefits to investors due to heavy restrictions and high costs.