Investing for your kids: how to open an investment account for a minor

Getting decades of compound interest working from a child's birth is one of the most powerful ways to help them long-term. In Spain, it's perfectly legal to invest under their name — with a few particularities worth knowing before you start.

What it takes to open the account

The minor needs their own national ID (this can be arranged from birth). The entity will usually also ask for the family record book and the parents' or legal guardians' ID, who act as the account's legal representatives. Several brokers and managers already offer accounts specifically for minors with access to index funds.

Who decides what to buy?

Until the child turns 18, they can't manage the account directly: it's the parents or guardians who decide on contributions, which fund to buy, and any redemptions. Once they reach adulthood, ownership and control pass entirely to them.

Contributions are, technically, a gift

This is the nuance that gets explained least: money a parent contributes to a child's account counts as a gift for tax purposes, subject to Spain's Inheritance and Gift Tax. The good news is most autonomous regions apply very high rebates between parents and children (often 95%–99%), which in practice cuts the cost a lot — but it varies significantly by region and amount, and the rebate usually requires formalizing the gift within a deadline. If you plan to contribute meaningful amounts, check your specific region's rules or a tax advisor before doing so — don't assume uniform treatment across Spain.

How the returns are taxed

When the fund is redeemed, the gain is taxed on the child's own tax return (not the parents'), as investment income or a capital gain, at the same brackets as an adult. If the child doesn't exceed the combined limit of €1,600 per year in investment income and capital gains subject to withholding, they aren't required to file a return for that.

Which fund to choose

With such a long horizon (at least 18 years, often more), the logic is the same as for any very-long-term investment: broad diversification and low cost, without overcomplicating it. Compare options in our index fund catalog or simulate the savings growth with our compound interest calculator.