Investing for Children in Switzerland: Tax, Legal, and the 5 Mistakes Parents Make
January 18, 2026
10 min read
Investing for Children in Switzerland: Tax, Legal, and the 5 Mistakes Parents Make
The guide your bank won't give you — because the answers aren't always in their favour.
You've decided to invest for your child. That's the easy part. Now come the questions that keep parents up at night:
Should the account be in my name or the child's? What happens if I get divorced? Who pays tax on the dividends? Can my 18-year-old really take the whole CHF 60,000 and blow it? What if I die — does the money go to my child or my ex? And what on earth is the KESB, and can they interfere?
These aren't edge cases. They're the questions every Swiss parent faces — and the answers are buried across cantonal tax laws, the ZGB (Swiss Civil Code), and provider-specific fine print that nobody reads.
This guide untangles all of it. Plain language, no legal jargon, with concrete recommendations for the most common scenarios.
Important disclaimer
This article provides general information based on Swiss federal law. Tax rules and legal interpretations vary by canton and individual situation. For specific cases — especially involving divorce, inheritance, or cross-border elements — consult a qualified tax advisor or lawyer. arvy does not provide legal or tax advice.
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The big decision: Your name or the child's?
This is the first question every parent asks — and the answer has consequences for taxes, control, divorce, creditor protection, and the moment your child turns 18. Here's the honest comparison:
Option A: Account in the parent's name
| How it works | You open a regular investment account. You invest monthly. The money is legally yours. You gift it to your child when you decide. |
| Control | Full control — always. You decide when, how much, and whether to give it at all. |
| At age 18 | Nothing happens automatically. You choose the timing. |
| Tax | You declare everything in your tax return: dividends as income, portfolio value as wealth. Simple. |
| Divorce | The money is part of your Errungenschaft (marital property) and may be split 50/50 unless you have a Gütertrennung. |
| Creditors | Vulnerable — if you face financial difficulties, creditors can access it. |
| Death | Follows your will / inheritance law. The child may not receive it immediately. |
| Best for | Most parents. Maximum flexibility, simplest tax treatment. |
Option B: Formal children's account (gebundenes Kindesvermögen)
| How it works | Account runs in the child's name. The money legally belongs to the child from day one. Parents manage it as legal guardians. |
| Control | Parents manage until 18. Then: full control transfers to the child. Irreversible. |
| At age 18 | The child receives full access. They can withdraw everything. No parental veto. |
| Tax | Parents declare the income (dividends) and wealth (portfolio value) until the child turns 18. Some cantons have specific rules. |
| Divorce | The money belongs to the child, not to either parent. Protected from marital property division. |
| Creditors | Protected — parental creditors cannot access the child's assets. |
| Death | The money already belongs to the child. No inheritance process needed. |
| Best for | Parents who want creditor protection and formal separation. Or situations with high conflict risk (difficult family dynamics). |
Our honest take
For 80% of families, Option A is the better choice. It's simpler, more flexible, and you maintain control over when and how to transfer the money. The "risk" of Option A (creditors, divorce) only matters in specific situations. The "risk" of Option B (your 18-year-old gets CHF 60,000 with zero restrictions) is real for everyone. Most parents prefer to gift the money when they feel the child is mature enough — at 20, 22, or 25 — not at an arbitrary legal milestone.
Tax treatment: What you actually need to declare
Swiss tax treatment of children's investments is surprisingly straightforward. Here's the complete picture:
| Tax type | What happens | Who declares it | Impact |
|---|---|---|---|
| Capital gains | Tax-free | Nobody | CHF 0. This is Switzerland's structural advantage. All growth is untaxed. |
| Dividends | Taxed as income | Parents (until child turns 18) | Small. On a CHF 30,000 portfolio with 1% dividend yield = CHF 300/year to declare. Swiss withholding tax (35%) is reclaimable. |
| Wealth tax | Portfolio value included in taxable wealth | Parents (until 18) | Minimal. At 0.3% wealth tax, a CHF 50,000 portfolio = CHF 150/year. Negligible vs. the growth. |
| Gift tax (from parents) | Exempt in most cantons | Nobody | CHF 0 in most cantons. Vaud and Neuchâtel have exceptions — check locally. |
| Gift tax (from grandparents) | Exempt in most cantons | Nobody | CHF 0 in most cantons for direct-line relatives. Godparents may face gift tax in some cantons. |
| At age 18 (Option A) | You gift the assets or cash | Parent (final), then child | No gift tax (parent → child) in most cantons. Child declares from age 18 in their own tax return. |
| At age 18 (Option B) | Automatic transfer | Child from age 18 | Child declares in their own tax return. Usually minimal (students have low income). |
The bottom line on tax
The total annual tax cost of investing CHF 100/month for your child is approximately CHF 50–200/year (depending on canton, portfolio size, and dividend yield). Over 18 years, that's CHF 900–3,600 in total tax — on a portfolio that grows to CHF 46,000. The tax is trivial. The opportunity cost of not investing (CHF 22,000 lost to a savings account) is not.
The KESB question: Can the authorities interfere?
Many parents worry about the KESB (Kindes- und Erwachsenenschutzbehörde, the Child and Adult Protection Authority). The short answer: in normal circumstances, no.
The KESB becomes relevant only when there's concern about mismanagement of a child's assets — for example, if parents use the child's bound assets (Option B) for their own purposes, or if there's a custody dispute. In a normal family situation where parents invest responsibly for their children, the KESB has no reason to intervene.
Practical implication: If you choose Option A (account in your name), the KESB has zero involvement — because the money is legally yours, not the child's. If you choose Option B (bound children's assets), you're technically managing the child's property as their legal guardian, which comes with a duty of care. Investing the money in a diversified portfolio (like an ETF or arvy's quality fund) is well within the bounds of responsible management.
When the KESB might care
Only in edge cases: large inherited amounts (CHF 100,000+) managed poorly, custody disputes where one parent accuses the other of misusing the child's funds, or situations where the child's assets are demonstrably at risk. A regular CHF 100/month savings plan into a regulated investment product is not something the KESB concerns itself with.
What happens in a divorce
This is the question nobody asks when they're happily setting up a children's account — and the one that matters most when things change.
Option A (your name): The investment is part of your personal assets. Under the default marital property regime (Errungenschaftsbeteiligung), assets accumulated during the marriage are split 50/50 at divorce. That means: half of the children's investment could go to your ex-spouse, unless you have a prenuptial agreement (Gütertrennung) or can prove the money came from pre-marital assets or inheritance (Eigengut).
Option B (child's name): The money belongs to the child, not to either parent. It's completely excluded from the marital property division. Neither parent can claim it.
The pension fund angle: Remember that pension fund assets (2nd pillar) accumulated during marriage are also split 50/50 at divorce — regardless of your property regime. This is often a much larger amount than the children's investment. → Marriage, Children, Divorce: How Life Events Change Your Finances
The uncomfortable truth
If divorce risk is a real concern, Option B (child's name) protects the money better — because it legally belongs to the child, not to the marriage. But you trade this protection for losing control at 18. There's no perfect solution. The best approach: have an honest conversation with your partner about the account structure before you start investing.
The 5 mistakes that cost Swiss parents thousands
Mistake 1: Keeping everything on a savings account
This is the most expensive mistake — and the most common. Swiss parents save an average of CHF 100/month for their children, but most of it sits on a bank savings account earning 0.75–1.25%. Over 18 years, the difference between a savings account and an invested portfolio is CHF 22,000+ on CHF 100/month. That's not a rounding error. That's a semester of university.
See the full savings-account-vs.-investing comparison with numbers → CHF 50/Month for 18 Years: The Gift No Toy Can Match
Mistake 2: Choosing a defensive strategy for 18 years
Some parents choose a "balanced" or "defensive" investment profile for their child's account because it "feels safer." Over 18 years, this costs a fortune. A 100% equity portfolio returns ~7% historically. A 50/50 balanced portfolio returns ~4–5%. On CHF 100/month over 18 years, that's CHF 46,000 vs. ~CHF 35,000. The "safer" choice costs CHF 11,000 in growth. Your child has 18 years. They don't need bonds.
Mistake 3: Forgetting about it at 17
If markets crash in year 17 and you haven't thought about your exit strategy, you'll either panic-sell at a loss or hand over a depressed portfolio. The fix: starting from age 15, gradually shift 20–30% into lower-volatility assets (bonds or cash). This protects the portfolio against a crash in the final years without sacrificing the 15 years of equity growth that came before.
Mistake 4: Not telling the child about the money
Some parents keep the investment a complete secret until the 18th birthday. This sounds like a wonderful surprise — but it means the child has zero financial education about what they're receiving. They get a piece of paper saying "you have CHF 60,000" and have no idea what to do with it. The better approach: start talking about the investment from age 10–12. Show them the companies, explain compound interest, let them watch the portfolio grow (and sometimes shrink). By 18, they'll understand the value of what they're receiving.
Our favourite resource for teaching kids about money → 📚 A Dog Called Money by Bodo Schäfer — Book Club
Mistake 5: Not considering what happens when you leave Switzerland
If you're an expat, there's an additional layer: what happens to your child's investment if you leave Switzerland? An account in your name (Option A) travels with you — you control it regardless of where you live. A bound children's account (Option B) at a Swiss provider that requires Swiss residency may need to be closed or transferred. And the arvy equity fund (ISIN LI1306144786) is accessible from anywhere — Liechtenstein-domiciled UCITS, holdable through any international broker.
Complete departure guide → Leaving Switzerland? Your Financial Checklist
Special case: Grandparents and godparents
Grandparents and godparents are often the biggest contributors to a child's investment — but the structure matters:
| Contributor | Gift tax? | Best approach |
|---|---|---|
| Parents | No gift tax (parent → child) in most cantons | Invest in own name, gift later. Or contribute to formal children's account. |
| Grandparents | No gift tax (grandparent → grandchild) in most cantons | Transfer money to parent's investment account with written note "for grandchild's investment." Or set up their own account earmarked for the child. |
| Godparents (Götti/Gotte) | Potentially taxable in some cantons (not direct-line relatives) | Check cantonal rules. In Zurich: no gift tax up to CHF 200,000 between individuals. In other cantons: thresholds vary. For typical amounts (CHF 500–5,000/year): no practical issue. |
The best birthday gift protocol
Tell family members: "Instead of toys, contribute CHF 50–100 to [child's name]'s investment account." Give them the bank details (for the parent's account) or set up a simple shared document tracking contributions. Over 18 years of birthdays, Christmases, and special occasions, these small contributions compound into tens of thousands. A CHF 100 birthday gift invested at age 1 becomes ~CHF 340 by age 18. Multiply that by grandparents, godparents, aunts, and uncles — and you've built a meaningful portfolio without anyone spending more than the cost of a toy.
Frequently Asked Questions
Can I access the money in my child's bound account before they turn 18?
Generally no — bound children's assets (Option B) belong to the child and can only be used for the child's benefit (education, health, etc.). Parents cannot withdraw the money for personal use. This is legally enforced.
What if my 18-year-old wants to spend it all on something irresponsible?
If the account is in their name (Option B): you can't prevent it. The money is legally theirs from age 18. If the account is in your name (Option A): you control the timing. You can wait until 20, 22, or 25 to gift it — or gift it in portions over several years. This is the main reason most parents prefer Option A.
Do I need to tell the tax office about my child's investment?
Yes. If the account is in your name: declare dividends as income and portfolio value as wealth in your own tax return. If the account is in the child's name: declare the child's income and wealth in your tax return until they turn 18. Your tax software typically has a section for children's assets.
What happens to the investment if I die?
Option A (your name): the investment is part of your estate and follows Swiss inheritance law. Your child is a legal heir and will receive their share — but it may go through the inheritance process, and the timing depends on your will and family situation. Option B (child's name): the money already belongs to the child. No inheritance process needed. A surviving parent or guardian continues managing until age 18.
Can both parents contribute to the same children's account?
If the account is in one parent's name (Option A): the other parent transfers money to that account. Keep records of contributions for transparency. If it's a formal children's account (Option B): both parents can typically contribute, as both are legal guardians.
Is there a maximum amount I can invest for my child tax-free?
There's no legal limit on how much you can invest for your child. Gift tax between parents and children is exempt in most cantons regardless of amount. The only practical limits are your own budget and the provider's minimum investment requirements (arvy: CHF 50/month).
Should I invest in the child's name for tax reasons?
Usually not. Children have minimal income and wealth, so the tax savings of shifting assets to their name are negligible. The main reason to use a children's account is legal protection (creditors, divorce) — not tax optimisation. For most families, keeping it simple in the parent's name is better.
Further reading
📋 Children's Account: Complete Guide
All articles, calculators & guides on one page
🧮 Child Investment Calculator
Milestones from birth to age 40
💰 CHF 50/Month for 18 Years
The complete guide: how much, how, and the maths
📚 A Dog Called Money — Book Club
Teaching kids about money through story
💍 Marriage, Children, Divorce
How life events change your finances
🧮 Child Investment Calculator
Calculate your child's milestones from birth to 40
This article was written by Thierry Borgeat, Co-Founder of arvy, and reviewed by Patrick Rissi, CFA, and Florian Jauch, CFA. Last updated March 2026.
Disclaimer: This article is for general informational purposes and does not constitute personal legal, tax, or investment advice. Swiss family law, tax rules, and cantonal regulations vary significantly. The information about marital property, KESB, and gift tax is based on general Swiss federal law and may differ in your specific canton or situation. For individual advice — especially regarding divorce, inheritance, or cross-border matters — consult a qualified lawyer or tax advisor. arvy is a FINMA-supervised asset manager and does not provide legal or tax advisory services. Legal Notice & Disclaimers
