What is a Roth IRA and what are the alternatives in Europe?
What is a Roth IRA and how do Europeans get similar benefits? A clear guide to tax advantaged investment accounts across Europe.
A Roth IRA is a retirement account used in the United States. You put in money that you already paid taxes on. The money grows tax free. When you retire, you can take it out without paying taxes again.
People in the US use Roth IRAs because
• withdrawals in retirement are tax free
• investment gains are tax free
• you can choose your own investments like stocks or ETFs
It’s a simple way to grow money for the long term without worrying about future taxes.
Does Europe have Roth IRAs?
Europe does not have Roth IRAs. Each country has its own retirement system with different tax rules. Some offer tax benefits when you put money in. Some offer benefits when you take money out. None work exactly like a Roth IRA.
Still, there are options that offer similar benefits.
Europe’s Closest Alternatives
United Kingdom: Stocks and Shares ISA
This is the closest to a Roth IRA.
You invest after tax and withdrawals are tax free.
You can buy ETFs, stocks, and funds inside the ISA.
Germany: ETF Savings Plans
Banks and brokers offer long term ETF saving plans. Gains are partly taxed, but the system encourages slow, steady investing.
France: PEA (Plan d’Épargne en Actions)
PEA allows you to invest in European stocks.
If you keep it for five years or more, many gains become tax free.
Spain: Pension Plans & PIAS
Spanish pension plans offer tax benefits when you contribute.
PIAS policies let you invest long term with lighter taxes if kept for many years.
Italy: PIR (Piani Individuali di Risparmio)
Long term investment plan with tax advantages if held for at least five years.
Netherlands & Nordics
These countries focus more on employer based pension systems. Ta