There are many brokers and choosing one is non-trivial. Let’s see how they differ from a perspective of a long term ETF investor living in Germany.
- the investor buys ETFs monthly
- at some European or German stock exchanges
- directly without a saving plan (Sparplan)
- pays German taxes
- stock exchange fees are ignored (they are mostly the same across brokers)
Here is a high level overview. You can find more details and explanations below the table.
|Broker (pricing mode)||Account fee||Transaction fee||English||German taxes||Peculiarities|
|flatex||0||5.9||5.9||5.9||Yes (but not everything)||Yes||-0.4% yearly on cash (negativzinsen), stock dividends fee|
|onvista (festpreis)||0||5||5||5||No||Yes||Only some nationalities, owned by comdirect|
|onvista (free buys)||0||0 with “free buy” or 0.23% (without or when selling)||5.99 without “free buy” or when selling||39 without “free buy” or when selling||No||Yes||Only some nationalities, only some ETFs, amounts and not forever, owned by comdirect|
|finanzen.net||0||5||5||5||No||Yes||Wrapper around onvista, only some nationalities|
|comdirect||0 for 3 years, then 1.95 EUR/month unless two trades per quarter||0.25%||9.9||59.9||No||Yes|
|max blue||0||0.25%||8.9||49.9||No||Yes||owned by Deutsche Bank|
|DKB||0||10 EUR if <= 10k EUR transaction, 25 EUR otherwise||10||25||No||Yes|
|Interactive Brokers (fixed)||10 USD (unless having 100k USD)||0.1%||4||29||Yes||No|
|Interactive Brokers (tiered)||10 USD (unless having 100k USD)||0.08%||1.25||29||Yes||No|
|Lynx||0||0.14%||5.8||99||Maybe||No||German wrapper around IB|
German brokers (all do German taxes for you)
All German brokers do all the taxes for you and take the money to pay the tax away before you get your dividends. This is convenient.
Constant transaction fee
With these brokers your transaction fee does not depend on the amount of money in the transaction. I’ve already wrote a post why this is good and how much money one can save with such a broker (spoiler: more than you think).
Flatex takes a constant fee (5.9 EUR). Some pages are available in English, but the trading interface and customer service aren’t (however, some people there agreed to speak English). Still better than nothing, since I am not aware of any other German broker having anything in English. As was said above, Flatex (like any other German broker) does taxes (they even take the money for tax away before you actually get your dividends). If you hold EUR with them, you will pay 0.4% per year from its amount. However, this applies only to EUR, not ETFs or stock. If you are going to buy stocks, there is a 5.9 EUR fee for stock dividends larger than 15 EUR (this does not apply to ETFs).
Onvista has been bought recently by comdirect. They also have a constant fee (5 EUR), but only in their Festdepot. If you use Free-buy mode, selling (or buying without a free buy) costs 0.23% (min 5.99, max 39 eur), which is comparable to all other percentage-based fee brokers. Moreover, Free-buy mode seems to be a temporary deal and the current end date is 31.12.2019. Moreover it applies only to some ETFs and only to some amounts of money (>= 1500 EUR per order) and to actually get at least one free buy you have to have done a 2000 EUR transaction in the previous month. They do German taxes as well. The only disadvantage is that they accept only citizens of Germany, France, Ireland, Austria, Luxemburg, Hungary.
Just a wrapper around onvista Festdepot (even their price conditions have exactly the same formating and styling, just a different color). And guess what - they also accept only citizens of Germany, France, Ireland, Austria, Luxemburg, Hungary.
Percentage-based transaction fee
With these brokers your transaction fee depends on the amount of money in the transaction.
0.25% (min 4.9, max 69.9). Nothing special.
0.25% (min 9.9, max 59.9). The account is free only for the first 3 years, after that it costs 1.95 EUR per month, unless you do at least 2 thread per quarter.
0.25% (min 8.9, max 49.9). Owned by Deutsche Bank.
DKB decided to be original with their pricing. For transaction below 10k, you pay 10 EUR, above 10k - 25 eur. This is actually extremely expensive when investing monthly, e.g. for 1k you lose 1% due to this fee.
0.25% (min 9.95, max 69)
Non-German brokers (no more German taxes for you)
Brokers in this category don’t do any taxes for you. You can get a list of your transactions from them, but you will have to figure out how much taxes to pay yourself. May be not fun.
IB has 2 modes of pricing - fixed and tiered. In fixed you pay 0.1% (min 4, max 29), in tiered 0.08% (min 1.25, max 29). I wrote in great details about them before, including which one is better and when (spoiler: tiered, practically always). IB is a very advanced broker. Many use it for professional trading. As a result the learning curve is steep. E.g. just buying ETFs is already non-trivial (here is my post about this). On the other hand you get access to a lot of exchanges and this access is much more direct than what you get at any of the german brokers (they simplify the process a lot). Also IB has good currency exchange fees (0.2%) and API, so you can automate the process. The downside - 10 USD fee per month, which is counted against your transaction fees. That is if you spend 5 EUR for transactions, you pay only 10 USD - 5 EUR at the end of the month. If you have more than 100k USD with them (or equivalent, e.g. ETFs or stocks or EUR), the fee is waived.
German wrapper around IB. Each transaction costs 0.14% (min 5.8, max 99), which is cheaper than normal German brokers, but you get no taxes done here.
0.038% (min 2). Degiro is cheap, but there is a lot of controversy around them. First, they have two kinds of accounts - basic and custody. In basic one, they can lend your securities to other people to make money, but not for you. As a result, there is some risk that the people won’t return your securities. Theoretically the broker should manage this risk, but stuff happens.
Another interesting peculiarity is that Degiro is associated with a hedge fund and there is presumably some evidence that this hedge fund has abused their position and took advantage of Degiro clients.
This great post on reddit considers all the disadvantages in more details.
Since investing in ETFs is a long term game, using a controversial broker sounds silly, so I personally wouldn’t do it.
If you prefer easy level of difficulty for your German taxes, then go with some of constant fee German ones (flatex or onvista). If you happen to use the percentage based fee one, consider switching. I wrote about this already, working 2.4 month full time just for your broker does not sound fun.
If you don’t mind doing the taxes on your own, but want more hard core experience and more possibilities, go with IB. This works especially well when you expect to have 100k USD with them soonish or do frequent currency exchange or buy some exotic financial instruments. This will also be cheaper than using any constant fee German brokers (assuming 100k USD with them and investing 1-2k EUR per month).
Happy investing with a great broker!