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Trading account in Germany

A German Depot is the account other countries call a brokerage or demat account. What you need to open one as a resident or non-EU citizen, in which order the documents arrive, how deposits and withdrawals work, what it costs and what the broker settles with the tax office for you.
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Janine El-Saghir
Essentials
  • A German Depot is what India calls a demat account and the US or UK a brokerage account: the account that holds your shares, ETFs and bonds. It always comes with a clearing account for cash and a reference account at your bank.
  • To open one you need a registered German address, a tax identification number and a valid passport or ID card. Citizenship is not the criterion, residence is: most German brokers accept non-EU citizens who live in Germany.
  • Identity is verified by video call, at a post office or with the online ID function. The whole process takes minutes online, plus the wait for the tax ID letter if you are new in the country.
  • Funding works by SEPA transfer from your reference account, which by law must arrive no later than the next business day. Withdrawals go back to the same account only.

What a German Depot is, and why it is your demat or brokerage account

In Germany the account that holds securities is the Depot, also written Wertpapierdepot or Depotkonto. In India the same thing is a demat account, short for dematerialised, because the shares exist as electronic entries rather than paper certificates. In the US and the UK it is a brokerage account; German providers translate it as trading account. One account, one job: recording which securities you own.

A German Depot is never alone. Three accounts work together:

  • The Depot holds the securities. No cash sits here.
  • The clearing account (Verrechnungskonto) holds cash, receives dividends and sale proceeds and pays for purchases. It is opened automatically with the Depot.
  • The reference account (Referenzkonto) is your current account at any bank; money enters and leaves the broker only through it.

The dematerialised principle has a legal consequence that matters if a broker fails. Under the Securities Deposit Act, securities are held in collective custody at a central securities depository, and every customer holds fractional co-ownership of the collective holding (Sections 5 and 6 DepotG). The shares in your Depot are your property, not the broker’s; they do not form part of the broker’s insolvency estate.

Who can open one: residents and non-EU citizens

German brokers ask where you live and where you pay tax, not where you were born. The three things every provider checks are a German residential address, a German tax identification number and an identity document that counts under German anti-money-laundering law. Under Section 12 of the Money Laundering Act (GwG), that is a valid official photo document that satisfies the passport or ID requirement in Germany, expressly including a passport recognised under German immigration rules. A non-EU passport therefore qualifies; the electronic residence permit qualifies for the online ID route, which Section 12 GwG names alongside the German ID card.

Non-EU citizen with a German address: yes, with two exceptions

A citizen of India, Turkey, Brazil or Nigeria who is registered in Germany can open a Depot at most providers. Two groups run into limits. US citizens and green-card holders are refused by some brokers because of the reporting duties the US FATCA rules impose on foreign banks. And people without a German address cannot open a German Depot at most providers and use a broker in their country of residence instead. The broker comparison marks which providers accept most nationalities and which run in English.

Documents and steps, in the order they happen

For anyone new in Germany the paperwork has a sequence, because one document produces the next.

  • Register your address. Under Section 17 of the Federal Registration Act (BMG), anyone who moves into a home has to register with the local registration office within two weeks. You receive the registration certificate (Meldebescheinigung) on the spot.
  • Wait for the tax ID. The registration office transmits your data to the Federal Central Tax Office (Section 139b of the Fiscal Code, AO), which assigns the eleven-digit tax identification number (Steuer-ID) and sends it by post. The Central Tax Office states on its website that for data-protection reasons the number is communicated only by letter, and only to the registered address. If the letter is lost, you can request it again online.
  • Open the account online. Name, address, date of birth, nationality, tax ID and reference account go into the form. Under Section 63 of the Securities Trading Act (WpHG), the broker also has to ask about your knowledge and experience with securities before it lets you trade; honest answers do not block the account, they only trigger a warning for products you have never used.
  • Verify your identity. Three routes exist: VideoIdent, a video call in which you show your passport to an agent; PostIdent, where a post office clerk checks the document; or the online ID function of a German ID card, eID card or electronic residence permit, which Section 12 GwG lists alongside the passport.
  • File the exemption order. The Freistellungsauftrag tells the broker to leave the first €1,000 of investment income per year untaxed. Under Section 44a (2a) of the Income Tax Act, it is only valid with your tax ID, which is the practical reason the number is needed before the account is fully usable.
Open the account before the tax ID arrives

Several brokers let you complete the registration and identification first and add the tax ID later. Trading is possible in the meantime; only the exemption order waits, so any dividend or interest received before the number is on file is taxed in full and refunded through the tax return.

Funding the account, and getting money out

Deposits are SEPA transfers from your reference account to the clearing account. German law fixes the speed: under Section 675s of the Civil Code (BGB), the amount must reach the recipient’s bank no later than the end of the business day following receipt of the order. A transfer your bank receives on a Friday must therefore arrive by Monday; where your bank offers instant transfers, the money is there within seconds. Brokers accept transfers only from an account in your own name; a transfer from a third party is returned.

Savings plans can also be funded by direct debit from the reference account. Card payments and cash deposits are not offered; a Depot is not a payment account.

Withdrawals go only to the reference account, an anti-money-laundering safeguard, so choose one you will keep; changing it requires a new verification at most brokers. Sale proceeds can be withdrawn after settlement, a few business days later.

Cash on the clearing account is a bank deposit covered by statutory deposit insurance under Section 8 of the Deposit Guarantee Act (EinSiG): €100,000 per customer and bank, up to €500,000 in special cases such as balances from the sale of a home. If your broker is a securities institution without a banking licence, the clearing account sits at a partner bank named in the product details, and claims against the broker itself fall under the investor compensation scheme at 90% up to €20,000 (Section 4 AnlEntG). The securities need neither scheme, as explained above.

What it costs from deposit to withdrawal

Deposits and withdrawals are free at almost every provider. The costs sit in between:

  • Custody fee (Depotgebühr): a monthly or yearly charge for holding the account, abolished at most online brokers, still charged or conditionally waived at some banks.
  • Order fee: charged per purchase or sale, either a flat amount or a percentage of the order with a minimum and a cap.
  • Trading venue fee: added on some exchanges, listed separately in the price list.
  • Spread: the gap between the buying and selling price. It is the main cost on venues that charge no order fee.
  • Savings plan execution: a fee per rate, now zero for most ETFs at most brokers.
  • Currency conversion: on a US exchange the broker converts euros to dollars at its own rate, usually with a margin.

For a monthly ETF plan the execution fee and the fund’s own cost decide; the ETF broker comparison is built around that. For frequent trading the order fee and the spread decide; the online broker comparison lists custody fee, order fee and trading venue per provider, so this page does not repeat prices that change.

What the broker does about tax, and what you do

A German Depot is a withholding account. The broker deducts 25% flat-rate capital gains tax plus the solidarity surcharge, 26.375% in total, from every dividend, interest payment and realised gain. Church tax is added automatically: under Section 51a (2c) of the Income Tax Act the broker queries your church tax status at the Federal Central Tax Office every year between 1 September and 31 October. How the rates come together is explained with the capital gains tax calculator.

Three things are yours to do. The exemption order above. A W-8BEN, the US form titled “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)”, which most German brokers collect at account opening: with it, US dividends are taxed at the treaty rate of 15% at source instead of the statutory 30%, and the 15% is credited against your German tax (Section 32d (5) EStG). And a tax return if you hold accounts at several banks, so that allowance and losses can be balanced across them; with one Depot and income under the allowance, none is needed. The broker’s annual tax certificate (Jahressteuerbescheinigung) documents what was withheld.

Interest on a savings plan or on the cash balance is investment income like any other and runs through the same withholding.

Which type of Depot to open

The account type is chosen at opening: a single Depot with one exemption order of €1,000; a joint Depot (Gemeinschaftsdepot) for spouses, with a joint order of €2,000 and both tax IDs; or a junior Depot in a child’s name with the child’s own allowance, offered by a minority of providers. Moving a Depot to another German provider takes a few weeks; the securities move as book entries, and a transfer into a Depot in your own name is not a sale, so no tax is triggered.

Sources

Frequently asked questions about the trading account

A Depot (Wertpapierdepot, Depotkonto) is the German securities account that records the shares, ETFs, funds and bonds you own. It is what the US and UK call a brokerage account and India a demat account. It always comes with a clearing account for cash and is linked to a reference account at your bank. The securities remain your property; the broker only keeps them in custody.

In substance, yes. “Demat” is short for dematerialised: securities held as electronic entries instead of paper certificates. German Depots work the same way; securities sit in collective custody at the central depository and you hold fractional co-ownership of them. The difference is only the word.

Yes, if you live in Germany. Brokers require a registered German address, a German tax identification number and a passport; citizenship is not a condition. Two limits exist: some brokers refuse US citizens and green-card holders because of US reporting rules, and almost none open accounts for people without a German address.

Not always. Several brokers let you register and verify your identity first and add the tax ID later. The exemption order (Freistellungsauftrag), which keeps the first €1,000 of investment income per year untaxed, is only valid with the tax ID, so until the number is on file any dividend or interest is taxed in full and refunded through the tax return.

By SEPA transfer from the reference account in your name. Under Section 675s of the German Civil Code the money must reach the broker’s bank no later than the end of the business day following receipt of the payment order; instant transfers arrive within seconds where your bank offers them. Savings plans can be funded by direct debit. Card payments and cash deposits are not offered.

No. Withdrawals go only to the reference account registered with the broker, as an anti-money-laundering safeguard. Changing the reference account usually requires a new verification. Deposits and withdrawals are free at almost every provider.

Securities are held in collective custody and remain your property, so they are transferred to another Depot rather than forming part of the insolvency estate. Cash on the clearing account is a bank deposit: under Section 8 of the German Deposit Guarantee Act the statutory compensation is capped at the equivalent of €100,000 per customer and bank, with a higher cap for certain temporary balances.

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Über die Autorin
Janine El-Saghir Finanzanalystin & Wirtschaftsredakteurin Dr. Janine El-Saghir ist eine erfahrene Finanzanalystin und Wirtschaftsredakteurin, die sich darauf spezialisiert hat, komplexe Finanzthemen für Anleger verständlich aufzubereiten. Mit über 16 Jahren Erfahrung...