Why Germany Is an ETF Nation
Germany has undergone a quiet investing revolution. A country that once kept its savings in Sparbücher (savings books) and Bausparverträge (home savings contracts) has embraced ETF investing at a remarkable pace. As of 2025, there are over 7 million ETF Sparplan (savings plan) accounts in Germany — more than double the figure from just three years earlier.
The catalyst? Neo-brokers like Trade Republic and Scalable Capital made investing accessible, affordable, and mobile-first. Where traditional German banks charged €10-30 per trade, neo-brokers brought that down to €1 or less. Monthly ETF Sparplan execution went from costing €1.50-2.50 per transaction to completely free.
If you live in Germany — or anywhere in the EU — and want to start investing, this guide covers the practical steps, the tax implications, and the mindset you need.
The ETF Sparplan — Germany's Favorite Wealth-Building Tool
An ETF Sparplan (ETF savings plan) is an automatic recurring investment into one or more ETFs. You set the amount (as low as €1 at some brokers, typically €25-50 minimum), choose the frequency (monthly, bi-weekly, or quarterly), and your broker executes the purchase on a fixed date each period.
This is the German equivalent of dollar-cost averaging — except Germans call it “Durchschnittskosteneffekt.” Same concept, longer word.
The beauty of a Sparplan is simplicity. You set it up once and let compound growth do the work. A €200/month Sparplan into a global ETF, sustained over 20-30 years, is how millions of Germans are building retirement wealth outside of the statutory pension system (gesetzliche Rentenversicherung).
Glen's take: The Sparplan is one of the best inventions in retail investing. It removes emotion, enforces discipline, and costs nothing at most German brokers. If I lived in Germany, I would have a Sparplan running on autopilot into a broad global ETF — and I would not touch it.
Best Brokers for Investing in Germany
Germany's broker landscape has been transformed by neo-brokers. Here is how the main options compare for ETF Sparplan investing:
| Broker | Sparplan Fee | Trade Fee | Sparplan ETFs | Notes |
|---|---|---|---|---|
| Trade Republic | €0 | €1 | 2,000+ | Most popular neo-broker. 3.25% interest on cash (as of early 2026). |
| Scalable Capital | €0 | €0.99 (or flat €4.99/mo) | 2,500+ | Free Broker or Prime+ plan. Largest ETF Sparplan selection. |
| Flatex | €0 | €5.90 + exchange | 1,500+ | Established Austrian/German broker. Good for buy-and-hold. |
| ING DiBa | €0 (select ETFs) | €4.90 + 0.25% | 800+ | Trusted full-service bank. Higher fees, better customer support. |
| Consorsbank | 1.5% per execution | €4.95 + 0.25% | 600+ | BNP Paribas subsidiary. Good research tools. |
Fees and ETF counts change frequently. Always verify current pricing on each broker's website.
German Investment Tax — Abgeltungsteuer Explained
Germany levies a flat 25% Abgeltungsteuer (withholding tax) on all investment income: capital gains, dividends, and interest. On top of that, there is a 5.5% Solidaritätszuschlag (solidarity surcharge) calculated on the tax itself, bringing the effective rate to approximately 26.375%. Church members pay an additional 8-9% Kirchensteuer on the tax amount.
The good news: your broker handles everything automatically. When you sell an ETF at a profit or receive a dividend, the tax is withheld before the money reaches your account. You do not need to file a separate tax return for investment income unless you want to claim losses or have complex situations.
Sparerpauschbetrag (€1,000)
Every individual gets a €1,000 annual tax-free allowance on investment income (€2,000 for married couples filing jointly). To use it, you must file a Freistellungsauftrag with your broker. Without it, tax is withheld from the first cent of gains.
Vorabpauschale (Pre-Tax Deduction)
For accumulating ETFs, Germany applies an annual Vorabpauschale — a small deemed gain based on a government-set base rate. This ensures accumulating funds do not indefinitely defer taxes. It is deducted from your Freistellungsauftrag or withheld from your account.
Teilfreistellung (Partial Exemption)
Equity funds (those holding 51%+ equities) get a 30% Teilfreistellung — meaning only 70% of gains are taxable. This partially compensates for corporate-level taxation. Mixed funds get 15%, real estate funds get 60% or 80%.
Loss Offsetting (Verlustverrechnung)
Investment losses can be offset against gains of the same type. Stock losses can only offset stock gains. ETF and fund losses can offset all capital gains. Unused losses carry forward indefinitely — they never expire.
I Document Every Trade — Even the Losses
Options record: 1W-8L. Net worth: 100% GSE preferred. Get the unfiltered updates.
Unsubscribe anytime. I respect your inbox more than Congress respects property rights.
Most Popular ETFs in Germany
German investors overwhelmingly favor broad, low-cost, globally diversified ETFs. The iShares Core MSCI World is by far the most popular single ETF in German Sparplan accounts. Here are the ETFs you will see discussed most in German investing communities:
| ETF Name | ISIN | TER | Type | Focus |
|---|---|---|---|---|
| iShares Core MSCI World | IE00B4L5Y983 | 0.20% | Accumulating | Global developed markets (~1,500 stocks) |
| Vanguard FTSE All-World | IE00BK5BQT80 | 0.22% | Accumulating | Global developed + emerging (~4,000 stocks) |
| iShares Core S&P 500 | IE00B5BMR087 | 0.07% | Accumulating | 500 largest US companies |
| Xtrackers MSCI World | IE00BJ0KDQ92 | 0.19% | Accumulating | Global developed markets (DWS/Deutsche Bank) |
| Vanguard FTSE Developed World | IE00BK5BQV03 | 0.12% | Distributing | Developed markets, pays dividends |
| iShares MSCI EM | IE00B4L5YC18 | 0.18% | Accumulating | Emerging markets (~1,400 stocks) |
TER = Total Expense Ratio (annual fund cost). ISIN = International Securities Identification Number. Accumulating ETFs reinvest dividends; distributing ETFs pay them out.
How to Start Investing in Germany — Step by Step
Choose a Broker & Open a Depot
A Depot (securities account) is where your ETFs and stocks are held. Trade Republic and Scalable Capital let you open one in under 10 minutes via video identification (VideoIdent) or PostIdent. You need a German address, a valid ID or passport, and a German bank account (IBAN).
Tip: Trade Republic is the easiest for absolute beginners. Scalable Capital offers more ETF selection.
File Your Freistellungsauftrag
Before your first investment, set up your Freistellungsauftrag (tax exemption order) in your broker's settings. Enter €1,000 (or split it if you have multiple brokers). This ensures your first €1,000 of annual investment income is tax-free.
Tip: This takes 30 seconds in any broker app. Do it before your first trade — otherwise you will have to reclaim the tax via your Steuererklärung.
Pick Your ETF(s)
For most beginners, a single globally diversified ETF is the right starting point. The iShares Core MSCI World (IE00B4L5Y983) or Vanguard FTSE All-World (IE00BK5BQT80) are the two most common choices. One ETF, set and forget.
Tip: Do not overcomplicate this. A single MSCI World ETF covers ~1,500 companies across 23 developed countries. That is plenty of diversification.
Set Up Your Sparplan
Choose your monthly amount (start with whatever you can comfortably afford — €50, €100, €200). Select a fixed execution date (1st or 15th of the month are common). Your broker will automatically buy ETF shares each month. No action needed from you after setup.
Tip: Start small and increase later. A €50/month Sparplan is infinitely better than a €500/month Sparplan you cancel after 3 months because it felt like too much.
Do Not Touch It
Seriously. The hardest part of a Sparplan is leaving it alone. Markets will drop. Your portfolio will show red numbers. This is normal. The entire point of a Sparplan is that you keep investing through downturns — buying more units when prices are low. Time in the market beats timing the market.
Tip: Set a calendar reminder to check your portfolio once per quarter at most. Checking daily leads to emotional decisions.
Glen's Honest Take
I ran a hedge fund in the United States. Here is what I think about the German investment landscape:
1. Germans actually have it pretty good. The Sparplan system is elegant. Free recurring ETF purchases, automatic tax withholding, a €1,000 tax-free allowance — the infrastructure is better than what most American retail investors deal with.
2. The 25% flat tax is not as bad as it sounds. In the US, long-term capital gains rates are 0%, 15%, or 20% depending on income — but most Americans also pay state income tax on gains. Germany's 26.375% effective rate is competitive, especially with the Teilfreistellung reducing the base.
3. Stop overthinking the ETF choice. I see German Reddit threads debating MSCI World vs FTSE All-World vs MSCI ACWI for hundreds of comments. They all track roughly the same universe of stocks. Pick one, set up your Sparplan, and go live your life.
4. The biggest risk is not starting. Germany's statutory pension (gesetzliche Rente) will not be enough for most people to retire comfortably. The sooner you start a Sparplan — even a small one — the more compound growth works in your favor.
Recommended Resources
Tools & books I actually use and recommend
SeekingAlpha Premium
Quant ratings, earnings transcripts, and the stock analysis community where I published 300+ articles.
Try SeekingAlphaA Random Walk Down Wall Street
Burton Malkiel's classic case for index investing. The book that convinced millions to stop stock-picking.
View on AmazonThe Little Book of Common Sense Investing
John Bogle's manifesto on why low-cost index funds beat everything else. Straight from the founder of Vanguard.
View on AmazonSome links above are affiliate links. I only recommend products I personally use. See my full disclosures.
Frequently Asked Questions
What is an ETF Sparplan and why is it so popular in Germany?
An ETF Sparplan (savings plan) lets you automatically invest a fixed amount into ETFs every month — often starting from just €1. It is the most popular way Germans build wealth because it requires no market timing, benefits from euro cost averaging, and most neo-brokers offer hundreds of Sparplan-eligible ETFs with zero order fees. Think of it as the German equivalent of a recurring automatic investment.
How much tax do I pay on investment gains in Germany?
Germany charges a flat 25% Abgeltungsteuer (withholding tax) on capital gains, dividends, and interest, plus 5.5% Solidaritätszuschlag on top (effectively ~26.375%). If you are a church member, Kirchensteuer adds another 8-9%. However, every person gets a €1,000 annual Sparerpauschbetrag (saver's allowance) — gains up to that amount are tax-free if you file a Freistellungsauftrag with your broker.
What is a Freistellungsauftrag and how do I set one up?
A Freistellungsauftrag is a tax exemption order you file with your broker to use your €1,000 annual Sparerpauschbetrag (€2,000 for married couples filing jointly). Without it, your broker withholds tax on every euro of gains from the first cent. You can split your allowance across multiple brokers, but the total must not exceed €1,000. Every German broker lets you set this up in their app or online portal.
Which broker should I use in Germany?
For most beginners, Trade Republic or Scalable Capital are the best starting points. Both offer free ETF Sparplan execution, low trading fees (€1 or less per order), intuitive mobile apps, and automatic tax reporting to the Finanzamt. If you want access to more international exchanges, Interactive Brokers is the power-user choice. Flatex and DEGIRO are solid mid-range options.
Can I invest in US stocks from Germany?
Yes. Most German brokers let you buy US-listed stocks and ETFs on exchanges like Tradegate, Xetra, or Lang & Schwarz. However, US-domiciled ETFs (like VOO or VTI) are generally not available to EU retail investors due to PRIIP/KID regulations. Instead, you buy UCITS-compliant equivalents — for example, iShares Core S&P 500 UCITS ETF (SXR8) instead of VOO.
Keep Exploring
MSCI World vs S&P 500
The biggest ETF debate in Europe — global diversification vs US concentration.
Read moreGuideBest ETF Brokers in Europe
Trade Republic, Scalable Capital, DEGIRO, Interactive Brokers compared.
Read moreGuideAccumulating vs Distributing ETFs
Thesaurierend vs Ausschüttend — which is better for your tax situation?
Read moreGuideFIRE Movement in Europe
Financial independence adapted for European tax systems and pension structures.
Read moreComparisonUS vs European Stock Market
Why the US has outperformed and what it means for European investors.
Read moreGuideBest Index Funds
Top 10 index funds for beginners compared by cost and holdings.
Read more