Investments for Expats in Germany

Germany applies a flat-rate Abgeltungssteuer (final withholding tax) of 25% on all capital gains, dividends, and interest income. Add the 5.5% solidarity surcharge (Solidaritaetszuschlag) on top, bringing the effective rate to 26.375%. If you are a member of a church, an additional 8-9% Kirchensteuer applies on the tax amount. Your broker automatically withholds these taxes, so you generally do not need to report investment income in your tax return unless you want to claim deductions or have foreign income.

The Sparerpauschbetrag is your annual tax-free allowance for investment income, set at 1,000 EUR per person (2,000 EUR for married couples filing jointly). To use it, submit a Freistellungsauftrag (exemption order) to your broker or bank. You can split the allowance across multiple banks, but the total must not exceed 1,000 EUR. Any investment income below this threshold is tax-free. Set up the Freistellungsauftrag when you open your depot account to avoid unnecessary tax withholding.

Yes. Most German brokers accept customers who are tax residents in Germany, regardless of nationality. You need a German address, a tax identification number (Steuer-ID), and a German bank account. Some brokers like Trade Republic and Scalable Capital require EU/EEA residency, while others like ING or Comdirect accept broader international customers. Always check the broker's specific requirements. Your investments are protected by EU deposit guarantee (up to 100,000 EUR for cash) and segregated custody for securities.

An ETF Sparplan (savings plan) is an automated recurring investment into ETFs, typically starting from as little as 1 EUR per month at neo-brokers like Trade Republic or 25 EUR at traditional brokers. It uses euro-cost averaging to reduce timing risk. In Germany, over 7 million ETF savings plans are active. Many brokers offer free Sparplan execution on hundreds of ETFs. This makes it the most popular entry point for new investors, as it requires no market timing knowledge and builds wealth systematically over time.

Using a German broker (or one with a German banking license) has significant tax advantages: the broker automatically calculates and withholds Abgeltungssteuer, handles the Sparerpauschbetrag, and provides year-end tax reports compatible with German tax returns. If you use a foreign broker, you must report and pay taxes yourself via your annual Steuererklaerung, which adds complexity. Popular German-licensed brokers include Trade Republic, Scalable Capital, ING, DKB, and Comdirect. Choose based on fees, ETF selection, and English-language support.