Depot — Investment Account
Depot is an investment account for holding securities in Germany. Without a Depot, you cannot buy ETFs, stocks, or bonds. Opening a Depot takes 10-15 minutes online, and modern brokers charge €0-1 per trade — significantly cheaper than banks a decade ago.
This article explains broker selection principles, not specific product recommendations. Investment decisions are yours alone.
What Is a Depot and Why You Need One
Depot is a specialized account for holding securities:
- ETFs (exchange-traded funds)
- Company stocks
- Bonds
- Other exchange-traded instruments
The Depot is separate from your regular bank account. Money for purchases sits in the Verrechnungskonto (cash account), while securities are held in the Depot.
Types of Brokers: Neobrokers vs Traditional Banks
Germany has two main broker types:
Neobrokers (Trade Republic, Scalable) — low fees (€0-1 per trade), minimalist interface, app-only. Emerged after 2015 [1].
Traditional banks (ING, DKB, comdirect) — higher fees (from €4.90), more features (phone support, access to off-exchange instruments), established brands.
Neobroker Comparison
| Broker | Sparplan (auto-invest) | Single trade fee | Sparplan minimum | License |
|---|---|---|---|---|
| Trade Republic | €0 | €1 | €1 | BaFin [2] |
| Scalable Capital | €0 (Prime €4.99/month) | €0.99 or €0 (Prime) | €1 | BaFin [3] |
| Smartbroker+ | €0 | €0 (Gettex) or €1 | €25 | BaFin [4] |
Sparplan — automatic monthly ETF or stock purchases for a fixed amount.
Traditional Bank Comparison
| Broker | Sparplan | Single trade fee | Sparplan minimum |
|---|---|---|---|
| DKB | €1.50 per execution | 0.25%, min €10 | €50 |
| ING | €0 | 0.25%, min €4.90 | €1 |
| comdirect | €1.50 | 0.25% + €4.90 | €25 |
Broker Selection Criteria
Broker choice depends on your strategy and psychology.
| Criterion | Neobrokers | Traditional Banks | Best For |
|---|---|---|---|
| Cost | €0-12/year with €100/month Sparplan | €18-60/year with €100/month | Cost minimization — neobrokers |
| Available ETFs | 1500-2500 positions | 5000+ positions | Basic ETFs — either works |
| Interface | App-only, minimalist | App + web + phone | Need support — banks |
| License | BaFin, banking license | BaFin, banking license | All equally regulated [5] |
| Trust | New brands (2015-2019) | Established names (30+ years) | Psychological factor |
Psychological Dimension: Trust in New Brokers
If you've witnessed "reliable" brokers collapse in your country of origin, skepticism toward Trade Republic is logical. The German system differs structurally:
- Securities stored separately — if broker bankrupts, your stocks and ETFs remain yours, transferred to another broker [6].
- Cash insured up to €100,000 — Einlagensicherung (deposit insurance) covers Verrechnungskonto balances [7].
- BaFin regulation — all brokers (neobrokers and banks) have banking licenses and are regulated by BaFin [5].
But trust builds gradually. Starting with ING (familiar brand) and switching to Trade Republic (lower fees) after a year is a reasonable trajectory.
Depot Opening Process
Opening a Depot takes 10-20 minutes online.
Steps
- Registration — provide name, address, tax ID (Steuer-ID).
- Identification — VideoIdent (online video with passport) or PostIdent (at post office). VideoIdent faster — 5 minutes.
- Contract signing — electronic signature in app.
- Freistellungsauftrag setup — see below.
- Fund Verrechnungskonto — transfer money from regular account.
- Purchase — set up Sparplan or buy manually.
Freistellungsauftrag — €1,000 Tax Exemption
Freistellungsauftrag (exemption order) instructs the broker not to withhold tax on the first €1,000 (singles) or €2,000 (married couples) of investment profit per year [8].
How it works:
- Without Freistellungsauftrag, broker withholds 26.375% tax on every euro of dividends and gains.
- With Freistellungsauftrag, first €1,000 of profit stays with you entirely.
- Savings: up to €263 per year per person.
How to set up: In broker app, find "Freistellungsauftrag" section and specify amount (€1,000 for one broker or split among several).
If you have multiple brokers: Split the limit. Example: Trade Republic — €600, ING — €400. Total cannot exceed €1,000.
Verrechnungskonto — Depot Cash Account
Verrechnungskonto is a regular bank account linked to your Depot. Money for purchases sits here, not in the Depot itself.
Important:
- Money in Verrechnungskonto protected by deposit insurance up to €100,000 [7].
- Some brokers (Trade Republic) pay interest on balance — up to 3.25% annually (January 2025 data) [9].
Security: What Happens If Broker Fails
Securities are your property. They're stored separately from broker assets in central depository (Clearstream for German brokers) [6].
If broker bankrupts:
- Your ETFs and stocks remain yours — transferred to another broker.
- Money in Verrechnungskonto protected by deposit insurance up to €100,000 per person [7].
- Transfer process takes several weeks, but securities don't disappear.
This differs structurally from broker bankruptcies in Russia/CIS in 1990s-2000s, where client funds were often commingled with company assets.
Who Should Open a Depot: Boat vs Ladder
| Phase | Recommendation |
|---|---|
| Boat (0-24 months) | You can open Depot, but priority is accumulating 3-6 month emergency fund in Tagesgeldkonto (savings account). Long-term investments are for stability, not survival. |
| Island/Ladder (year 2+) | Depot becomes key wealth-building tool. Sparplan of €100-500/month in ETFs is foundational financial strategy element. |
Frequent Questions
Can I open Depot without Girokonto at same bank? Yes. Trade Republic, Scalable Capital and Smartbroker+ don't require checking account at same institution.
Do I need to file tax return? If you have Freistellungsauftrag set up and profit doesn't exceed €1,000/year, broker automatically withholds tax, no return needed. If profit higher — file Steuererklärung to reclaim overpayment [8].
Can I have multiple Depots? Yes. Many hold one Depot for long-term holdings (Sparplan), another for experiments or trading.
FAQ
Not legal or financial advice.
I have an Interactive Brokers account from before I moved to Germany. Can I keep using it?
Yes, but with tax implications. Interactive Brokers (Ireland/Luxembourg) does not withhold German Kapitalertragsteuer — you are responsible for declaring and paying tax. All dividends, capital gains, and interest must be reported in Anlage KAP (capital income tax form) when filing Steuererklärung (tax return). A Freistellungsauftrag (tax exemption order) cannot be set up with a foreign broker — the €1,000 deduction is applied when filing. After moving to Germany, notify the broker of your tax residency change and update W-8BEN forms (to reduce US withholding tax to 15%). Using both a German and foreign broker simultaneously is permitted.
Trade Republic pays 3.25% on cash balance. Is it a savings account?
No. Interest is earned on the Verrechnungskonto (settlement account), but it's not a Tagesgeld in the traditional sense. Key differences: (1) funds are protected by Einlagensicherung (deposit insurance) up to €100,000, like a regular bank account [7]; (2) the rate can change at any time without notice — it's tied to the ECB rate; (3) interest is subject to Kapitalertragsteuer (capital gains tax, 26.375%) — set up a Freistellungsauftrag so the first €1,000 of gains are tax-free [8]. For an emergency fund, a separate Tagesgeld account is more reliable — it's psychologically separated from your investment portfolio.
My Depot shows negative returns. Should I switch brokers?
Negative performance reflects market movement, not a broker problem. Switching brokers won't change the value of your ETFs or stocks. A transfer (Depotübertrag) is free by law (§ 67 WpHG), takes 2–6 weeks, and is not a taxable event — you're not "selling" securities, just transferring them. Switching brokers makes sense if: fees are too high, needed ETFs are unavailable, the interface is inconvenient, or service doesn't meet requirements. The decision to switch should not be based on temporary portfolio drawdowns.
Can I open a Depot for my child?
Yes. Germany has Junior-Depot (custodial accounts for minors). Parents open it in the child's name, manage the account until the child turns 18, after which the child gets full access. Tax advantage: the child has their own Sparerpauschbetrag (saver's tax-free allowance, €1,000/year) and Grundfreibetrag (tax-free basic allowance) — with no other income, up to ~€11,784/year in capital gains is tax-free. Limitation: the funds legally belong to the child, parents cannot take them back. Junior-Depot is offered by Trade Republic, Scalable Capital, ING, comdirect.
How does a Depot transfer (Depotübertrag) from an old broker work?
Depot transfers are free — the transferring broker cannot charge a fee (§ 67 WpHG) [5]. Process: (1) open a new Depot at the new broker; (2) fill out the Depotübertrag form (usually available in the new broker's app); (3) the new broker requests the transfer from the old one. Timeline: 2–6 weeks, sometimes longer. During the transfer, you cannot sell the securities being transferred. The transfer is not a taxable event — the acquisition cost (Anschaffungskosten) is preserved. After the transfer, verify that Anschaffungskosten (acquisition costs) were correctly transferred — errors can lead to overpaying tax on sale.
Sources
- Trade Republic — Company history. Trade Republic Bank GmbH. URL: https://traderepublic.com/de-de/ueber-uns (accessed: January 31, 2025).
- Trade Republic — BaFin license. Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). URL: https://www.bafin.de (accessed: January 31, 2025).
- Scalable Capital — BaFin license. Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). URL: https://www.bafin.de (accessed: January 31, 2025).
- Smartbroker+ — BaFin license. Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). URL: https://www.bafin.de (accessed: January 31, 2025).
- Wertpapierhandelsgesetz (WpHG) — securities trading regulation. Bundesministerium der Justiz. URL: https://www.gesetze-im-internet.de/wphg/ (accessed: January 31, 2025).
- Einlagensicherung und Anlegerentschädigung. Bundesverband deutscher Banken. URL: https://bankenverband.de/themen/einlagensicherung/ (accessed: January 31, 2025).
- Einlagensicherung — deposit insurance up to €100,000. Entschädigungseinrichtung deutscher Banken (EdB). URL: https://www.edb-banken.de (accessed: January 31, 2025).
- Freistellungsauftrag — tax exemption on investment income. Bundesministerium der Finanzen. URL: https://www.bundesfinanzministerium.de (accessed: January 31, 2025).
- Trade Republic — interest on balance. Trade Republic Bank GmbH. URL: https://traderepublic.com (accessed: January 31, 2025).