General information only — not investment advice.
The basics of investing in Germany
- Brokerage account (Depot): at an online broker or bank. Typical low-cost route: ETF savings plans (Sparplan) from €1/month, often free of order fees.
- Taxes: capital gains, dividends and interest are taxed at a flat 25% Abgeltungsteuer + Soli (+ church tax if applicable) ≈ 26.4%.
- Tax-free allowance: €1,000 per person (€2,000 for couples) via a Freistellungsauftrag with your bank or broker.
- Equity ETFs: 30% of gains are tax-free (Teilfreistellung). An annual "Vorabpauschale" (advance lump sum) is taxed in January even if you sell nothing — keep some cash in the account.
- US citizens: EU funds and ETFs cause US tax problems (PFIC rules) — get specialised advice.
Red flags with "financial advisers"
- Many "free" advisers are commission-paid salespeople. Common expensive products: unit-linked life insurance (fondsgebundene Rentenversicherung) with high costs, endowment policies, closed-end funds.
- Ask: "Wie werden Sie bezahlt?" (How are you paid?) and ask for the cost information (Effektivkosten). Independent fee-based advisers (Honorarberater) or the Verbraucherzentrale give advice without selling products.
- Check that a company is licensed in the BaFin company database before investing. BaFin publishes warnings about scams.
Buying property
- Extra costs on top of the price: property transfer tax (Grunderwerbsteuer) 3.5–6.5% depending on the state, notary and land registry about 1.5–2%, estate agent commission (usually split between buyer and seller, up to about 3.57% each).
- Banks typically expect 10–20% equity plus the extra costs from your own money, and prefer a permanent contract past probation. Non-EU buyers usually need a settlement permit or a long-term permit for good loan terms.
Big decisions checklist
- ☐ Emergency fund complete before investing.
- ☐ Dispo and high-interest debts paid off.
- ☐ Liability insurance (and disability insurance if relevant) in place.
- ☐ Employer pension subsidy (at least 15%) understood.
- ☐ Freistellungsauftrag set.