Investing from Germany

From Bogleheads
Jump to: navigation, search
Frankfurt on the Main: Neue Börse (New Stock Exchange)
Flag of Germany.png This page deals specifically with investing in Germany.

You can apply the Bogleheads® investment philosophy if you live in Germany, but you must be aware of a few particularities. Investing from Germany introduces a series of them. Please ask portfolio questions in the Bogleheads forum and contact a professional advisor before acting on them.

The general guidance given in EU investing is applicable.

This page is not intended for US resident investors, as their situation is very specific. US expats who live in Germany should look at Taxation as a US person living abroad before investing in Europe domiciled funds.

Bogleheads style investing

The funds described in the Investing from Belgium page (above link) can also be used by German investors.[1]

For distributing ETFs, Vanguard All-World ETF (VWRL: IE00B3RBWM25) would be a good choice for equities, although it excludes small caps.[1]

The table below includes asset class exchange-traded funds; the fund International Securities Identification Number (ISIN); [note 1] the fund total expense ratio (TER); and a description of fund characteristics.

Fund ISIN Total Expense Ratio Description
iShares Core MSCI World UCITS ETF ISIN IE00B4L5Y983 0.20% Accumulating.
Provides broad, developed countries exposure.
db x-trackers STOXX 600 ETF ISIN LU0328475792 0.20% Accumulating.
Tracks 600 stocks of European companies. 200 large cap, 200 medium cap, 200 small cap.
iShares Stoxx Europe 600 ETF ISIN DE0002635307 0.20% Distributing.
Tracks 600 stocks of European companies. 200 large cap, 200 medium cap, 200 small cap.
iShares Euro Government Bond 3-5y ETF ISIN DE000A0LGQD2 0.20% Distributing.
Covers short to mid-term bonds from European governments.

Taxation

As always, taxes are very important and differ a lot between the European countries.[1]

The SPDR® ETFs Tax Reference Guide from SPDRs Europe offers some detail on the situation for German investors. Use only German tax reporting funds to avoid taxation of unrealized cap gains, which would be a reason specific for Germans to avoid US domiciled ETFs.[1]

German investors are taxed on dividends and realized capital gains at a rate of 26.375% without church tax and up to 28.625% including church tax depending on your religious affiliation. It does not matter if the fund distributes the dividends or reinvests them for you.

According to Vanguard,[2] all their Ireland domiciled ETFs are German tax reporting as of November 2015. Ireland domiciled ETFs would be a good option as Ireland does not tax dividends or estates, as long as they are German tax reporting then. Luxembourg domiciled ETFs could be unattractive if they are physically replicating because they often cannot access tax withholding treaties. Physically replicating Germany domiciled ETFs should be fine, but choice is limited when you want to invest in stocks outside of Europe (an investor could use justETF to find ETFs).[1]

Notes

  1. An International Securities Identification Number (ISIN) uniquely identifies a security. Its structure is defined in ISO 6166. Securities for which ISINs are issued include bonds, commercial paper, stocks and warrants. The ISIN code is a 12-character alpha-numerical code that does not contain information characterizing financial instruments but serves for uniform identification of a security at trading and settlement.

See also

References

External links