Investment Opportunities

This chapter helps you understand the investment opportunities open to you as a foreigner living in Germany, and what happens to your money once you use them. It explains what a Depot is and how to open one, how German brokers compare, how investment income is taxed under the Abgeltungsteuer, and why holders of ETFs get a small tax bill in January even in years when they sell nothing. It also covers property, crypto and the retirement products that changed in 2026.

You do not need to be wealthy or fluent in German to start. You do need a registered address, a German tax number and a clear view of the rules, because Germany taxes investment income at source and expects you to set up one specific piece of paperwork yourself. Nothing here is financial or tax advice. It is background so that you can ask a Steuerberater, a tax adviser, or a Honorarberater, a fee-only financial adviser, better questions.

What investment opportunities in Germany look like in 2026

Germany is a saver’s country that has slowly become an investor’s country. For decades most households kept their money in a Sparbuch, a passbook savings account, or in life insurance policies. That has shifted. Low-cost brokers, ETF savings plans and a long stock market run have brought millions of ordinary people into the market, and the products available to a resident here are as good and as cheap as anywhere in Europe.

The market backdrop in mid-2026 has been strong. The DAX, the index of Germany’s largest listed companies, climbed above 25,800 points for the first time in early July 2026, reaching an intraday record of about 25,826 points, according to the Boersen-Zeitung. Handelsblatt reported that the run was driven by hopes of less restrictive US monetary policy, falling oil prices and a reform package agreed in Berlin. A record index is a fact about the past, not a promise about the future, and buying after a long rise is not the same as buying cheaply. Treat the number as context rather than as a signal.

What matters more for you than the index level is the framework around it. Investment products sold in Germany are supervised by the BaFin, the Federal Financial Supervisory Authority, and by EU rules that require your bank to ask about your knowledge and risk tolerance before selling you something complicated. Cash in a bank account is protected by the statutory deposit guarantee up to 100,000 euros per person per bank. Securities held in your Depot are treated differently and better: they are your property, not the bank’s, so if the bank fails, your shares and fund units are still yours and can be moved elsewhere. Fund assets are held as Sondervermögen, separate assets, which are ring-fenced from the fund company’s own insolvency.

The Depot: your account for holding securities

A Depot, sometimes written Wertpapierdepot, is a securities account. It is the register that records which shares, bonds, fund units and ETFs belong to you. It is not where your cash sits. Every Depot comes paired with a Verrechnungskonto, a settlement account, which is the cash side: money you pay in waits there, purchases are debited from it, dividends land in it, and, importantly, tax is taken from it. If that settlement account is empty when a tax charge falls due, your bank can put it into overdraft or sell something. Keeping a small cash buffer there is one of the few genuinely practical habits in this chapter.

To open a Depot you generally need to be resident in Germany, which in practice means you have completed your Anmeldung, the compulsory registration of your address, and hold the resulting registration certificate. You will need a valid passport or ID card, a German address, a German current account, and your Steuer-Identifikationsnummer, the eleven-digit tax identification number that arrives by post after you register. Identity is confirmed by VideoIdent, a short video call where you hold your ID up to the camera, or PostIdent, where a Deutsche Post branch checks your document. Most providers handle both in English or with an English-speaking agent, though the contract itself is usually German.

Your residence permit does not restrict you here. Investing is not employment, so holding shares or fund units does not touch the conditions of a work visa or a Blue Card. What does matter is your tax residence: once you are resident in Germany, Germany taxes your worldwide investment income, including gains in accounts you left behind in your home country. That surprises people every year, and it is worth reading alongside our chapter on how German taxes work.

Choosing where to open your Depot

There are two broad families of provider. The established online banks, such as Comdirect (part of Commerzbank), Consorsbank (part of BNP Paribas), ING and DKB, give you a full bank plus a Depot, a wide selection of exchanges, real customer service and research material. Their standing fees are usually low or waived if you run a savings plan or meet a minimum activity level, and their order fees are moderate. DekaBank, sold through the Sparkassen, is oriented towards its own managed funds and suits people who want a branch relationship rather than the lowest price.

The second family is the neobrokers: Trade Republic, Scalable Capital, finanzen.zero and similar app-first providers. They charge very little per order, often a flat euro or nothing at all on savings plans, and they are usually the cheapest way to run a monthly ETF plan. The trade-offs are a narrower choice of trading venues, thinner support and a product that lives mostly in an app. For a long-term investor buying a broad ETF every month, that is often an acceptable trade. For someone holding unusual bonds or trading actively, it is not.

When you compare, look past the headline order fee. Check the Depotgebuehr, the annual custody fee, and what waives it. Check the cost of a Sparplan, a standing savings plan, because that is what you will use most. Check whether the interface, the documents and the support exist in English, since you will be reading tax statements in this account for years. Check which exchanges you can reach, because a fund available on Xetra may not be on a neobroker’s single venue. And check what a Depotuebertrag, a transfer of your holdings to another provider, costs, since within Germany it is normally free and you should not be locked in.

One point deserves more weight than the marketing gives it. A German broker is legally the paying agent for your investment taxes. It calculates what you owe on each dividend and each sale, deducts it, and forwards it to the Finanzamt, the tax office. Your holdings, gains and losses are tracked for you across the year. A broker based outside Germany, including well-known international platforms, does not do this. You then have to declare every dividend and every disposal yourself in Anlage KAP, the capital income annex to your tax return, convert foreign currency correctly, and track your own gains. It is legal and sometimes worth it, but it turns a background task into an annual project. For most people arriving in Germany, a German-domiciled Depot is the simpler life.

Abgeltungsteuer: the flat tax on your investment income

The Abgeltungsteuer, sometimes called the final withholding tax, is the flat tax on private investment income. It applies to interest, dividends and realised capital gains. The rate is 25 percent, plus the Solidaritaetszuschlag, the solidarity surcharge, at 5.5 percent of the tax itself, which brings the effective rate to 26.375 percent. If you are a registered member of a church that levies Kirchensteuer, church tax, at 8 percent in Bavaria and Baden-Wuerttemberg or 9 percent elsewhere, the total lands somewhere close to 28 percent. The rate is the same whether you earn 30,000 or 300,000 euros. It has not changed for 2026. Proposals to raise the rate to 30 percent have been raised in political debate, notably by the SPD, but no such change has been enacted, and the coalition agreement does not announce one.

Before that tax bites, you have an allowance. The Sparerpauschbetrag, the saver’s lump-sum allowance, shields the first 1,000 euros of investment income per person per year, or 2,000 euros for a married couple assessed jointly. It has stood at that level since 2023 and remains unchanged for the 2026 tax year. It is not applied automatically. You have to claim it by filing a Freistellungsauftrag, an exemption order, with your bank or broker. This is a short form, available in your online banking, in which you tell the institution how much of your allowance to apply to that account. It requires your tax identification number, and you may split the total across several banks as long as the sum of all your exemption orders does not exceed your allowance. If you have one Depot, give it the whole amount.

Two adjustments are worth knowing. If your total income is so low that you would pay no income tax at all, for example as a student or during a gap between jobs, you can apply to your Finanzamt for a Nichtveranlagungsbescheinigung, a non-assessment certificate, and hand it to your bank so that nothing is withheld beyond your allowance. Separately, if your personal income tax rate is below 25 percent, you can request a Guenstigerpruefung, a more-favourable-rate check, in your tax return. The Finanzamt then applies your lower personal rate to your investment income instead of the flat rate and refunds the difference. It only ever helps you; the office applies whichever result is better.

Losses do not disappear, but they are kept in compartments. Your broker maintains Verlustverrechnungstoepfe, loss offset pots, and losses on shares can only be set against gains on shares, while other losses go into a general pot. Losses stay with that broker and roll forward automatically. If you hold Depots at two providers and one has gains while the other has losses, the offset does not happen by itself. You must request a Verlustbescheinigung, a loss certificate, from the loss-making broker by 15 December of that year, then combine the two in your tax return. Miss the deadline and the loss simply waits at that broker for a future year.

ETFs, funds and the Vorabpauschale

ETFs, exchange-traded funds, are the workhorse of German retail investing, and for good reason: a single monthly purchase of a broad global index fund gives you thousands of companies at a low running cost. German fund taxation has its own vocabulary, though, and two words explain nearly all of it.

The first is Teilfreistellung, partial exemption. Because a fund already pays tax at its own level on some of its earnings, part of what reaches you is exempt to avoid taxing the same money twice. Under the Investmentsteuergesetz, the Investment Tax Act, equity funds holding at least 51 percent shares get a 30 percent exemption, mixed funds with at least 25 percent shares get 15 percent, and property funds get 60 percent. This applies to distributions, to sale profits and to the advance charge below. In practice, a global equity ETF is taxed on 70 percent of its income, so the real burden is closer to 18.5 percent than to 26.375 percent.

The second is the Vorabpauschale, the advance lump sum. Many ETFs are thesaurierend, accumulating, meaning they reinvest income rather than paying it out. Without a rule, an accumulating fund could defer all tax for decades. So Germany levies a small annual advance charge instead. The calculation starts with the Basisertrag, base return: the fund’s value on 1 January multiplied by the Basiszins, the base rate, and then by 0.7. The Basiszins is set each January from Bundesbank data on government bond yields, and for 2026 it is 3.20 percent, up from 2.53 percent for 2025. The Vorabpauschale is the lower of that base return and the fund’s actual increase in value over the year, and it is never negative. If your fund lost money, there is nothing to charge. Teilfreistellung then reduces the taxable part, and the Sparerpauschbetrag can absorb the rest.

The mechanics catch people out more than the amounts do. The advance charge for a calendar year is not taken in that year. It is debited in January of the following year, so the charge for 2026, calculated with the 3.20 percent base rate, will be taken from your settlement account in January 2027. Your broker does this automatically and does not ask permission. This is why the cash buffer matters, and why a valid exemption order matters: for a modest portfolio, the advance charge often sits entirely inside the 1,000 euro allowance and costs you nothing, provided the exemption order is on file. The amount is not lost either. It is added to your cost base, so when you eventually sell, you are not taxed on it twice.

If you want to see the numbers for your own holdings rather than a worked example, Werkzeu.ge has a Kapitalertrag-Simulator that projects capital income over several years including the Vorabpauschale, Teilfreistellung and the gross-versus-net difference, and a Kapitalertrag-Checker that calculates the tax on interest, dividends, price gains and option premiums. Both sit in the Plus tier. They use the official formulas, but they are calculators, not advice, and they do not know your full circumstances.

Investment opportunities beyond the stock market

Not everything belongs in a Depot. Tagesgeld, instant-access savings, and Festgeld, fixed-term deposits, pay real interest again and are the right home for your emergency fund and for money you will need within a few years. Interest is investment income like any other, so it counts against the same Sparerpauschbetrag, and comparison portals will happily route you to accounts at banks elsewhere in the EU, where the deposit guarantee is the home country’s rather than Germany’s. That is legal and usually fine, but it is a different guarantee scheme, and it can complicate your tax return, since a foreign bank does not withhold German tax for you.

Property remains the classic German long-term asset, and it is a serious commitment rather than a portfolio line item. Purchase costs alone run to roughly 10 percent of the price once you add Grunderwerbsteuer, the land transfer tax, which varies by federal state, plus notary, land registry and usually an agent. The tax treatment rewards patience: a privately held property sold more than ten years after purchase is free of tax on the gain under the Spekulationsfrist, the speculation period in § 23 of the Income Tax Act, and a home you have lived in yourself can be exempt sooner. Sold inside that window, the gain is taxed at your personal income tax rate, not the flat rate. If you are weighing this against renting, Werkzeu.ge has a Miete vs. Kauf tool, in the paid Plus tier, that compares the two over time. The deposit is usually the binding constraint, so the household budgeting comes first.

Cryptocurrency is treated unusually generously in Germany, and unusually strictly in its record keeping. Coins are not capital assets under the Abgeltungsteuer but “other assets” under § 23 of the Income Tax Act, so the flat tax does not apply. Instead, a gain is completely tax free if you held the coin for more than one year. Sold inside the year, the gain is taxed at your personal income tax rate, with a Freigrenze of 1,000 euros. Note that a Freigrenze is an exemption limit, not an allowance: exceed it by one euro and the entire gain becomes taxable, not just the excess. Income from staking, mining or lending is taxable on receipt and has its own 256 euro Freigrenze. Since 1 January 2026, crypto service providers have been subject to reporting duties under the EU’s DAC8 directive, with automated transmission to tax authorities from 2027, so the informal era is over. The federal finance minister has floated abolishing the one-year holding period in budget discussions, but no bill exists, and the rule stands for now.

Retirement products and the 2026 pension reform

Retirement saving in Germany is usually described as three pillars: the statutory pension, occupational schemes, and private provision. The statutory pension is compulsory for most employees and is covered in our chapter on pension plans and retirement. The second pillar, betriebliche Altersvorsorge or bAV, lets you divert part of your gross salary into a company scheme, saving income tax and social contributions now and paying tax on the pension later. Many employers add a subsidy, and where they do, it is usually the best return available to you for the effort involved. Ask your HR department what the scheme is before you build anything private.

The third pillar changed substantially in 2026, and any older article you read on this topic is now wrong. The Bundestag adopted the reform of state-subsidised private pensions in spring 2026 and the Bundesrat approved the Altersvorsorge-Reformgesetz on 8 May 2026. From 1 January 2027, the Riester-Rente is replaced for new contracts by an Altersvorsorgedepot, a subsidised retirement savings account that is far more capital-market oriented. It drops the guarantee that Riester required, which is what made Riester products expensive and low-yielding, and it accepts more risk in exchange for a better expected return. According to the Deutsche Rentenversicherung, the basic Zulage, or state allowance, runs up to 540 euros a year, paid as 50 cents per euro you contribute up to 720 euros and 25 cents per euro after that, with a child allowance of one euro per euro saved up to 300 euros per child, and a deduction of up to 1,800 euros plus allowance entitlements. Self-employed people qualify for the subsidy for the first time, and a standard product will be offered with effective costs capped at 1.0 percent.

If you already hold a Riester contract, it is protected and continues to run. You may switch to a new product by declaration, but the Deutsche Rentenversicherung advises thinking carefully first, since an old contract’s guarantees may be worth more than they look. If you were about to sign a new Riester contract, waiting for the successor is the obvious move. A separate Fruehstart-Rente, under which the state would pay ten euros a month into a depot for every child in education between six and eighteen, has been agreed at the level of key points but is not yet law, so treat it as planned rather than available.

The Ruerup-Rente, formally the Basisrente, is untouched by the reform and continues as its own product. It works through the tax deduction rather than through allowances: contributions are deductible as Sonderausgaben, special expenses, up to 30,826 euros for a single person and 61,652 euros for a jointly assessed couple in 2026. The catch is that this ceiling covers all basic retirement provision together, including your compulsory statutory pension contributions, so an employee has far less headroom than the figure suggests. It suits high-earning self-employed people, and it is genuinely inflexible: the capital cannot be withdrawn, sold or inherited in the normal way. Werkzeu.ge has a Renten-Rechner, free with a free account, if you want to model the accumulation, but a product you cannot exit for thirty years is one to discuss with a fee-only adviser rather than a calculator.

Cross-border points if you may not stay forever

Most guides written for a German audience stop here. As a foreigner, you have three extra considerations, and they are the ones that cost real money.

If you are a US citizen or green card holder, get specialist advice before you buy a single European fund. The United States taxes on citizenship, so you remain inside its system while living here, German banks report your accounts under FATCA, and non-US funds, including ordinary German ETFs, are generally treated as PFICs under US rules, a category with punitive tax treatment and heavy reporting. Some German brokers decline US customers outright for this reason. None of this makes investing impossible, but the standard German advice, which is to buy a global accumulating ETF and forget about it, is close to the worst thing a US person can do here. A cross-border adviser who handles both systems is not optional.

Second, dividends from foreign shares usually arrive with Quellensteuer, foreign withholding tax, already deducted at source. Germany credits up to 15 percentage points of it against your German tax, and anything above that must be reclaimed from the foreign country, a process ranging from routine to hopeless depending on the state. Your double taxation agreement determines the details, and this is one reason many investors prefer funds domiciled in Ireland or Luxembourg for US exposure.

Third, if you might leave Germany, be aware of the Wegzugsbesteuerung, the exit tax under § 6 of the Foreign Tax Act. It treats certain holdings as if you had sold them on the day you move away, and taxes the paper gain even though no money changed hands. It has always applied to substantial shareholdings in companies, and since 1 January 2025 it also reaches investment fund units held privately where you hold at least 1 percent of the fund’s units or your acquisition costs in a single fund reach 500,000 euros, under § 19 of the Investment Tax Act. The threshold is measured per fund rather than across your portfolio, so ordinary savers are not affected, but a large single-ETF position can cross it. There are provisions for temporary absence and for instalments. If you are planning a move and your holdings are substantial, this is a Steuerberater question, and it is far cheaper to ask before you leave than afterwards. Our chapter on tax law and financial advice explains how to find one.

Tools that do the arithmetic for you

Most of what is described above is arithmetic with official formulas, and a calculator will do it faster than you will. Werkzeu.ge, which is built by Cryon UG, the company behind WeLiveIn.de, is a browser-based collection of German bureaucracy, tax and finance tools with a bilingual German and English interface, hosted in Germany. Its Finanzen category holds 14 tools and its Rechner category 9, alongside a much larger tax section.

The two most relevant to this chapter, the Kapitalertrag-Checker and the Kapitalertrag-Simulator, are in the Plus tier. So are the Dividenden-Tracker, for following dividend income across a portfolio, and the Vermoegensuebersicht, for a consolidated view of your assets. Free without any account are the Brutto-Netto-Rechner, which turns a gross salary into take-home pay and tells you what you can actually spare each month, and the Einkommensteuer-Rechner, which computes income tax under § 32a of the Income Tax Act including the solidarity surcharge and church tax. That second one is useful here for a specific reason: it shows your personal tax rate, which is what you need in order to judge whether a Guenstigerpruefung would help you. The Renten-Rechner is free with a free account, and Miete vs. Kauf is in the Plus tier. The free tier carries ads. Rather than quoting a figure that will be out of date, see the current pricing at werkzeu.ge/en/pricing; it is a few euros a month.

Two honest caveats. The platform is in beta until 30 November 2026, and its own terms say tools may be incomplete or contain errors, so check anything that matters. More importantly, its terms are explicit that it does not provide legal, tax or financial advice, and that applies with full force to this chapter. The tax tools use the official Finance Ministry formulas, but a formula does not know about your foreign accounts, your residence history, your marital status or your plans. It does not replace a Steuerberater. The tools also prepare and calculate only. They never submit anything to the Finanzamt on your behalf, and there is no filing integration, so your tax return still goes through ELSTER or your adviser.

What to do next

Start with the boring part, because it is the part that pays. Make sure your emergency fund exists in a Tagesgeld account before any of this. Then, if you already hold a Depot, check today that a Freistellungsauftrag is on file and set to the full 1,000 euros, and that your settlement account has enough cash in it to cover the advance charge that will be debited in January 2027. Those two steps take ten minutes and are the highest-value actions in this chapter.

If you do not have a Depot yet, wait until your Anmeldung is done and your tax identification number has arrived, then open one at a German provider. Compare the custody fee, the savings plan cost and whether the service exists in English, and prefer a German-domiciled broker for the first few years so that the tax handling happens without you. Once your bank account is set up, a Depot is usually a further form with the same institution.

Then decide slowly. Ask your employer about the bAV subsidy before you build anything private, since a matched contribution is a return no market has to provide. If you are about to sign a Riester contract, stop and wait for its successor in January 2027. If you are a US person, or if you hold more than half a million euros in a single fund, or if you might leave Germany within a few years, take the cost of one hour with a Steuerberater or a fee-only adviser seriously: on those three questions the fee is the cheapest part of the decision. And once you are filing a return anyway, it is worth checking what else you can claim while you are in there.