An overview of DEGIRO - Index Fund (European) Investor (2024)

DEGIRO is one of the most popular brokers in Europe.

People like DEGIRO because:

• It is available to investors in 16 European countries.
• It has low fees for trading ETFs.
• It is a brand of a publicly traded company, flatexDEGIRO.
• It has a simple interface.

The shortcomings of DEGIRO are its high currency conversion fees, and the fact that shares in the Basic account may be lent to 3rd parties.

I often see the following questions about any broker:

• “Is this broker good for long-term investing?”
• “Is this broker good for me?”
• “Can I trust this broker?”

The answer unfortunately is: it depends. There are multiple aspects that you need to consider when choosing a broker. Some aspects are more important to some people than others. People give different importance to aspects like fees, tax handling, investors compensation scheme, reputation and features.

Given you can’t have a simple answer to those questions. What you need is a solid decision-making process to understand if the broker is good for you. I’ve shared my process earlier. I’ve shown how that process looks in practice when applied to Interactive Brokers and Trading 212.

Table of Contents

• Fees
• Domicile
• Account types and limits
• Available ETFs and Stock Exchanges
• Legal structure/regulatory environment
• Holding Client Money
• Foreign currency support
• Customer Support
• Supported Countries
• Other

Fees

DEGIRO has one of the lowest fees you can see on the market. You can learn more about their fees in their fees page.

The relevant fees for a Regular Account (Basic, Active, Trader) you should be aware of are detailed in their fees schedule:

• transaction fees:
  • €3 when trading ETFs
  • a few ETFs (part of the ETF Core Selection list) have €1 transaction fees for your first trade of the month. Note that you need to trade those ETFs in the appropriate stock exchange to pay a lower fee. I’ve written a post where I explain which ETFs of the ETF Core Selection list I think are the best.
• custody/maintenance fees: free
• dividend processing fees: free
• exchange connectivity fee:
  • DEGIRO charges you to transact on exchanges which aren’t in your “home” market
  • 0.25% of your portfolio value with a maximum charge of 2.5€ per calendar year per exchange
• portfolio transfer fees:
  • to DEGIRO: free
  • from DEGIRO: 20€ per position + external costs
• currency conversion fees
  • Auto FX: 0.25%
  • manual trade: €10 + 0.25%

I detailed the fees that are important for the kind of usage I do of a broker. You should always read the fee schedule and take note of fees related to the usage you will do of a broker.

Domicile

Even though DEGIRO is available in many countries it is domiciled in The Netherlands. That means that DEGIRO likely won’t take care of any tax related paperwork that is specific to your country, unlike what a local broker would do. This also means that DEGIRO likely won’t do any tax withholding, you will also have to take care of that yourself.

It is important to understand which kind of tax bureaucracy you will have to deal with due to DEGIRO and evaluate if it is worth the low fees. In some countries the paperwork will be simple, in others it will be more complex. Tax laws vary from country to country so you will have to do your own research.

Account types and limits

For the purposes of investing in ETFs, DEGIRO has a single account type: Basic.

Note that shares of a Basic Account can be lent by DEGIRO to 3rd parties.

DEGIRO has put measures in place to minimize the risks related to shares lending:

• separate entities for holding clients assets (SPV – special purpose vehicle) and the rest of DEGIRO’s business (DEGIRO);
• DEGIRO being the counter-party for the shares lent towards the SPV instead of the shares borrower;
• requiring collateral greater than the shares lent.

The details about the shares lending practices can be found in their documents: Client Agreement and Investment Services Information. Keep in mind that even though those measures are in place, you are still subject to counterparty risk in the event that both the shares borrower and DEGIRO go bankrupt. You will have to do your own risk assessment to determine which type of account is more suitable for you.

Available ETFs and Stock Exchanges

DEGIRO trades on 21 major European stock exchanges.

Note that an ETF may be available in different exchanges through DEGIRO. But only some of the exchanges have lower transaction fees (€1 instead of €3).

My assumption is that DEGIRO provides access to most if not all of the ETFs shown on justETF.

You can only trade European domiciled ETFs in DeGiro. You won’t be able to buy ETFs like SPY, VTI, VOO due to PRIIPs regulations. There are great European domiciled alternatives to these ETFs.

Legal structure/regulatory environment

DEGIRO is accredited by The Netherlands Authority for the Financial Markets (AFM).

The Investor Compensation Scheme in the event a Dutch broker fails to meet its obligations is 20,000€, the minimum at the EU.

DEGIRO segregates clients assets to mitigate the risk of clients loosing their assets in the event of insolvency of the company. DEGIRO’s client assets are held at a separate entity, SPV, than the entity that runs DEGIRO’s business, DEGIRO. DEGIRO uses two SPVs: one to hold securities meant to be used for Derivatives, borrowed money/securities, debit money – SPV Long Short – and another for the remaining securities – SPV Long Only. More details about this arrangement can be found in the Client Agreement and Investment Services Information.

DEGIRO uses omnibus accounts to hold clients assets. These are accounts that hold assets for one or more clients, making it more cost effective for the brokers. Assets held by SPV Long Only are as safe using omnibus accounts as individualized accounts would be. But for assets held by SPV Long Short, clients within the same omnibus account are exposed to each other.

Holding Client Money

Uninvested balance is kept in a bank account – the cash account. DEGIRO sets up an account in your name at flatex Bank. This account can only be used for holding cash for investments on DEGIRO. The account is subject to compensation up to €100,000 under the German Deposit Guarantee Scheme in the event of a bankruptcy.

Foreign currency support

By default all accounts use AutoFX. Through AutoFX all transactions are handled in your base currency (e.g. EUR). For example, if you would buy a stock in USD, the platform would automatically deduct the appropriate amount in EUR.

Alternatively you can manage foreign currencies manually. In that scheme you will be able to be credited/debit directly in the foreign currency. But you will have to still withdraw/transfer funds to DEGIRO’s bank account in EUR.

Customer Support

I found DEGIRO’s help center to be really complete and clear. I’ve also read reports of folks saying that DEGIRO’s customer support replies in a reasonable amount of time and with clear/helpful answers.

Additionally all their documents are clear. Their documents are mostly written in plain English and I found their language understandable for non-native speakers. Each local website will have documents in the local language.

Reputation

My impression is that there is a hate/love relationship with DEGIRO. Some people love it for the low fees others are suspicious of the fees and DEGIRO’s shares lending practices.
You can read about people’s experiences in the Internet. Some examples include:

• /r/eupersonalfinance
• /r/EuropeFIRE
• Bogleheads forum

Supported Countries

DEGIRO is available in 16 European countries. It has a local website in local language for any of the supported countries.

If you don’t live in one of the 16 countries supported by DEGIRO you may not be able to open an account. If you are in that situation, send an e-mail to DEGIRO customer support and ask them if you can open an account.

Other

DEGIRO has iOS and Android apps.
DEGIRO’s web interface is clear and simple.

Other brokers

DEGIRO is one of the most popular brokers available across Europe. An alternative to DEGIRO is Interactive Brokers. Read my detailed guide on Interactive brokers.

Disclaimer: This information is for educational and entertainment purposes only. This does not represent, in any case, specific investment, legal nor tax advice nor recommendations to purchase a particular financial product. Learn more at https://indexfundinvestor.eu/disclaimers/