Choosing a Broker (Europe)

The fork in the road: who does your taxes?

Before comparing fees, answer the structural question. European brokers come in two families.

Domestic brokers (banks and national platforms). They operate under your country's tax regime and typically withhold and report taxes automatically: in Germany the Abgeltungsteuer and Vorabpauschale are handled for you, in several other countries capital-income reporting flows straight to the tax authority. You pay for this in higher fees or narrower menus, and you buy back hours of your life every spring.

International platforms. Often cheaper per order, broader in market access, and tax-agnostic: you compute and declare gains, dividends and any notional taxes your country levies. For a one-fund accumulating portfolio this can be modest work; for anything busier, or in notional-taxation countries, it is a real annual project, and errors are yours.

Neither is wrong. The mistake is choosing by fee table alone and discovering the tax dimension the following April. Weight it explicitly: a €1-per-order platform that costs you a weekend of tax forms and one anxious mistake is not cheaper than a €4 domestic broker.

The savings-plan test (Europe's differentiator)

Chapter 16 makes the full case for savings plans; here is the broker-selection angle. Ask four questions of any candidate:

1. Cost per execution: free at many modern brokers, up to ~1.5% of the amount at others. On €200/month, 1.5% is €36/year of pure drag; over 25 years at 7%, roughly €2,400.
2. Which ETFs are plan-eligible, and on what terms. "Free savings plans" often apply to promoted lists that rotate with marketing deals. Confirm your fund (by ISIN) is included, and check the terms survive the promo period.
3. Fractional handling: proper plans invest the exact euro amount into fractions and reinvest without rounding losses.
4. Flexibility: changing amount, pausing, and switching funds should be free and instant.

A broker that scores well here has effectively pre-built your entire investing system.

Per-order fees, venues and the FX trap

For lump-sum orders, three visible-and-not costs:

• Order fee by venue. European brokers price exchanges differently: Xetra at one rate, foreign venues higher, sometimes a cheap in-house/OTC execution venue as default. Cheap venues are fine when their spreads are honest; Chapter 56 shows how to check a fill.
• The spread you learned in Chapter 12: not a broker fee, but broker routing decides which order book's spread you meet.
• Foreign-exchange fees, the quiet one. Buying a USD- or GBP-quoted line from a EUR account can trigger an FX conversion of 0.1%–0.5% each way. Often the same fund has a EUR-quoted listing (same ISIN, Chapter 7) that avoids the toll entirely. A broker's FX fee matters mainly when their venue menu forces you into foreign-currency lines.

Protection: what actually stands behind the account

Same architecture as everywhere, with European labels. Your fund shares are segregated custody assets: broker failure doesn't touch them (Chapter 1). What varies is the compensation scheme covering failures-plus-fraud edge cases and cash: EU investor-compensation schemes cover up to €20,000 of investment claims (the UK's FSCS: £85,000), while cash deposits at banking brokers fall under deposit guarantees up to €100,000. Practical readings: keep large idle cash at a bank, not a broker; note which country's scheme your platform actually belongs to (the legal entity's home, not the app's language); and treat the €20k figure as covering a narrow failure scenario, not portfolio risk, which custody already handles.

The menu: what you can and cannot buy

MiFID II/PRIIPs closed US-domiciled ETFs to EU retail investors (Chapter 3), so every mainstream broker sells the same UCITS universe; unlike the US, though, coverage depth varies. Check by ISIN that your chosen funds are orderable and plan-eligible. Watch two menu tricks: platforms whose search promotes house partnerships, and CFD-first apps where the real fund sits behind a derivative lookalike. If the product in the cart says CFD, leave the shop.

Regional notes within Europe

A worked example

Tomas in Vienna, €300/month plus a €10,000 lump sum, one accumulating All-World ETF.

• International platform: free plan, €1 orders, tight FX only if he picks the USD line (he takes the EUR listing: €0). Annual explicit cost ≈ €12. But Austria's fund taxation makes DIY reporting non-trivial; he prices his time and error risk at more than the savings.
• Domestic broker: €0 plan on his ISIN (verified, not promo-only), €4 lump-sum orders on Vienna/Xetra, automatic tax settlement. Annual explicit cost ≈ €4–8.

He chooses domestic, and the deciding line in his notes reads: "The cheapest broker is the one whose costs I can see in April." A Berlin friend with a simple German setup and a love of spreadsheets rationally chooses the platform. Same logic, different inputs, both correct.