swedish-kronorMy earlier post on some negative sides of the new broker DeGiro, 9 things I hate about DeGiro, has drawn a lot of visitors. DeGiro kept on expanding to almost every European country – and by doing so all new customers ended up over here (hi). Even gave some interviews to newspapers in Poland and Denmark.

Truth be told, DeGiro is improving their company and the service. Passwords can be changed, and US dividends can maybe be fixed with a W8-Ben form. But expanding to different countries without taking the time to fix the paperwork is asking for trouble. Especially in tax heavy Scandinavia.

Google translate is maybe not the best way to handle official translations. Anyway, this anonymous comment deserves a bigger audience – so taken the opportunity to bring it to the front page. Also would like to underline the conclusion by somebody else – more points on DeGiro’s todo list.


One small word on DeGiro’s competitors. Noticed for example that Alex, a Dutch broker owned by Binck, is still claiming to be the best internetbroker (nl). Because it has won an award by some sort of jury. Hard to understand. Was an award from four years ago. Even Alex Asset management wasn’t going downhill back then. Apparently they’ve stopped updating their website four years ago.

Over to Sweden.

Problems in DeGiro Sweden

I have taken a look at De Giro’s Swedish website and found a lot of strange things.

1: Tax mess 1

Swedish banks report a number of things to the Swedish tax authority, and the Swedish tax authority uses these things to automatically calculate a lot of taxes. For example, dividend amounts and foreign withholding taxes are automatically reported to the tax authority, so I do not need to report my dividends or request deduction of foreign tax myself. Foreign banks usually do not do this, and De Giro’s Swedish website doesn’t reveal whether De Giro does this. De Giro tries to attract customers in Sweden, so it would be very beneficial for them to do this. If you have to spend a lot of time on filling in tax forms, paying slightly higher fees may be a better option.

2: Tax mess 2

On De Giro’s website, it says that any cash in your account at De Giro automatically is placed in an investment fund. This has two implications:
– If you use any cash (by withdrawing it to your bank account, by buying securities or by paying a fee), then you sell some of your holdings in the investment fund. Each sale of your holdings in the investment fund needs to be reported on a separate line in your income declaration, and you need to calculate the purchase value, sale value and profit and pay taxes accordingly. The taxes should be close to zero, but it takes forever to do the necessary paperwork.
– If you put more cash in your account (by transferring from your bank account, by selling securities or by receiving dividend), then you buy some more holdings in the investment fund. This also needs to be reported to the tax authority, and you need to pay 0.12% of this amount in tax. Also, if you hold some amount in your account on 1 January each year, then you need to pay 0.12% of that amount in tax. Lots of paperwork to do, and the tax may be quite high.
Swedish banks usually do this paperwork automatically, but I’m not sure whether De Giro does this (see ‘Tax mess 1’ above).

3: Tax mess 3

If I hold shares in a foreign company, I need to pay some dividend tax to the country of the company. These taxes are usually defined in international treaties. In some cases, brokers set up their systems so that a country charges more than the amount stipulated in the treaty, and the shareholder then needs to contact the tax authority in the company’s country to request a refund. Lots of paperwork to do and some fees to pay (postage & sometimes bank transfer fees). De Giro does not reveal for which countries the correct tax will be deducted. If De Giro charges a higher tax rate, but a different broker only charges the tax rate stipulated in the international treaty, then using the other broker sounds like a good idea even if De Giro might have minimally lower fees.

4: Tax mess 4

It says that other people may borrow my shares. If my shares have been borrowed by someone when it is time for dividend, then do I pay my foreign dividend tax in the country of the borrower or in the country of the company? In this situation, I receive my dividend from the borrower, not from the foreign company. Affects which tax rate I should pay and which tax authority I should request a refund from.

5: Website mess 1

The website is messy and contradicts itself. For example, according to point 6.3 in the terms of use (https://www.degiro.se/data/pdf/se/Kundavtal.pdf), it is not possible to transfer finansial instruments from De Giro to accounts outside De Giro, but yet, the price list (https://www.degiro.se/data/pdf/se/Prisoversikt.pdf) states that it costs 10 euros per ISIN to transfer financial instruments from De Giro. If something can’t be done, then why does the price list contain a price for doing this? Also, if I am thinking of trying out a new service, I want to know how much it would cost to stop using the service and move all my holdings back to my current broker, should I not be happy with De Giro.

6: Website mess 2

The Swedish translation of the documents is poor and often difficult to understand. For example, the price list contains an entry called ‘Anmälan till aktiesparträffar’ (‘application to shareholder savers’ meetings’), with a listed price of 10 euros. An ‘aktiesparträff’ sounds like something where you meet some friends at a bar and discuss your current trading at the stockmarket. Hardly something that you would involve your broker in. To get some clarity in what it means, I take a look at the Danish price list (https://www.degiro.dk/data/pdf/DK_Gebyroversigt.pdf) instead, where it says ‘Tilmeldelse til aktionærsmøde’. I take the Danish word ‘aktionærsmøde’ and translate each half of it separately into English: ‘aktionær’ = ‘shareholder, ‘møde’ = ‘meeting’. OK, I know what the English term ‘shareholder meeting’ means: it’s the thing which usually happens once per year where shareholder votes for various things. Called ‘generalforsamling’ in Danish and ‘bolagsstämma’ in Swedish. So if I want to know what the Swedish price list means, I apparently have to consult the Danish price list and translate it back into English. Not very user-friendly. The next thing in the Swedish price list (‘Anmälan till emissioner’) also looks very strange. This seems to mean that if a company needs more money and the shareholders receive rights to buy new shares, then it costs at least 50 euros to exercise the rights offers. Looks very strange; most brokers handle this free of charge. Maybe the entry is meant to mean something else which has been mistranslated.

Due to all of these problems, I have not attempted to use De Giro yet as it might be a bad idea to do so. De Giro’s services on the Nordic market are at about the same cost level as those of my current broker, but De Giro is a lot cheaper on the other markets it offers. Oh well, it is easier to simply forget about De Giro, I suppose, but it would have been nice to get easy access to the Japanese market.

Update February 20th : Reaction from DeGiro

  • Tax mess 1. We are currently working on this. I do not expect any problems here.
  • Tax mess 2. We have discussed this with our tax experts (EY) and it is simply not correct what you are writing here. We have asked EY to come up with a statement that we can publish. This, however, takes some time.
  • Tax mess 3. As you know this has already been taken care of for the US. We are currently looking to do this for other countries as well. This is not any different from other brokers and, as far as I know, other brokers only also facilitate this for the US.
  • Tax mess 4. When your shares are lent out you receive 100% of the gross dividend. This would be an advantage.
  • Website mess : According to our Swedish employees this could be somewhat confusing. However, everyone knows what is meant by this. We will change it accordingly.