Summary
Highlights
Interactive Brokers (IB) is a highly recommended broker in Europe due to its long history (since 1978), significant profitability ($3.7 billion in profit last year), and robust security measures ($16.6 billion in equity capital). It offers global access to 160 markets and 20 different currencies with no account fees and some of the lowest trading fees, starting from 35 cents USD for US stocks. EU clients are regulated by the Central Bank of Ireland, and the company is publicly listed in the US, ensuring stringent oversight.
When signing up, IB automatically opens an account in its locally regulated entity based on your location (e.g., Interactive Brokers Ireland for the EU). The platform supports individual, joint, and business accounts. It's recommended to consider tax implications for joint accounts, as individual accounts might be more straightforward in some countries. You can add additional accounts later within the web interface.
To find ETFs, use justETF.com and then search on IB using the ISIN or stock exchange ticker, preferring the latter for easier selection of your home currency. The majority of ETF investors should switch to the 'Tiered' pricing plan to pay minimal fees; this can take up to 48 hours to take effect, resulting in fees of 0.05% with a minimum of €1.25. If the ETF's home exchange is not IB AKA Xetra, direct orders can incur higher fees (€2.60 minimum). To avoid this, either set up a recurring investment (which processes via volume-weighted average price and offers fractional shares) or use the Interactive Brokers desktop app.
The desktop app allows users to manually select the exchange for order execution, bypassing Smart Routing and enabling the selection of the exchange with the lowest trading costs (e.g., GEX). This is crucial for ETFs not primarily traded on Xetra. Always place orders during regular market hours (Monday-Friday, 9:00-17:30 CET) for the best spreads and prices. Demonstrations show how to place a limit order on GEX via the advanced mode in the desktop app, leading to lower fees and sometimes even better purchase prices.
The Stock Yield Enhancement Program is off by default for European users. To activate it, you need a margin account or over $50,000 in assets. While it allows shares to be lent out against collateral, with IB sharing 50% of lending profits, it's generally not recommended for ETF holders due to minimal earnings (around 0.01%) and the introduction of counterparty risk. Additionally, it applies to all shares and can complicate dividend taxation, potentially leading to higher taxes on loaned shares.
To transfer shares to IB, navigate to 'Transfer & Pay', then 'Transfer Positions' (Incoming), select 'All Other Regions' if in Europe, and choose 'Free of Payment Transfer of Global Securities'. Select the originating broker and add the assets to be transferred. After confirmation, IB provides a PDF to send to the outgoing broker. IB does not charge for transfers, though some external brokers might. IB notifies you upon completion, and you can edit purchase prices for correct tax calculations.
IB's auto-FX rate is very low at 0.03%, meaning only 30 cents on a €1,000 conversion. Manual conversions are even lower at 0.02% but have a $2 minimum fee, making them cheaper for amounts of $7,150 or more. For smaller USD dividends (e.g., $120) when primarily investing in Euros, the recommendation is to withdraw them in USD to a Revolut bank account to convert to EUR for free, then wire back to IB if desired. This avoids the $2 minimum fee for manual conversions on IB for small amounts.