Germany

Germany is the largest economy in the EU and one of its more conservatively regulated trading markets. The Bundesanstalt für Finanzdienstleistungsaufsicht — BaFin — supervises brokers, and has repeatedly acted ahead of EU-wide measures rather than waiting for them.

The rule BaFin introduced first

In 2017, a year before ESMA's intervention, BaFin prohibited CFDs carrying an obligation to make additional payments — the Nachschusspflicht. Retail clients had been losing more than their deposits on gapping markets, most memorably when the Swiss franc peg broke in January 2015 and traders received demands for sums far exceeding their accounts. The ban made negative balance protection mandatory in Germany before it became the European standard.

Current conditions

The ESMA caps apply in full: 30:1 on major pairs, 20:1 on minors, gold and major indices, 10:1 on other commodities, 5:1 on shares and 2:1 on cryptocurrencies, with margin close-out at 50%, no bonuses, and a mandatory risk warning stating what share of that broker's retail accounts lose money.

Many brokers serving Germany are licensed elsewhere in the EEA and passport in. That is lawful and common — but the compensation scheme follows the licence, not the client. Germany's Entschädigungseinrichtung der Wertpapierhandelsunternehmen covers 90% of claims up to €20,000 for firms it protects; a Cyprus-licensed broker leaves you with the Cypriot ICF instead. Check which entity your contract names.

Tax

Investment income is subject to the Abgeltungsteuer withholding regime plus solidarity surcharge and, where applicable, church tax. A German broker deducts it at source; a foreign broker does not, leaving the reporting to you. Rules on offsetting losses from forward transactions have been contentious and were revised after sustained criticism, so verify the current position with a Steuerberater rather than relying on any published summary, including this one.

Practical checks

BaFin maintains a searchable register of authorised firms and publishes warnings about unauthorised providers. Confirm the entity name, check whether it is BaFin-licensed or passported, and establish which compensation scheme covers you before funding an account.