Choosing a broker is an important step when starting to invest. There are many different options available, so picking the right one for you is challenging. We take a closer look at BUX, a broker based in the Netherlands. We'll look at the pros and cons, the fees, convenience of setting up an account and safety. By the end, you'll be able to decide if BUX is a right broker for you to invest your savings, or if another broker suits you better.
Pros and cons of BUX
Read on to get the full low-down of BUX.
The story of BUX
BUX is a fast growing Dutch neo-broker and has been around since 2014. BUX, their trading app, makes commission-free investing easy and lets users invest in the companies they believe in. However, it's not an entirely free app as we'll discover below.
BUX has grown rapidly to other countries outside the Netherlands such as Austria, Belgium, France, Germany, Ireland, Italy and Spain. The company claims to have 700,000 customers across the EU.
It's free to create an account. However, BUX is quite a rare broker app in that it was one of the first to charge a service fee of €2.99 per month. The fee is automatically deducted from your account balance. If you don't have sufficient balance, they will continue charging you for a maximum of one year for €36. After this, they can delete your account.
Apart from the subscription fee, the transaction fees are very competitive and you can run free orders by using the "Zero Order" function. Essentially, it means that the order are executed at the end of the trading day between 4pm and market close. You are limited to 3 "Zero Orders" per month.
A few examples of transaction fees:
So where else do they charge fees?
They make money on currency conversion
There's also a 0.25% "FX markup" fee you have to pay when purchasing American stocks. This makes it more expensive to trade popular American stocks like Apple or Tesla.
You still have to pay the service fee even if you don't trade
Even if you're not using your BUX account or you stop trading for some time, you'll still be liable to the subscription fee which comes to €36 per year. This is quite pricey for a dormant account.
Fees for ETFs
Let's focus on ETFs, which are gaining in popularity (and for good reasons). Buying €1,000 of the popular IWDA ETF will be free of transaction fees if you do a "Zero Order". However, keep note of the subscription fee that you're paying just to use the app.
Find out all the fees on BUX.
Convenience of BUX
Automated savings plans
Yes, you can create an "investment plan" using BUX's app. It's free to create one but note that you have to choose the asset allocation yourself. Although they offer "risk-based plans" through the app, you'll have to double-check what's in them.
Note that Belgians will still have to pay the Belgian stock transaction tax (TOB) for every purchase.
A popular investment strategy is euro-cost averaging, where you invest periodically instead of investing large lump sums in one go. You invest at fixed times, for instance every month, regardless of how the markets are performing. Most people are paid monthly, so it makes sense for their investments to follow the same pattern. A big benefit of using BUX is that you're able to buy fractions of shares. This means you can buy parts of an expensive ETF or stock. For example, at the time of writing, Microsoft's stock price is $330 meaning you could invest €100 every month into Microsoft stock and build your wealth that way. This is useful if you have lower amounts to invest periodically. They are one of the few brokers in Belgium to offer this.
Interest on invested cash
At the time of writing, BUX is offering 2.75% interest on cash for all customers. This is the cash which remains uninvested in your balance on the app. Fair to them, this is higher than the rate on most savings accounts! Note that the limit is set to €25,000.
There was a significant surge in complaints about the BUX service when they began to charge a subscription fee. Their average rating on Trustpilot is 2.8 (out of 5). Many complaints are linked to the fact that you can't really get through to them on the phone. However, BUX responded to our emails quite rapidly and professionally.
They incite you to trade
Because of the monthly service fee, BUX has less of an incentive to make you trade than others brokers that earn revenue mostly through transaction fees. But the incentive is still present. And unless trading is your hobby, and you can dedicate considerable time monitoring your investment portfolio, reading quarterly earnings reports and following the financial news, it's unlikely that managing your own portfolio will earn you a better return than simply investing in an index ETF. Just ask yourself what kind of investor you are.
Also, they push risky investments such as virtual currencies to their users.
🇮🇹 Declaratory regime
As an Italian investor, you'll receive an annual tax report from BUX. You'll have to manually take that date and input it into your tax reports. You'll have to declare your income, capital gains as well as the IVAFE (wealth tax).
Note that you'll have to complete this manually as BUX puts the burden on you as an investor.
🇧🇪 TOB ("beurstaks" / "taxe boursière")
There’s a tax on the transaction every time you buy or sell a security in Belgium. The rules concerning the tax rate are complicated, also for ETFs. Depending on the characteristics of the ETF, the transaction tax varies between 0.12% and 1.32%.
Fortunately, BUX now handles the payment and declaration of the TOB for you (they didn't at first when they offered their services outside of the Netherlands).
🇧🇪 Dividend tax
BUX does not help you with the dividend tax. In Belgium, any dividend you perceive is taxed at 30%. Accumulating funds, which directly reinvest dividends, are a way around this tax. On the other hand, distributing funds distribute their dividends, which means they're taxable.
Unfortunately, BUX doesn't withhold this tax for you. So be careful in your choice of funds if you want to avoid paying the dividend tax or even having to declaring it every year in your tax form. BUX will send you yearly instructions with the amount to declare.
🇧🇪 Reynders tax
For ETFs that consist of at least 10% bonds, there is a 30% tax on the profits made when selling. For example, if you bought a bond ETF at €100 and end up selling it later for €130, your net profit will only be €21. The other €9 will go to the Belgian state through this tax.
Unfortunately BUX doesn't withhold this tax for you. You will have to declare it yourself.
🇧🇪 Do you have to declare your BUX account to the National Bank of Belgium?
Yes. Because BUX is a foreign broker, you have to declare your account to the NBB as well as on your tax returns every year.
Setting up an account
Let's now dig into the details of setting up your BUX account for the first-time.
BUX doesn't use itsme
Although they don't use itsme, it's still quite easy to open an account through the BUX app. Once you register your email and answer a couple of questions, you will be asked to take a picture of your ID for account verification purposes. You will also need to add a proof of address too. You then receive a notification saying that your account is being verified.
In the meantime, you have access to market data live and you can play around the limited features of the app until you are verified.
Usually within a day, you’ll receive a notification that your ID has been verified. BUX will ask you a set of easy questions (also known as the “know your customer” questions). You’ll then have to take a selfie to verify your ID card, and receive a code via SMS and you are able to sign the contracts (including the subscription fee agreement). Finally, you'll be able to top up your account or start an invesment plan through the app.
Create an account on the web and mobile
You can choose to create an account through either the web or mobile app BUX offers.
Ease of use: 3/5
As it's a trading app, BUX shows many details that aren't very relevant to most investors, especially for buy-and-hold index investors. This makes the mobile experience can get quite clunky and fairly difficult to find the information you need to make an investment decision. You have more room on your computer to browse, but there's still an information overload. That's why we've rated it a 3 out of 5!
No children accounts and joint accounts
You're unable to set up any children or joint accounts on BUX. The account can only be held in your name.
Is BUX safe?
As we’re dealing with our long-term savings, safety and trust is vital.
Who is the regulator?
BUX is a regulated entity in the Netherlands. Essentially this means that the AFM oversees them.
Have they had any issues with the regulator?
Based on our research, we can't find any information that BUX has had any issues with any regulator.
How much of your assets are protected by the investor protection scheme?
Your assets are protected by the standard €20,000 European investor protection scheme.
Is your cash protected by the deposit guarantee scheme?
Yes, if you have a cash balance on your BUX account, it's protected up to €100,000.
Does BUX do securities lending?
Yes, BUX engages in securities lending. Securities lending is a practice where brokers lend stocks and ETFs to third parties, and it is used as a source of revenue. BUX utilizes this practice to help keep their fees low. They also provide transparency in this process by publishing a report on the last day of every quarter, detailing which stocks and ETFs have been borrowed.
When you use BUX, essentially you are giving consent for BUX to use your financial instruments and to lend them to a borrower. However, there is an associated risk of insolvency with securities lending at BUX; if BUX were to become insolvent, they might be unable to return the lent financial instruments. To mitigate this risk, BUX has a security structure in place under which Stichting BUX Collateral holds collateral.
Does BUX do payment for order flow?
They do not do payment for order flow (PFOF) and have a strong stance against it. PFOF is an important source of revenue for many new brokers, including Trade Republic. This practice involves routing your orders to certain market makers, who then pay the broker for the right of executing these orders. PFOF can work at your detriment, as brokers may prioritise payment over executing the best possible trade for you.
BUX vs other brokers
All brokers offer more or less the same service. So for most investors, the broker fees and handling of taxes have become the most important criteria to make a choice. The table below shows the list of brokers for buying €500 of the IWDA ETF:
We have also compared BUX with other brokers if you want to dig deeper:
The easier way: Curvo
Brokers push you to trade and to pick individual companies to invest in. Rather than picking individual stocks such as Amazon or Tesla, index funds are a way to buy the whole market, across all sectors and regions of the world. Essentially, you own a small portion of thousands of companies throughout the world. Instead of betting on a particular company, you are placing a bet on the global economy.
Rather than having to pick the right stocks or ETFs among the thousands available through a broker like BUX, you invest in a portfolio that is tailored to you and your goals. These portfolios are composed of globally diversified index funds, meaning you earn a piece of the growth of the global economy, and they're best suited to make the most of your savings long term. And they're secure, as they're managed by NNEK, a Dutch investment firm under supervision of the regulator in the Netherlands (AFM).
We believe that investing is an important tool for our generation to improve our financial well-being and to prepare for our future. We are building Curvo to fulfil that vision, by making good investing easy and accessible to all:
- Diversified portfolio set up for you: The best portfolio for you is built by NNEK based on your time horizon and financial goals. Simply answer a short questionnaire and you’ll get everything set up for you.
- Automated savings plans: Through Curvo’s app you can set up a monthly contribution from €50. That means that money is automatically invested for you in your portfolio. Put your savings on autopilot!
- Fractional shares: All the money you send towards your portfolio is fully invested by NNEK. No cash is left on the side.
- No TOB: Significant savings as the portfolios aren’t liable for the Belgian transaction tax (or "TOB"). This saves you between 0.12% and 1.32% for every time you buy or sell!
- Sustainable investments: Your investments focus on one guiding principle: don’t invest in companies that are considered destructive to the planet. This means that sectors like non-renewable energy, vice products, weapons and controversial companies are all excluded.
- Project yourself into the future: Through Curvo you can see how much your portfolio is expected to be worth in the future. You can answer questions like “how will increasing my monthly contribution by €50, €100 or €200 affect my long-term savings?” to give a concrete idea for the “future you”.
Learn more on how it compares to investing through a broker.
BUX has established itself as one of the leading neo-brokers for young Europeans, offering a slick and relatively easy to use app. Due to the fact that BUX has a subscription model, you need to ask if it's worth the monthly fee to invest through their app over the long-term. But cost is not the only factor to take in consideration when you’re putting your savings to work. The fact that BUX offers fractional shares is a big benefit compared to many brokers but their service also comes with the risk of security lending.
Questions you may have
Can BUX be trusted?
Yes. Although they do securities lending, the app itself can be trusted as it's regulated by the Dutch regulator (AFM).
How does BUX make money?
BUX charges a monthly subscription fee to use their service. They also make money through transaction fees, they charge a currency exchange markup when you buy US securities, and they lend out your securities.