Interactive Brokers Merger – What Does It Mean For Your Portfolio?

Interactive Brokers MERGER


Interactive Brokers is shaking things up, merging its EU operations and moving everyone to its Irish entity, IBIE.

What does it mean for your portfolio protection? 

Here is what we know so far, and our interpretation of the changes.


  • Interactive Brokers (IBKR) is one of the largest brokers in the world, with a $37 bn market cap and ‘A-‘ Credit Rating from S&P.
  • In September 2023, it announced merging its EU operations, and moving all customers to its Irish entity (IBIE). UK customers are not affected.
  • We don’t know the exact reasons for this move, except the stated efficiencies, but in January 2024, the U.S. ends its double taxation treaty with Hungary, where its second entity was based.
  • Most of its Central and Eastern European customers were historically assigned to the Hungarian entity (IBCE).
  • For IBCE customers, the major difference will be the change of the regulator. IBIE falls under the supervision of the Central Bank of Ireland, whereas IBCE fell under the supervision of Hungarian Central Bank. Both countries have different Investment Compensation Schemes.  
Here is the full analysis

IBKR is moving its E.U. clients to ireland

IBKR had two entities in the EU

Interactive Brokers Group (IBKR) recently announced pulling its European operations into a single hub in Dublin, Ireland. 

When you signed up with IBKR as an EU customer, you were essentially assigned to one of two entities:

  • Interactive Brokers Central Europe (“IBCE”) – based in Budapest Hungary
  • Interactive Brokers Ireland (“IBIE”) – based in Ireland
Both of them were managing EU customers post Brexit.

Were you assigned to IBCE or IBIE?

Interactive Brokers assigns EU customers to different entities based on their country of residence, regulatory environments, and specific business considerations. The exact criteria or methodology they use is not public information. However, historically, the assignment of clients was mainly influenced by their country of residence:

  • Customers residing in Central and Eastern European countries were likely assigned to Interactive Brokers Central Europe (IBCE) in Hungary.
  • Those residing in other parts of Europe were likely assigned to Interactive Brokers Ireland (IBIE).

👉 Action Item: Check your client agreement to verify whether you’re impacted.

Why is IBCE being closed?

We don’t know the exact reasons behind the move, but many observers think that the end of the double taxation treaty with the U.S. played a role, although the official announcement also mentions efficiencies.

Hungary will no longer have a tax treaty with the U.S.

The double Taxation treaty was in place for 30 years

The treaty in question was applicable for 30 years. In July 2022, Hungary received a notification of termination from the United States. As of 1 January, 2024, according to the recent publication of the Hungarian Tax Authority this treaty will no longer be applicable. The introduction of a new treaty for the avoidance of double taxation cannot be ruled out, however, this would be a complex and time- consuming process.

What it means for Hungarian Investors


As regards dividend income, the treaty sets forth a limit on tax liability arising in the country of source. Accordingly, the tax liability arising in the US in connection with dividends paid by a US company to a Hungarian one may not be higher than 5%, or 15% (depending on the proportion of ownership held by the beneficial owner entitled to the dividend in the entity paying the dividend).

As of January 2024, this cap will be removed and US domestic regulations will be applicable to withholding tax, when applying the prevailing 30% withholding tax rate will be likely to result in a higher tax charge.

However, Hungarian investors can still use tax efficient Irish UCITS ETF to tackle this problem.


The termination of the treaty will have even more serious consequences for interest income and royalty payments than the removal of the withholding tax cap applicable to dividends. The interest and royalty paid by a US company to a Hungarian tax resident entity have not incurred any tax liability in the US, however, those affected by this change will in the future be subject to a 30% withholding tax liability under US domestic rules.

What the merger means for IBCE Clients

If you were assigned to ibce

You will be moved to IBIE with a €20k Investment Compensation Scheme

Securities and Cash have a combined Investor Guarantee Scheme Across Most European Countries – ranging from €20k in Ireland to €100k in Hungary. An additional safeguard exists if cash is held in your name with a bank, potentially benefitting from an extra €100k guarantee.

Hungary also covered 100% of the loss, while Ireland wants you to cover 10%.

Below is a table from our Broker Safety Guide, showing the different coverage levels in Europe.

So, on paper, this means that you’re losing out on being moved to the Irish entity.

Select Compensation Schemes

CountryInvestment GuaranteeCoverage LevelCash GuaranteeGuarantor
US$500k100%Combined up to 250kSIPC
UK£85k100%Additional £85kFSCS
Poland€22kup to €3k - 100%, €3-22k - 90%CombinedKDPW
DenmarkDKK 150,000100%CombinedFS
As of September 2023. Source: Regulatory Websites, Combined means Investment and Cash Guarantee have an aggregate limit, unless cash is held with Bank under your name (additional €100k)

Why IBIE May be good news

However, this move may not be detrimental if you take a step back and consider a number of other factors:

  • Ireland is a ‘AA’ Rated Developed Country, with strong regulator and deep capital markets expertise. It is part of the Eurozone. Ireland is recognised as a significant financial hub, particularly for asset management and investment funds, attracting various international financial institutions.
  • Hungary is a ‘BBB’ Rated Emerging Country. While Hungary is a EU member, it isn’t fully integrated into the Eurozone as it has not adopted the Euro as its currency. This might create a different set of financial regulations and considerations for investors. There are concerns and criticisms over political influence on Hungary’s institutions, including its central bank, which might affect its independence and decision-making processes. Under the current regime, it is also not guaranteed that the Government would step up to cover for shortfalls of foreign investors. 

These considerations made a number of our readers consider changing their residency with IBKR in the past and moving to IBIE.

If you were assigned to IBIE

The news is neutral

Unless IBIE inherits some restrictions from IBCE, it is unlikely that customers will be affected.

Stay on top of broker safety

Many investors don't know the risks they are facing

How to be smart about counterparty risk

Unfortunately, the EU has Investment Compensation Scheme requirements that are very low, compared to the UK or the US. 

The directive in place has been challenged, but a higher threshold has not been implemented. This means European Investors need to be more cautious about selecting the right brokers.

Understand common misconceptions

Some common misconceptions include:

  • I Don’t Need Protection. Shares Are Mine And My Broker Holds Them In My Name
  • The Investment Compensation Scheme Only Protects Cash
  • Asset Segregation Protects My Assets
  • My Cash Is Protected Up To €100k
  • I Have No Possibility Of Assessing The Likelihood Of Bankruptcy
  • Broker Capital Will Cover All Workout Costs So I Won’t Lose Money/Securities

We have created a step by step guide on how to mitigate Broker counterparty risks.

You can also read our full review of IBKR using the button below.

Our Assessment

Interactive Brokers




Our interactions with hundreds of investors revealed two trends: Index investing forms the backbone of their portfolios, and Interactive Brokers emerges as the go-to platform for a majority of investors.


As of 29/03/2024, Interactive Brokers offers rates up to 4.738% (GBP), 3.445% (EUR) and 4.83% (USD) on cash. 

Our Assessment




Our interactions with hundreds of investors revealed two trends: Index investing forms the backbone of their portfolios, and Interactive Brokers emerges as the go-to platform for a majority of investors.


Thank you for reading.
Good Luck and Keep’em* Rolling!

(* Wheels & Dividends)



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