Should one use umlaute in translated URLs?

Question

I have found at When translating a site go with URLs in Chinese or English? that

The URLs should be in the same language as the content.

If you want a Chinese URL, it's pretty clear that you go with

However, I wonder how is it with European languages. Should you replace umlaute by common standards?

For example, what would be better practice, to translate example.com/product/oil in German into

example.com/produkt/öl

or

example.com/produkt/oel 

Answer 1

Special characters can be used in the URL without any problem. In terms of SEO, check this video of Matt Cutts a few years ago: https://www.youtube.com/watch?v=K4TKJwvTu50.

The problem would not be Google but other search engines or apps that are not prepared to work with that kind of characters. Main searchers and browsers will be ok.