Those who live in Europe know all about enjoying the good life. Less is known about the complexity and limitations of investing. If you’re an American and also a resident of Europe, you're still subject to US tax-filing requirements. Here are some strategies to help your investments also enjoy the good life.
Americans must report their income no matter where they are in the world. This also includes investment income. Simplifying how you invest will consequently simplify your tax situation. While this is an obtainable goal, there are limited options with how you may be able to invest.
Most US financial institutions and all US mutual fund companies will not allow for your non-US residency.^1 European financial institutions are subject to FATCA (Financial Accounting and Tax Compliance Act)^2, which means that they will be reporting your information to the IRS which is used to cross-reference your FBAR filing. It’s common to find a European bank unwilling to work with an American for this reason. Lastly, new European regulations (MiFID II), since 2018, prohibit most EU residents from investing in US complex securities, including US ETFs.^3 This leaves limited options for where and how you can invest. The most optimal solution may be to keep your assets in the US, housed in an expat-friendly investment firm, and invest in individual stocks and bonds.
Eureka Wealth Management is an expat-friendly financial planning and investment advisory firm. Money management consists of selected stocks and bonds and a normal 1099 tax document is issued each year. We also advise on insurance and US tax and estate strategies. For more information, please visit eurekawealthmanagement.com/expats or call +1(760) 537-0791. Consult your tax advisor if you have tax questions.