Potentially moving to Europe for 5-10 years

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German Expat
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Potentially moving to Europe for 5-10 years

Post by German Expat »

We are currently considering moving to Switzerland this summer. We would move for 5-10 years but then plan to come back to the US. With Facta in place it will be quite hard to invest in Switzerland since we will have a hard enough time just to get a checking account.
Now to my questions and I appreciate any feedback especially also from people that did the same.

- Would you keep investing the same way you did before (asset allocation)?

- I am planning to send any excess money we have back to the US for taxable investing in the US and just keep Vanguard (maybe every 3 month or so to save wiring costs)

- Switzerland has a 3 tier retirement system, anybody with experience here and does it make sense to pay into the 3rd (voluntary) tier?

Anything else to consider form an investment perspective? What are others doing that are living abroad?
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galeno
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Re: Potentially moving to Europe for 5-10 years

Post by galeno »

I know nothing about Switzerland. We do know a lot of ex-pats that have moved to our "Switzerland of Central America". In general, Europeans and Canadians who move to Costa Rica do better than USA ex-pats. Every country has its warts. Even Switzerland (a cousin lived there for 15 years). The key is to be patient. Don't make rash decisions.

For your first year or two do nothing different. You will be in "honey moon mentality". Don't' forget this. Rent your home don't buy. No matter how good a home purchase looks. Keep all your accounts as they are and only change them when you are SURE that changing will be a good move.
KISS & STC.
Wolkenspiel
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Re: Potentially moving to Europe for 5-10 years

Post by Wolkenspiel »

I wanted to strangle the women in the UBS office who told me they wouldn't open a checking account for me because "we're a business, we're not here for your pleasure", as soon as she heard that my salary would come from the US. I'm not sure if your user name implies that you also have a German passport, but if yes, I'd definitely stick with that and generally minimize my exposure to the Swiss banking system.

I think there are cheaper ways to transfer money to the US than bank wires. I'd suggest looking into e.g. XEtrade or some other service like this, which will also give you better exchange rates. Depending on the exact location in Switzerland, the rent vs buy question may not arise (i.e. you may not be allowed to buy property, IIRC).

No comment on the Swiss retirement system.
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German Expat
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Re: Potentially moving to Europe for 5-10 years

Post by German Expat »

Thanks for the replies. I have also a German passport but for practical purposes this won't make a difference since they will treat me as Facta / American anyway. There is a case on a different (Swiss) forum where a 86 year old was born in the US but never lived there except his first 2 years and now has issues.
We do plan to rent because we don't even know the exact area we want to stay (Zurich or greater Zurich is set) and also pricing is extremly high (but interest rates are quite low as well) and the tax system works different for interest tax deductions on your home.
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Watty
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Re: Potentially moving to Europe for 5-10 years

Post by Watty »

Be sure to have your wills and related paperwork(living will, etc) updated since things can be complex if someone dies or has medical problem while living overseas. Your US paperwork might not be accepted over there. This is especially important with any retirement accounts or trusts since the local laws there are likely very different and may be taxed very differentely.

Check on what it takes to separate yourself from having to pay your current states income taxes, this might not be a clear-cut as you might think especially since you will be paid from the US.

Search the boards about keeping a US mailing address since some brokerages and mutual fund companies will not allow foreign accounts. They may not allow you to keep an account open if you do not have a US mailing address.
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German Expat
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Re: Potentially moving to Europe for 5-10 years

Post by German Expat »

Good point on the mailing address, will look into this and ask a friend to keep one. I already figured out state tax is a problem in Colorado because we would need to file if we keep a drivers license or any other tie. Before transferring out of the country I plan to move back to Tennessee to avoid this issue (we own a Condo there that I use).
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Watty
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Re: Potentially moving to Europe for 5-10 years

Post by Watty »

One more thing. It was not clear if you were a US citizen or not. If not then the estate taxes on non-resident aliens are VERY high so if you get hit by a bus over there and still have accounts in the US then they might be subject to that.
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German Expat
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Re: Potentially moving to Europe for 5-10 years

Post by German Expat »

Watty wrote:One more thing. It was not clear if you were a US citizen or not. If not then the estate taxes on non-resident aliens are VERY high so if you get hit by a bus over there and still have accounts in the US then they might be subject to that.
Sorry, forgot to mention that above, me and my son are German and US citizens, my wife is US citizen only.
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galeno
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Re: Potentially moving to Europe for 5-10 years

Post by galeno »

Great point about the differences in inheritance taxes! Very important.

E.g. the USA has drastic inheritance taxes for USA-NRAs vs how they tax USA citizens/residents. We did not know this until we decided to switch to a USA broker from our Bermuda broker back in 1995.
KISS & STC.
gd
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Re: Potentially moving to Europe for 5-10 years

Post by gd »

If the resource is available, try using an employer to assist in housing, bank accounts, driver's licenses and such. When I worked in Germany decades ago my large employer dominated the town, and a phone call or accompaniment by one of the local company guys greased all wheels. Without German residency this is unlikely, but you might investigate what Germans do who want to live in Switzerland; perhaps you can play the German citizenship angle. My German-citizen/US-PR spouse can now get checking and savings accounts there easily (with local address), but local banks won't touch stock investments of US citizens/residents due to US laws. As long as I have some sort of mailing address in the US, US financial companies don't seem to care.
bpp
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Re: Potentially moving to Europe for 5-10 years

Post by bpp »

German Expat wrote:We are currently considering moving to Switzerland this summer. We would move for 5-10 years but then plan to come back to the US. With Facta in place it will be quite hard to invest in Switzerland since we will have a hard enough time just to get a checking account.
Now to my questions and I appreciate any feedback especially also from people that did the same.

- Would you keep investing the same way you did before (asset allocation)?
If you plan to go back to the US eventually, there would seem to be no reason to change your asset allocation.
- I am planning to send any excess money we have back to the US for taxable investing in the US and just keep Vanguard (maybe every 3 month or so to save wiring costs)
Sounds reasonable.

No experience with Switzerland-specific issues. Will your US investments become taxable in Switzerland at some point?
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tractorguy
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Re: Potentially moving to Europe for 5-10 years

Post by tractorguy »

I was a U.S. expat working in the UK and Japan for 5 years each for a U.S. based multinational. My pay was a mix of U.S. and local.
re the banking issue: 15 years ago, it was a mix. There were some old line banks that needed a 10 year employment history in country before they'd let you open an account. Others weren't so picky. I went to HSBC in England with a letter from the UK branch of my employer and got an account in 30 minutes. I mentioned that friends had had problems at another bank and the manager said, "We love that, we get some of our best customers from that bank."

Find an expert on international income tax now and start working with them to find out what records you need to keep. I had to keep a log of working days in each country and a log of all money moved in and out of the country I was working in. This was as of 5 years ago so it may have gotten worse. My company hired an outside firm to do my foreign and U.S. taxes. The foreign were usually easy. The U.S. taxes were usually an inch thick stack of paper. (when I was still printing the forms).

As others have said, keep a U.S. mailing address for your U.S. investments. If you're not happy with a relative getting your financial mail, some banks offer a bill paying and mail forwarding service for a fee. Look for private banking or personal wealth management options. I was happy to use a relative to receive statements they didn't open and manage everything over the internet but other friends didn't feel comfortable with this as an option.

We typically had "home leave" to visit friends and family in the states and my family came back for longer periods. My spouse and children were usually in the states for 3-4 weeks a year, I was here for the same amount on business trips and usually a 1 week vacation. To support this, I recommend:

Get at least two U.S. credit cards with high credit limits. Capital One offers no fee international charges and was one of the ones I used. This will be in addition to the one or two Swiss credit cards you will want to carry for local charges. I found that my spending pattern on the U.S. cards had a high probability of locking the cards just when I needed them. I'd go for a few months with no charges and then put something large overseas on the card, or come to the states and have a flurry of buying. Everything in the states is much cheaper than Europe or Japan so we would try to buy a season's wardrobe and stock up on hard to get food items whenever anyone in the family was in the country. Frequently these spurts of buying would trigger a card lock just when we needed to use the card the most and also when it was least convenient to call the credit card company.

Keep a U.S. cell phone on a pay as you go plan to use when you come back to the states. You don't want to pay international roaming rates just to talk to people and a working cell phone is a requirement for travel now.
Lorne
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