Assets split between US and Europe (Spain) [Spanish ex-pat in US]

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SavingsMug
Posts: 4
Joined: Fri Aug 16, 2019 7:21 pm

Assets split between US and Europe (Spain) [Spanish ex-pat in US]

Post by SavingsMug » Fri Aug 16, 2019 7:54 pm

I recently got the drive to properly manage my savings/investments, and after discovering the 3-fund portfolio that's the way I want to go. But my current situation is a bit particular:

I'm Spanish, but living on the US with a Green Card. No plans of leaving the US on the near future.

40% of my assets are in Spain, on a single bank: 12% on a checking account, 28% on an investment fund, and 60% on a managed account. I'm not happy at all with the bank. They told me that they would waived their periodical fees on my checking account (yes, you pay for having your money there), but they keep charging them and I have to fight to get them removed periodically. The investment fund is doing very poorly.

The other 60% of the assets are in the US. On a single bank, mostly on savings, part on a checking account and part of on an investment fund. I also have a 401K that I'm currently maximizing on a different entity.

If all the assets were on the US, I can figure out how to distribute the 401K, the savings, and try to move the money out from the current fund to another one that adheres to the 3-fund portfolio strategy.

But I really have no clue of what to do with the assets in Spain. I see in the forum/wiki how to reproduce the strategy in Europe, but I'm not sure that keeping half of my assets there, on an entity that is not making me very happy, is the right thing.

Should I try to move everything to the US, so I have a more simple portfolio? Or should I instead treat it as two independent portfolios, following each the same strategy?

Elena
Posts: 338
Joined: Mon Nov 21, 2016 5:42 pm

Re: Assets split between US and Europe (Spain) [Spanish ex-pat in US]

Post by Elena » Fri Aug 16, 2019 9:31 pm

I would check Rankia for ideas. Low cost index funds are just getting started in Europe, so there are some threads comparing custodians who carry them (my understanding is that such funds are mainly based in Ireland, but there is less of an assortment of the cheaper ones; I have not looked into ETFs because every time I come across the fees I just quit). I find that the EU has a bunch of regulations that are different to the US investment co., and overall the investing climate is way tighter, with many more commissions and fees. I myself have given up on investing there (Spain) for the sake of simplicity. I do not like paperwork and having to report internationally would just be a hassle.

TedSwippet
Posts: 2571
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Assets split between US and Europe (Spain) [Spanish ex-pat in US]

Post by TedSwippet » Sat Aug 17, 2019 3:47 am

Welcome.
SavingsMug wrote:
Fri Aug 16, 2019 7:54 pm
40% of my assets are in Spain, on a single bank: 12% on a checking account, 28% on an investment fund, ...
The investment fund sounds like it is a PFIC for US tax purposes. Check up on this carefully. The US's PFIC tax rules are horrible, and something you will really want to avoid.
SavingsMug wrote:
Fri Aug 16, 2019 7:54 pm
Should I try to move everything to the US, so I have a more simple portfolio? Or should I instead treat it as two independent portfolios, following each the same strategy?
Because of PFIC rules and the whole miasma of US reporting regulations like FBAR and FATCA, you will find it much easier to just move everything to the US and invest there as if a full US citizen and resident. If you think you will later move out of the US and lose the green card, you need to be aware of the US's spiteful 'exit tax'. In the worst cases this can destroy your retirement savings.

actuallyxy
Posts: 35
Joined: Wed May 24, 2017 6:25 am

Re: Assets split between US and Europe (Spain) [Spanish ex-pat in US]

Post by actuallyxy » Sat Aug 17, 2019 4:45 am

You need to find out what's the tax situation first.

If it turns out you can keep assets in Spain, BNP Paribas has a low cost platform with access to Vanguard funds.

https://pi.bnpparibas.es/fondos/buscado ... tora=00110

Topic Author
SavingsMug
Posts: 4
Joined: Fri Aug 16, 2019 7:21 pm

Re: Assets split between US and Europe (Spain) [Spanish ex-pat in US]

Post by SavingsMug » Sat Aug 17, 2019 11:57 am

So it seems like is probably better (some extra research on my part is needed) to move everything to the US, except for the "Exit Tax". Thanks for pointing that out TedSwippet, I was convinced that this tax only applied to US Citizens, but now I see it also applies to Green Card holders on some cases.

If I end doing that, any recommendation of how to minimize costs? I can open a new post about that if the mods consider it appropriate.

More opinions on the original topic are also welcome!

wineandplaya
Posts: 90
Joined: Fri Sep 14, 2018 9:42 am

Re: Assets split between US and Europe (Spain) [Spanish ex-pat in US]

Post by wineandplaya » Sat Aug 17, 2019 3:29 pm

Exit tax is not an issue if you plan on applying for citizenship or if you're savings are smaller than $2M (I think). If you move back to Spain, you will probably lose your green card eventually (triggering exit tax), but your citizenship stays with you for life, unless you explicitly renounce it.

What age do you think you'll be when you eventually return to Spain, if that's your plan? If you'll be at least 55, the smartest might be to contribute to a Roth 401k and cash it out just before you move. That way you can avoid higher Spanish taxes on gains that will occur after you move back.

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