Moving part of nest egg to Euro [Germany ex-pat in US]

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Enlil
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Joined: Fri Sep 25, 2020 2:10 pm

Moving part of nest egg to Euro [Germany ex-pat in US]

Post by Enlil »

Hi,

I am a permanent US resident, but also a German citizen. The political situation in the US has my partner and me worried about putting too many eggs in this basket. We are looking to move part of our cash nest egg (~$30k) into Euro. We are also interested not only in having the money be held in Euro, but also be located in Europe.

This brings up so many questions:
a) How to move the money most efficiently? Wire transfer? Traveling with a big envelope of cash? Opening an account with a international bank and moving the account somehow?
b) What are the immediate tax implications of the move itself?
c) What are long term tax implications?
d) Are we insane?

Thank you so much for any advise!
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Re: Moving part of nest egg to Euro [Germany ex-pat in US]

Post by LadyGeek »

Welcome! I moved your post to the Non-US Investing forum, which attracts members with the experience to answer your questions. I have also retitled your thread.
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TedSwippet
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Re: Moving part of nest egg to Euro [Germany ex-pat in US]

Post by TedSwippet »

Welcome.
Enlil wrote: Fri Sep 25, 2020 2:17 pm a) How to move the money most efficiently? Wire transfer? Traveling with a big envelope of cash? Opening an account with a international bank and moving the account somehow?
Traveling with cash in excess of $10k will entangle you in a bunch of US reporting, for example FINCen form 105. There's nothing illegal about taking the money with you as cash, but the paperwork and stress makes it undesirable. Wire transfer into an account with an EU based bank is probably your best bet. Transferwise or a similar specialist forex broker will probably give you the best rate.

Your most likely problem is going to be finding an EU based or other non-US bank that will accept you as a customer. Post-FATCA, many -- if not most -- non-US banks now routinely refuse accounts for US citizens and US residents. So you may have to hunt around to find a usable home for your EUR.
Enlil wrote: Fri Sep 25, 2020 2:17 pm b) What are the immediate tax implications of the move itself?
None immediately. Post-tax money moves without being taxed again, and the wiring bank, Transferwise, or similar, should seamlessly handle any currency transfer report for you. Hassles annually though, as noted below.
Enlil wrote: Fri Sep 25, 2020 2:17 pm c) What are long term tax implications?
You'll need to file a FinCEN form 114 annually, and complete part III of the 1040 schedule B, if not doing so already. Also, potentially IRS form 8938, depending on foreign balance(s).

Aside from these 'informational' forms (with their $10k or higher penalties for simple non-filing paperwork footfaults), normal US tax on any interest received on the balance. You will find it hard to invest this money beyond a simple interest bearing account (assuming you can even open one of these, post-FATCA), due to punitive US tax laws for non-US domiciled funds and ETFs. Individual shares might be an option, but not an easy one.
Enlil wrote: Fri Sep 25, 2020 2:17 pm d) Are we insane?
Maybe, or maybe not. It's hard to say. The US seems to be on an even more an ethnocentric trajectory at the moment than normal, and as a non-US citizen you might be feeling uneasier than your US citizen peers and colleagues, justifiably or otherwise.

The main thing to realise is that financially, the US equates 'foreign' with 'offshore', and 'offshore' with 'illegal'. This makes it tricky for US citizens and US residents to hold foreign assets (and also relatively difficult for non-US citizens to hold US assets, for what it's worth). You might be able to achieve what you want here, but only at some cost.

If you can live with half a solution, transferring to EUR but not moving the money outside the US financial system -- say a simple EUR currency ETF -- you'd find things a lot easier. The other half solution would be holding USD in a non-US bank. That removes forex from the equation, but still leaves you with all the US tax and annual reporting hassles associated with holding a foreign (to the US) account.
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