Legality of US expat citizen using US address to open account (and more)

For investors outside the US. Personal investments, personal finance, investing news and theory.
Sister forums: Canada, Spain (en español)
---------------
Post Reply
Topic Author
lootsuzette
Posts: 10
Joined: Mon Mar 01, 2021 3:45 pm

Legality of US expat citizen using US address to open account (and more)

Post by lootsuzette »

Hello! I found the forum after a long time of searching about expat investment stuff. I feel like I’ve come to an impasse now and figured asking on a forum might help.

For clarity:
I’m a US citizen and permanent resident of Norway. And, as a Norwegian resident, I am responsible for reporting worldwide income to Norway.

So here’s some things I’m wondering:

1. Many people say "just use a US address to open a (insert Vanguard or anyone else) account.” What's the legality of this?

2. Local taxation regarding the above: As a permanent resident of Norway, as I said above I am responsible to Norway for global income. Would I pay tax to the US state (address used to open the account, my parents in this case) and then declare to Norway Ive already paid taxes on that?

3. Basically I don’t have $20k to invest. I can’t open an Interactive Brokers account yet (plus it’s only available as Pro for some reason to Norwegian residents). Schwab also doesn’t accept Norway even if you are a US citizen. What I want is to start somewhere, but I’d like it to grow rather than sit in a savings account. I’d like something like Wealthfront (as an example), but none of those companies accept non-US-residents. Norway has a number that will invest your savings like Wealthfront, but I imagine they all fall under PFIC. Any suggestions? Deal with PFIC?

The Norwegian companies similar to Wealthfront accept US citizens only if they are permanent residents (at least some do, I know). So there’s that.

I appreciate if anyone knows anything that could be helpful!
TedSwippet
Posts: 3873
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Legality of US expat citizen using US address to open account (and more)

Post by TedSwippet »

Welcome.
lootsuzette wrote: Mon Mar 01, 2021 4:08 pm I’m a US citizen and permanent resident of Norway.
My sympathies. Not for being a resident of Norway -- a splendid place -- but rather for being a US citizen. We have a whole wiki section on this, if you have not already found it:

Outline of non-US domiciles - Tax issues specific to US persons living outside the US
lootsuzette wrote: Mon Mar 01, 2021 4:08 pm 1. Many people say "just use a US address to open a (insert Vanguard or anyone else) account.” What's the legality of this?
I don't believe there is anything illegal about it. Ideally, you'll want to avoid any interaction with state taxes, but as a US taxable person (through your US citizenship) holding an account with a US broker or fund house should be fine.

That aside, some will not want to offer accounts to non-US residents, which is why you want to appear as a US resident. But their reluctance to provide service for non-residents is a commercial decision, not one driven or controlled by regulation or US tax law.
lootsuzette wrote: Mon Mar 01, 2021 4:08 pm 2. Local taxation regarding the above: As a permanent resident of Norway, as I said above I am responsible to Norway for global income. Would I pay tax to the US state (address used to open the account, my parents in this case) and then declare to Norway Ive already paid taxes on that?
You should be able to avoid all US state tax issues. A few states are 'sticky', but most will accept that you no longer live/are domiciled there.

What you can never escape, as long as you remain a US citizen, is US federal tax. The general rule is that your country of residence has primary taxing rights, and then the US will take the difference if your US tax liability on a chunk of income would have been higher, after credits for Norwegian tax paid, depending on the source country of the income, and so on. So, you get the lower of the two countries' allowances, and pay the higher of the two countries' tax rates. Read up on the FEIE and FTC.

Beyond this, the US/Norway tax treaty will spell out any areas where things differ, or otherwise clarify (or muddy!) things.
lootsuzette wrote: Mon Mar 01, 2021 4:08 pm 3. Basically I don’t have $20k to invest. I can’t open an Interactive Brokers account yet (plus it’s only available as Pro for some reason to Norwegian residents). Schwab also doesn’t accept Norway even if you are a US citizen. What I want is to start somewhere, but I’d like it to grow rather than sit in a savings account. I’d like something like Wealthfront (as an example), but none of those companies accept non-US-residents. Norway has a number that will invest your savings like Wealthfront, but I imagine they all fall under PFIC. Any suggestions? Deal with PFIC?
If you're as stuck as it appears, your best (least worst) bet might be passively managed individual stocks. Or, BRKB might be a way to get something that is fund-like but not actually a fund.
Topic Author
lootsuzette
Posts: 10
Joined: Mon Mar 01, 2021 3:45 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by lootsuzette »

Wow fantastic response, thank you so much!

Yes I’m aware of the tax issues and I have a CPA handling my US tax returns in relation to being a Norwegian resident. I will ask her a bit more in-depth regarding state and federal taxation of US-held investments and how all of that works. I’ll also dive in more to the Norwegian-US treaty. As for declaring US-held investments, it looks relatively straightforward on the Norway side, I’m just a bit confused about who gets the initial tax and so on and so forth.
Last edited by lootsuzette on Fri Mar 05, 2021 3:07 am, edited 1 time in total.
Always passive
Posts: 995
Joined: Fri Apr 14, 2017 4:25 am
Location: Israel

Re: Legality of US expat citizen using US address to open account (and more)

Post by Always passive »

TedSwippet wrote: Mon Mar 01, 2021 5:46 pm Welcome.
lootsuzette wrote: Mon Mar 01, 2021 4:08 pm I’m a US citizen and permanent resident of Norway.
My sympathies. Not for being a resident of Norway -- a splendid place -- but rather for being a US citizen. We have a whole wiki section on this, if you have not already found it:

Outline of non-US domiciles - Tax issues specific to US persons living outside the US
lootsuzette wrote: Mon Mar 01, 2021 4:08 pm 1. Many people say "just use a US address to open a (insert Vanguard or anyone else) account.” What's the legality of this?
I don't believe there is anything illegal about it. Ideally, you'll want to avoid any interaction with state taxes, but as a US taxable person (through your US citizenship) holding an account with a US broker or fund house should be fine.

That aside, some will not want to offer accounts to non-US residents, which is why you want to appear as a US resident. But their reluctance to provide service for non-residents is a commercial decision, not one driven or controlled by regulation or US tax law.
lootsuzette wrote: Mon Mar 01, 2021 4:08 pm 2. Local taxation regarding the above: As a permanent resident of Norway, as I said above I am responsible to Norway for global income. Would I pay tax to the US state (address used to open the account, my parents in this case) and then declare to Norway Ive already paid taxes on that?
You should be able to avoid all US state tax issues. A few states are 'sticky', but most will accept that you no longer live/are domiciled there.

What you can never escape, as long as you remain a US citizen, is US federal tax. The general rule is that your country of residence has primary taxing rights, and then the US will take the difference if your US tax liability on a chunk of income would have been higher, after credits for Norwegian tax paid, depending on the source country of the income, and so on. So, you get the lower of the two countries' allowances, and pay the higher of the two countries' tax rates. Read up on the FEIE and FTC.

Beyond this, the US/Norway tax treaty will spell out any areas where things differ, or otherwise clarify (or muddy!) things.
lootsuzette wrote: Mon Mar 01, 2021 4:08 pm 3. Basically I don’t have $20k to invest. I can’t open an Interactive Brokers account yet (plus it’s only available as Pro for some reason to Norwegian residents). Schwab also doesn’t accept Norway even if you are a US citizen. What I want is to start somewhere, but I’d like it to grow rather than sit in a savings account. I’d like something like Wealthfront (as an example), but none of those companies accept non-US-residents. Norway has a number that will invest your savings like Wealthfront, but I imagine they all fall under PFIC. Any suggestions? Deal with PFIC?
If you're as stuck as it appears, your best (least worst) bet might be passively managed individual stocks. Or, BRKB might be a way to get something that is fund-like but not actually a fund.
I am a US citizen living abroad for many years. I used to live in Los Angeles. All my investments were at Fidelity when I lived then, and continue to be there although I reported to them my outside of the US address. Fidelity has continued to provide services, except from purchasing mutual funds and some other minor issues. And I consider this very acceptable since ETFs provide all I want as a passive investor.
I have contemplated getting a US address in an state without income taxes, like Texas, where I have family, but I decided against it. I think that I would be providing false information to Fidelity, since I do not live in Taxes and that may have consequences.
On the taxes issue, I file annually and pay US federal taxes following the tax agreement between the US and my country of residence. I understand that the tax agreements between the US and other countries are specific to each country. For instance, for tax purposes, my country of residence recognizes my US IRA as a tax shelter, but does not recognize municipal bonds. So, you need to become really familiar with the agreement between Norway and the US.
typical.investor
Posts: 2933
Joined: Mon Jun 11, 2018 3:17 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by typical.investor »

What about tastyworks?

They are a US broker and say they accept accounts from Norway.
Matej Vela
Posts: 58
Joined: Tue Feb 28, 2017 2:40 am
Contact:

Re: Legality of US expat citizen using US address to open account (and more)

Post by Matej Vela »

lootsuzette wrote: Mon Mar 01, 2021 4:08 pm [...]
I’m a US citizen and permanent resident of Norway. And, as a Norwegian resident, I am responsible for reporting worldwide income to Norway.

So here’s some things I’m wondering:

1. Many people say "just use a US address to open a (insert Vanguard or anyone else) account.” What's the legality of this?
It's a bad idea in more ways than one:

(1) Broker's liability: every broker who does business with you needs to comply with securities regulations, anti-money laundering, know-your-customer rules, etc. They take this seriously because they are the ones potentially out of pocket: as early as 2001 US brokers were paying fines to Canadian regulators for servicing Canadian residents without being registered locally.

(2) Your own criminal and/or civil liability: this is basically fraud, one where you dig yourself into a deeper hole with every misrepresentation on the source of income etc. You need to take both US and Norwegian law into account. It's true that you are unlikely to end up with something like the head shot, but why take the risk? If the broker gets caught out by (1), they might go after you in civil suits.

(3) State taxes: a number of states will tax you on worldwide income until you jump through their specific hoops to establish a new domicile. See previous discussion in viewtopic.php?p=5581886.

Before we go further, can you check if DriveWealth lets you open an account? Their primary orientation is to provide a platform for other companies like Digit rather than attract retail clients directly (along with attention from local regulators) — their homepage doesn't even link to the sign-up flow, and they accept non-US residents (which you are not, just to be clear).

You'll want to amend or delete your second post in light of forum policies against dishonest behavior and bypassing the law.
Topic Author
lootsuzette
Posts: 10
Joined: Mon Mar 01, 2021 3:45 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by lootsuzette »

Matej Vela wrote: Fri Mar 05, 2021 2:47 am
It's a bad idea in more ways than one:

(1) Broker's liability: every broker who does business with you needs to comply with securities regulations, anti-money laundering, know-your-customer rules, etc. They take this seriously because they are the ones potentially out of pocket: as early as 2001 US brokers were paying fines to Canadian regulators for servicing Canadian residents without being registered locally.

(2) Your own criminal and/or civil liability: this is basically fraud, one where you dig yourself into a deeper hole with every misrepresentation on the source of income etc. You need to take both US and Norwegian law into account. It's true that you are unlikely to end up with something like the head shot, but why take the risk? If the broker gets caught out by (1), they might go after you in civil suits.

(3) State taxes: a number of states will tax you on worldwide income until you jump through their specific hoops to establish a new domicile. See previous discussion in viewtopic.php?p=5581886.

Before we go further, can you check if DriveWealth lets you open an account? Their primary orientation is to provide a platform for other companies like Digit rather than attract retail clients directly (along with attention from local regulators) — their homepage doesn't even link to the sign-up flow, and they accept non-US residents (which you are not, just to be clear).

You'll want to amend or delete your second post in light of forum policies against dishonest behavior and bypassing the law.
Ah, very good points, thank you!

Edited because it seems my internet was being funky. The DriveWealth link you sent gives a JSON error. As for TastyWorks, they do appear to accept Norwegian residents with a low minimum. That looks promising.
Matej Vela
Posts: 58
Joined: Tue Feb 28, 2017 2:40 am
Contact:

Re: Legality of US expat citizen using US address to open account (and more)

Post by Matej Vela »

lootsuzette wrote: Fri Mar 05, 2021 3:14 am Edited because it seems my internet was being funky. The DriveWealth link you sent gives a JSON error.
Yeah, sorry, DriveWealth sign-up is erroring out for me too from the US. Maybe try in a few hours...
lootsuzette wrote: Fri Mar 05, 2021 3:14 am As for TastyWorks, they do appear to accept Norwegian residents with a low minimum. That looks promising.
No personal experience, but SGTM.
Topic Author
lootsuzette
Posts: 10
Joined: Mon Mar 01, 2021 3:45 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by lootsuzette »

I looked into Tastyworks more, and while they accept accounts from Norway (and all the other countries listed), they don't accept US Citizens residing anywhere outside the US.
typical.investor
Posts: 2933
Joined: Mon Jun 11, 2018 3:17 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by typical.investor »

lootsuzette wrote: Sun Mar 07, 2021 1:28 am I looked into Tastyworks more, and while they accept accounts from Norway (and all the other countries listed), they don't accept US Citizens residing anywhere outside the US.
*sigh*

I can’t figure out the purpose of that.

Many countries restrict other countries’ brokers from opening accounts for their residents. But if Norwegian residents can open accounts, this would not seem to be the reason for why you can’t.

Many foreign financial institutions don’t want to do US reporting, so decline US persons. But Tastyworks should be routinely doing US reporting.

I suspect the reason is something simple like their system determines whether US reporting needs to be done based on address, and they have few expat clients so don’t want to change that.

*sigh*

Personally, I think I’d save $20k and use IB when I do then.
Marseille07
Posts: 5499
Joined: Fri Nov 06, 2020 1:41 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by Marseille07 »

Yes, IB is your best bet. If they require 20K, save up that much and open their account.
Go St. Louis Cardinals!
Topic Author
lootsuzette
Posts: 10
Joined: Mon Mar 01, 2021 3:45 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by lootsuzette »

typical.investor wrote: Sun Mar 07, 2021 1:51 am
*sigh*

I can’t figure out the purpose of that.

Many countries restrict other countries’ brokers from opening accounts for their residents. But if Norwegian residents can open accounts, this would not seem to be the reason for why you can’t.

Many foreign financial institutions don’t want to do US reporting, so decline US persons. But Tastyworks should be routinely doing US reporting.

I suspect the reason is something simple like their system determines whether US reporting needs to be done based on address, and they have few expat clients so don’t want to change that.

*sigh*

Personally, I think I’d save $20k and use IB when I do then.
I had to laugh when I saw that. It’s ridiculous! I would also think by now there would be a company specializing in this, considering there is roughly 3 million citizens living abroad over 18. That’s the size of a state right there. Countries smaller than that have their own banking systems.

I suppose the answer is IB, yep. Unless I find something else out (which I’ll update this if I do).
Matej Vela
Posts: 58
Joined: Tue Feb 28, 2017 2:40 am
Contact:

Re: Legality of US expat citizen using US address to open account (and more)

Post by Matej Vela »

typical.investor wrote: Sun Mar 07, 2021 1:51 am Personally, I think I’d save $20k and use IB when I do then.
Marseille07 wrote: Sun Mar 07, 2021 1:52 am Yes, IB is your best bet. If they require 20K, save up that much and open their account.
lootsuzette wrote: Sun Mar 07, 2021 2:18 am I suppose the answer is IB, yep. Unless I find something else out (which I’ll update this if I do).
Eh, except Norway is a member of the EEA and applies PRIIPs regulations, which IB interprets as disallowing sales of vanilla US ETFs to retail investors: viewtopic.php?t=253807

Years ago when I was opening an account with IB the minimum was $10,000, and I see they dropped it to $0 in 2019 at least in the US. Are you sure you were looking at the cash account, and not something like managed portfolios? IB is well worth it just for the best-in-class foreign exchange commissions: 0.002% with $2 minimum, compared to ~0.5% on Wise (formerly known as TransferWise) and ~1-3% on most banks. I assume you'll be changing lots and lots of NOK to USD to avoid the heads-I-win-tails-you-lose taxation of foreign currency (ask your accountant to explain IRC 988(a) and 988(e)).

Whatever you do, you should stay away from individual non-US stocks as those are potential PFICs too (with limited exceptions for banks and insurance companies). Shot: hot stock tip for Kyocera, chaser: Kyocera's 20-F plainly stating it is a PFIC.
typical.investor
Posts: 2933
Joined: Mon Jun 11, 2018 3:17 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by typical.investor »

Matej Vela wrote: Sun Mar 07, 2021 3:45 am
typical.investor wrote: Sun Mar 07, 2021 1:51 am Personally, I think I’d save $20k and use IB when I do then.
Marseille07 wrote: Sun Mar 07, 2021 1:52 am Yes, IB is your best bet. If they require 20K, save up that much and open their account.
lootsuzette wrote: Sun Mar 07, 2021 2:18 am I suppose the answer is IB, yep. Unless I find something else out (which I’ll update this if I do).
Eh, except Norway is a member of the EEA and applies PRIIPs regulations, which IB interprets as disallowing sales of vanilla US ETFs to retail investors: viewtopic.php?t=253807
Ah ...

Then, I think it's a matter of learning how to use options that settle in ETF shares. I'd research that (perhaps with a demo IB account) and still use IB once I can.

That's what I'd do anyway before trying to go down the PFIC road. And I'd prefer that to trying to hold individual stocks.
Matej Vela
Posts: 58
Joined: Tue Feb 28, 2017 2:40 am
Contact:

Re: Legality of US expat citizen using US address to open account (and more)

Post by Matej Vela »

typical.investor wrote: Sun Mar 07, 2021 3:52 am Then, I think it's a matter of learning how to use options that settle in ETF shares. I'd research that (perhaps with a demo IB account) and still use IB once I can.
PRIIPs also covers options, and it's only a question of time before IB closes that particular loophole. I agree that the alternatives are not great...
trigger08
Posts: 117
Joined: Wed Aug 15, 2007 1:58 pm
Location: HK

Re: Legality of US expat citizen using US address to open account (and more)

Post by trigger08 »

Matej Vela wrote: Sun Mar 07, 2021 3:45 am Years ago when I was opening an account with IB the minimum was $10,000, and I see they dropped it to $0 in 2019 at least in the US. Are you sure you were looking at the cash account, and not something like managed portfolios? IB is well worth it just for the best-in-class foreign exchange commissions: 0.002% with $2 minimum, compared to ~0.5% on Wise (formerly known as TransferWise) and ~1-3% on most banks. I assume you'll be changing lots and lots of NOK to USD to avoid the heads-I-win-tails-you-lose taxation of foreign currency (ask your accountant to explain IRC 988(a) and 988(e)).
I wish I had known about IB a couple of years ago! I have been using Wise/Transferwise to move HKD to USD all this time and thought I was smart…could have been saving a lot with IB.

OP, sorry to hear your troubles. It can be difficult for US expats to deal with these kinds of things due to US requirements imposed on foreign financial institutions. Here in Hong Kong it was a big hassle to even open a checking account.
User avatar
peterinjapan
Posts: 593
Joined: Fri May 15, 2015 8:41 am
Location: Japan!

Re: Legality of US expat citizen using US address to open account (and more)

Post by peterinjapan »

I'm an American citizen living in Japan for 30 years+ so far, and I wouldn't allow myself to not have a legal "footprint" for investing and other things in the U.S., because otherwise you can be shut out of good investing products and vehicles, while the government is happy to require you to pay taxes on your worldwide income and investments. I think should be taken to the Supreme Court, personally.

When I sold a business in March 2020 (best timing ever, or what?), I started a new S Corp so that I could have the legal representation I needed going forward, a legal corporate address (my daughter's home), a person to have a U.S. based cell phone for certification texts (my daughter's phone). I pay my daughter a salary for these services she renders to the corporation, all nice and legal.

tl;dr, if you're an American and can maintain a legal address in the U.S. for investment reasons, don't hesitate to do so. Just never tell them you live abroad. (Vanguard is the most anti-expat American company out there, DO NOT tell them if you live abroad.)
Marseille07
Posts: 5499
Joined: Fri Nov 06, 2020 1:41 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by Marseille07 »

peterinjapan wrote: Sun Mar 07, 2021 6:43 am tl;dr, if you're an American and can maintain a legal address in the U.S. for investment reasons, don't hesitate to do so. Just never tell them you live abroad. (Vanguard is the most anti-expat American company out there, DO NOT tell them if you live abroad.)
I believe the OP's parents live in the US. They can probably visit their parents and open a brokerage account while doing so. I believe that's very much legal, provided the parents are OK with their address used by their son / daughter.

Now, this might trigger the state income tax filing requirement but that's another story for another day.
Go St. Louis Cardinals!
Topic Author
lootsuzette
Posts: 10
Joined: Mon Mar 01, 2021 3:45 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by lootsuzette »

Matej Vela wrote: Sun Mar 07, 2021 3:45 am Are you sure you were looking at the cash account, and not something like managed portfolios? IB is well worth it just for the best-in-class foreign exchange commissions: 0.002% with $2 minimum, compared to ~0.5% on Wise (formerly known as TransferWise) and ~1-3% on most banks. I assume you'll be changing lots and lots of NOK to USD to avoid the heads-I-win-tails-you-lose taxation of foreign currency (ask your accountant to explain IRC 988(a) and 988(e)).
I double-checked and it was indeed a cash account. Everything I check (futures, options, individual stocks, etc etc) gives an error saying "You must have a liquid net worth of at least USD 20,000 to continue" or in some cases it was as high as $50k or higher.

Just to reiterate, saving in general is the goal as well as investing. I'm not trying to throw everything I've got into the market and have no savings, I'm just trying to get in and learn as I go while building with smaller numbers rather than jumping in with a lump sum. Tastyworks' minimum of $2k sounded like a great starting point, but we saw their answer above.

As for the other posts, I have to run to work now so I'll check them a bit later. Thanks everyone for all the replies!
Topic Author
lootsuzette
Posts: 10
Joined: Mon Mar 01, 2021 3:45 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by lootsuzette »

peterinjapan wrote: Sun Mar 07, 2021 6:43 am I'm an American citizen living in Japan for 30 years+ so far, and I wouldn't allow myself to not have a legal "footprint" for investing and other things in the U.S., because otherwise you can be shut out of good investing products and vehicles, while the government is happy to require you to pay taxes on your worldwide income and investments. I think should be taken to the Supreme Court, personally.

When I sold a business in March 2020 (best timing ever, or what?), I started a new S Corp so that I could have the legal representation I needed going forward, a legal corporate address (my daughter's home), a person to have a U.S. based cell phone for certification texts (my daughter's phone). I pay my daughter a salary for these services she renders to the corporation, all nice and legal.

tl;dr, if you're an American and can maintain a legal address in the U.S. for investment reasons, don't hesitate to do so. Just never tell them you live abroad. (Vanguard is the most anti-expat American company out there, DO NOT tell them if you live abroad.)
Interesting! This actually is something I was looking at earlier today, but an LLC. I need to look more into it, but it might be a possibility to do this by creating an LLC to access investments. LLC costs vary wildly state-to-state, but my home-state isn't bad. I totally agree this stuff should be taken to the Supreme Court.
Marseille07 wrote: Sun Mar 07, 2021 11:06 am I believe the OP's parents live in the US. They can probably visit their parents and open a brokerage account while doing so. I believe that's very much legal, provided the parents are OK with their address used by their son / daughter.

Now, this might trigger the state income tax filing requirement but that's another story for another day.
That's correct, they do live in the US and I'm visiting usually twice a year, give or take (except last year because of pandemic). I've asked this question on a legal forum as well and they also said since I am not an actual resident, this is lying and could potentially be fraud and taken further.

The question remains about an LLC, however. I know a friend of mine in Europe has an LLC in the US for specific business purposes (not investment), so it's obviously doable.

There is also maybe one temporary "fix." PFIC reporting has a $25k threshold. I suppose I could potentially use a local "Betterment/robo-advisor" to save in funds and then liquidate before it reaches threshold, moving that to IB. Just a thought - I have no idea if that would actually work. "The threshold amount for filing Form 8621 is an aggregate of $25,000 for all shares held in one or more PFICs." (https://shieldgeo.com/guide-to-passive- ... us-expats/)
typical.investor
Posts: 2933
Joined: Mon Jun 11, 2018 3:17 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by typical.investor »

Matej Vela wrote: Sun Mar 07, 2021 4:11 am
typical.investor wrote: Sun Mar 07, 2021 3:52 am Then, I think it's a matter of learning how to use options that settle in ETF shares. I'd research that (perhaps with a demo IB account) and still use IB once I can.
PRIIPs also covers options, and it's only a question of time before IB closes that particular loophole. I agree that the alternatives are not great...
One could still look into options at IB. It appears they offer KIDs info on many options. Equities look like US only though, so an LLC for investing might be a better route (more complicated and costly though).

https://www.cmegroup.com/market-regulat ... ducts.html
Marseille07
Posts: 5499
Joined: Fri Nov 06, 2020 1:41 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by Marseille07 »

lootsuzette wrote: Sun Mar 07, 2021 5:20 pm That's correct, they do live in the US and I'm visiting usually twice a year, give or take (except last year because of pandemic). I've asked this question on a legal forum as well and they also said since I am not an actual resident, this is lying and could potentially be fraud and taken further.
I'm not a lawyer but while you're visiting your parents, your 'residential address' is that of your parents'. I don't believe there's any requirement as far as how long you must stay there to be considered a resident.

Heck, I remember a thread here talking about flying into South Dakota, staying at a hotel and using the hotel's address to establish South Dakota residency. If that's deemed OK, I don't see why your use of your parents' address wouldn't be OK.
Go St. Louis Cardinals!
typical.investor
Posts: 2933
Joined: Mon Jun 11, 2018 3:17 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by typical.investor »

lootsuzette wrote: Sun Mar 07, 2021 5:20 pm That's correct, they do live in the US and I'm visiting usually twice a year, give or take (except last year because of pandemic). I've asked this question on a legal forum as well and they also said since I am not an actual resident, this is lying and could potentially be fraud and taken further.
IANAL and this is not legal advice, but from a legal standpoint I would look into the concept of domicile.

Legally you can have more than one residence, but only one domicile which is the place you intend to end up. So if you think you will return to the US - quite possible to your parents house after they pass, and you consider it your domicile, I don't see how anyone can really prove differently. Domicile is one form of residence.
A "domicile" is a person's true, fixed, and permanent home where a person intends to remain permanently and indefinitely and to which a person has the intention of returning, whenever absent. It is often referred to as "legal residence." A person may be physically present, working or living in one place but maintain a domicile in another. A person has only one domicile at any point in time.
Simply put, your domicile is your home—the state you consider your permanent place of residence. If you aren’t living there right now, then it’s the place to which you intend to return and make your home indefinitely. You can have more than one residence, but only one domicile.

Factors That Affect Domicile

Some factors that indicate where you’re domiciled include where you live, vote, register your car, and where your spouse and children live. But domicile is fundamentally a question of your intent—which state do you consider your permanent home?

...

When does the question of domicile arise? Typically, it comes up after a state’s taxing agency (department of revenue or taxation) rules that someone is domiciled in the state. A taxpayer (or the taxpayer’s surviving family members) who wants to dispute that determination must go to court.
See https://www.nolo.com/legal-encyclopedia ... icile.html

In practical terms, a broker will often check if you really are at an address. So while you may believe you intend to return to your parents house, the broker may not accept it as your residence unless you have a utility bill to pay there or other such records.

And if you do use your parents address, you will have to watch out for state taxes depending on your state's residency definitions.

Forming an LLC eventually might be the best avenue though for a day when your parents aren't around if you think you might still be in Norway.
solargod007
Posts: 35
Joined: Sat Jun 20, 2020 2:52 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by solargod007 »

Marseille07 wrote: Sun Mar 07, 2021 11:06 am
peterinjapan wrote: Sun Mar 07, 2021 6:43 am tl;dr, if you're an American and can maintain a legal address in the U.S. for investment reasons, don't hesitate to do so. Just never tell them you live abroad. (Vanguard is the most anti-expat American company out there, DO NOT tell them if you live abroad.)
I believe the OP's parents live in the US. They can probably visit their parents and open a brokerage account while doing so. I believe that's very much legal, provided the parents are OK with their address used by their son / daughter.

Now, this might trigger the state income tax filing requirement but that's another story for another day.
Bogle heads correct me if Im wrong:
What I understand is the restriction for Non US residents is in buying Mutual Funds. ETFs are ok to buy from many countries. Please check if Norway is a country that Vanguard/Fidelity/Schwab recognize. If you can, then open an account when you next visit the US (or create an account with your parents address & help). Both Fidelity/Vanguard mention in their websites that they don't allow new accounts for non US residents. But will allow existing accounts to remain active (though Mutual Fund purchase will be restricted). So, buy only ETFs to avoid running into issues with them. This is for a taxable brokerage account (Not sure how your tax filing status with US/Norway- FEIE/FTC..).
typical.investor
Posts: 2933
Joined: Mon Jun 11, 2018 3:17 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by typical.investor »

solargod007 wrote: Sun Mar 07, 2021 7:27 pm Bogle heads correct me if Im wrong:
What I understand is the restriction for Non US residents is in buying Mutual Funds.
Correct.
solargod007 wrote: Sun Mar 07, 2021 7:27 pm ETFs are ok to buy from many countries.
Correct, but many US brokers will decline you as an expat even though they can sell you ETFs. The cost of compliance for them to do things like make sure you aren't buying mutual funds is too much.
solargod007 wrote: Sun Mar 07, 2021 7:27 pmPlease check if Norway is a country that Vanguard/Fidelity/Schwab recognize.
It's not always the broker's choice. There are many countries that restrict sales to their residents. The hassle of keeping track of it all is one reason many brokers decline your business.
solargod007 wrote: Sun Mar 07, 2021 7:27 pm If you can, then open an account when you next visit the US (or create an account with your parents address & help). Both Fidelity/Vanguard mention in their websites that they don't allow new accounts for non US residents. But will allow existing accounts to remain active (though Mutual Fund purchase will be restricted). So, buy only ETFs to avoid running into issues with them. This is for a taxable brokerage account (Not sure how your tax filing status with US/Norway- FEIE/FTC..).
This might work, but it didn't for me. I opened a Vanguard account (in about 2013) when in the States using an address I partially owned. When Vanguard kept occassionally sending me documents there (even though I had requested electronic notification only), I tried to change my mailing address to my foreign address because I didn't want the people staying at the address to see my information. Vanguard subsequently froze my accounts. I moved to Schwab instead of going through the hassle of getting the utilities into my name instead of the property management company who was paid by another co-owner. I tried to get them to take the deed though ... no luck.

I think this is as I'd only been a Vanguard customer for a short time. It seems people who were customers longer got different treatment perhaps because regulations have been changed in recent years (especially after 2001).
Matej Vela
Posts: 58
Joined: Tue Feb 28, 2017 2:40 am
Contact:

Re: Legality of US expat citizen using US address to open account (and more)

Post by Matej Vela »

lootsuzette wrote: Fri Mar 05, 2021 3:14 am The DriveWealth link you sent gives a JSON error.
To save others the three business days response time, unfortunately this is working as intended / will not fix:
DriveWealth Support <support@drivewealth.com> wrote: Thank you for reaching out to DriveWealth.

DriveWealth does not directly offer accounts to clients. However, we do have partners who utilize our technology to offer U.S. equities.

Below are some of our partners from all over the globe:

Invest with MyWallSt : https://link.mywallst.app/
Cash App https://cash.app/help/us/en-us/5000-investing
Avenue Securities- https://avenue.us/
Invstr- https://invstr.com/
Revolut- https://www.revolut.com/en-RO/
Passfolio- https://www.passfolioapp.com/
Chaka- https://chaka.ng/
Trove- https://troveapp.co/
BamBoo https://investbamboo.com/
Vested Finance- https://vested.co.in/
Stake- https://stake.com.au/
Their partners are still worth a try since DriveWealth is to my knowledge the one platform where EU/EEA retail clients can buy US-domiciled ETFs. To recap, IB stopped offering US funds in Jun 2018, and Schwab International has been restricted to an all-PFIC lineup since Sep 2019. (Specific to EU/EEA in both cases.)

Should a DriveWealth partner change policy or fold, you can use ACATS to transfer assets elsewhere in-kind (that is, without triggering a taxable event), and all the while SIPC provides fairly comprehensive protection.
Matej Vela
Posts: 58
Joined: Tue Feb 28, 2017 2:40 am
Contact:

Re: Legality of US expat citizen using US address to open account (and more)

Post by Matej Vela »

lootsuzette wrote: Sun Mar 07, 2021 5:20 pm I totally agree this stuff should be taken to the Supreme Court.
I'm not aware of any movement in that direction. Certainly there are smaller steps you can start with, such as joining advocacy groups like American Citizens Abroad or Association of Americans Resident Overseas, and bringing this to the attention of your congressional representative.

From my layperson's perspective, there seems to be a stronger case on the EU/EEA side:

(1) PRIIPs should not apply to execution-only transactions where no party is marketing a product or providing financial advice. It makes no kind of sense to have rules that make it easier to buy a meme stock like GME than an index fund like VT. Switzerland specifically exempts execution-only in Art. 8 para 4 and Art. 13 para 1 FinSA (and to avoid any confusion, Switzerland is not in the EU/EEA).

(2) More of a stretch: US funds with UCITS-analogous fact sheets should be exempt from PRIIPs the same way UCITS currently are. It's quite something that PRIIPs KIDs provide only forward-looking scenarios while UCITS KIIDs provide only historical returns, and ESAs couldn't achieve consensus as late as last year which way to go.
lootsuzette wrote: Sun Mar 07, 2021 5:20 pm The question remains about an LLC, however. I know a friend of mine in Europe has an LLC in the US for specific business purposes (not investment), so it's obviously doable.
Not sure about Norwegian equivalents of controlled foreign corporation (CFC) rules or economic substance doctrine. You'll want to check with local professionals, and like typical.investor above, I don't think this is going to be cost-effective for a small-to-midsize portfolio.
lootsuzette wrote: Sun Mar 07, 2021 5:20 pm There is also maybe one temporary "fix." PFIC reporting has a $25k threshold. I suppose I could potentially use a local "Betterment/robo-advisor" to save in funds and then liquidate before it reaches threshold, moving that to IB. Just a thought - I have no idea if that would actually work. "The threshold amount for filing Form 8621 is an aggregate of $25,000 for all shares held in one or more PFICs." (https://shieldgeo.com/guide-to-passive- ... us-expats/)
The $25K exception isn't very useful in practice as it only applies to PFICs with no dividends and no sales. Robo-advisors typically rebalance multiple times a year between 5-10 funds, leaving you with many taxable disposals that are computationally intensive regardless of size.

PFICs are not that onerous as long as (in order of importance) you have marketable stock, make a timely mark-to-market election, and are not in a high income tax bracket. Once you grok the rules, one fund should be a 20 minute adventure in-and-out. What did your US accountant say?
Topic Author
lootsuzette
Posts: 10
Joined: Mon Mar 01, 2021 3:45 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by lootsuzette »

Thanks for reaching out to DriveWealth! I checked a couple of the services listed quickly and it appears Passfolio may actually be an option, and they allow purchase of US-based ETFs as well as stocks, etc. I will look into it more when I have a bit more time, but it sounds pretty good to me. I will also check out some of the others listed.

Regarding IB, it appears I was confused on the application and I actually can have a cash account (so that's also some good news).

I also spoke with DNB here, and I also should be able to open an account with DNB Markets. Though I'm unsure whether or not that's beneficial at all. I suppose it would be local, can use local currency, so things like stocks and bonds would probably be fine, but not ETFs since I'm guessing any offered by DNB would end up being PFICs.

As for the LLC, the more I looked into it, it didn't really seem like all that great an idea.
Marseille07
Posts: 5499
Joined: Fri Nov 06, 2020 1:41 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by Marseille07 »

lootsuzette wrote: Sun Mar 21, 2021 12:56 am Thanks for reaching out to DriveWealth! I checked a couple of the services listed quickly and it appears Passfolio may actually be an option, and they allow purchase of US-based ETFs as well as stocks, etc. I will look into it more when I have a bit more time, but it sounds pretty good to me. I will also check out some of the others listed.

Regarding IB, it appears I was confused on the application and I actually can have a cash account (so that's also some good news).

I also spoke with DNB here, and I also should be able to open an account with DNB Markets. Though I'm unsure whether or not that's beneficial at all. I suppose it would be local, can use local currency, so things like stocks and bonds would probably be fine, but not ETFs since I'm guessing any offered by DNB would end up being PFICs.

As for the LLC, the more I looked into it, it didn't really seem like all that great an idea.
So you're all set with IB? I don't imagine you need margin capabilities for Boglehead-style investing.
Go St. Louis Cardinals!
TedSwippet
Posts: 3873
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Legality of US expat citizen using US address to open account (and more)

Post by TedSwippet »

Matej Vela wrote: Sun Mar 21, 2021 12:03 am PFICs are not that onerous as long as (in order of importance) you have marketable stock, make a timely mark-to-market election, and are not in a high income tax bracket. Once you grok the rules, one fund should be a 20 minute adventure in-and-out. What did your US accountant say?
How can investors avoid double-tax on capital gains due to timing issues?

Most other countries will only tax gains on sale, and the country of residence should have primary taxing rights on this income. The US offers no way to go back in time and claim a tax credit for non-US tax paid now and on realised gains against US PFIC mark-to-market tax paid years or perhaps decades earlier on unrealised gains. The only way I can see to defuse this is to sell and repurchase the PFICs annually to realise gains. And this could create a sizeable local (non-US) tax liability.
sean.mcgrath
Posts: 598
Joined: Thu Dec 29, 2016 6:15 am
Location: US in NL

Re: Legality of US expat citizen using US address to open account (and more)

Post by sean.mcgrath »

TedSwippet wrote: Mon Mar 01, 2021 5:46 pm
lootsuzette wrote: Mon Mar 01, 2021 4:08 pm 1. Many people say "just use a US address to open a (insert Vanguard or anyone else) account.” What's the legality of this?
I don't believe there is anything illegal about it. Ideally, you'll want to avoid any interaction with state taxes, but as a US taxable person (through your US citizenship) holding an account with a US broker or fund house should be fine.
Matej Vela wrote: Fri Mar 05, 2021 2:47 am
(2) Your own criminal and/or civil liability: this is basically fraud, one where you dig yourself into a deeper hole with every misrepresentation on the source of income etc. You need to take both US and Norwegian law into account. It's true that you are unlikely to end up with something like the head shot, but why take the risk? If the broker gets caught out by (1), they might go after you in civil suits.

You'll want to amend or delete your second post in light of forum policies against dishonest behavior and bypassing the law.
Hi Matej, if you are giving explicit legal advice it would be very helpful to state your qualifications or give a link. I am unaware that filling in a convenient address to my broker (I have used my office address in the past) is dishonest or illegal. Out of curiosity, I went to Vanguard right now to try signing up for an account. Under "do I need to live in the US?" the reply was "You must have a permanent legal residential address in the United States to open an account." It did not state that it needs to be my primary address or my legal domicile and it never asked for my legal domicile.

How certain are you of the legal advice you are giving?

Regards,
Sean
typical.investor
Posts: 2933
Joined: Mon Jun 11, 2018 3:17 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by typical.investor »

sean.mcgrath wrote: Sun Mar 21, 2021 12:41 pm
TedSwippet wrote: Mon Mar 01, 2021 5:46 pm
lootsuzette wrote: Mon Mar 01, 2021 4:08 pm 1. Many people say "just use a US address to open a (insert Vanguard or anyone else) account.” What's the legality of this?
I don't believe there is anything illegal about it. Ideally, you'll want to avoid any interaction with state taxes, but as a US taxable person (through your US citizenship) holding an account with a US broker or fund house should be fine.
Matej Vela wrote: Fri Mar 05, 2021 2:47 am
(2) Your own criminal and/or civil liability: this is basically fraud, one where you dig yourself into a deeper hole with every misrepresentation on the source of income etc. You need to take both US and Norwegian law into account. It's true that you are unlikely to end up with something like the head shot, but why take the risk? If the broker gets caught out by (1), they might go after you in civil suits.

You'll want to amend or delete your second post in light of forum policies against dishonest behavior and bypassing the law.
Hi Matej, if you are giving explicit legal advice it would be very helpful to state your qualifications or give a link. I am unaware that filling in a convenient address to my broker (I have used my office address in the past) is dishonest or illegal. Out of curiosity, I went to Vanguard right now to try signing up for an account. Under "do I need to live in the US?" the reply was "You must have a permanent legal residential address in the United States to open an account." It did not state that it needs to be my primary address or my legal domicile and it never asked for my legal domicile.

How certain are you of the legal advice you are giving?

Regards,
Sean
Personally, I think the view of it being "fraud" by using a US in non-sense and has no basis in law.

To understand why, one must look into the legal concept of domicile. It is important to know that you legally have multiple residences.

Legally, your domicile is the location you declare in legal documents, such as the address you use to vote, bank, register vehicles, and pay taxes. Ending a domicile association includes your efforts to close bank accounts, surrender your driver’s license, remove your name from voting rolls, and to pay taxes as a non-resident.

Your domicile carries legal consequences. It defines which country, state, and courts have jurisdiction to probate wills, administer estates, adjudicate lawsuits, and assess state income and death taxes. After a divorce, the legal domicile can affect your ability to claim and monitor payment of alimony and child support.
Domicile, in general, is the place which an individual intends to be his or her permanent home and to which such individual intends to return whenever absent. As indicated above, the location of a person’s domicile is dependent on a person’s intentions. Intent is a state of mind. A state of mind is difficult to prove. As a result, taxing authorities (and courts) look to a person's actions to determine their intent. Some of the factors that courts and taxing authorities look to include:

Amount of time you spend in one location versus another
Location of your spouse and children;
Location of your principal residence;
Where your driver’s license was issued;
Where your vehicles are registered;
Where you maintain your professional licenses;
Where you are registered to vote;
Location of the banks where you maintain accounts;
Location of your doctors, dentists, accountants, and attorneys;
Location of the church, temple or mosque, professional associations, or social and country clubs of which you are a member;
Location of your real property and investments;
Permanence of your work assignments in a location; and
Location of your social ties.
https://intltax.typepad.com/intltax_blo ... icile.html

What you have to watch out for are States that will consider the above to qualify you for taxation in their jurisdiction.

As for me, I maintain a DL, voting records and have declared FL my domicile such that should my estate need to be probated (it won't due to a trust but say I left something out), that is where it would be done. And I spend far more time in FL than anywhere else in the US due to a relative living there.

I find it highly offensive that anyone would accuse me of fraud. My intent is that I will return to Florida if/when I return to the US permanently. But no, I do not live there.

For most expats, if their estate needs to go through probate it will be in the State they last lived (or at least maintain closest ties). Why? Ask a lawyer but it'll likely come to something like the following which is the definition of Domicile: “the place where an individual has a fixed and permanent home for legal purposes; called also legal residence.”

In any case, I see nothing wrong with having a domicile in the US, and using that as your legal residence. A broker may not accept it of course, and may ask for proof of physical residence such as a utility bill but often that depends if you are in public records at that address. It's much easier for them to accept you if you are.
Marseille07
Posts: 5499
Joined: Fri Nov 06, 2020 1:41 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by Marseille07 »

typical.investor wrote: Sun Mar 21, 2021 6:59 pm
sean.mcgrath wrote: Sun Mar 21, 2021 12:41 pm
TedSwippet wrote: Mon Mar 01, 2021 5:46 pm
lootsuzette wrote: Mon Mar 01, 2021 4:08 pm 1. Many people say "just use a US address to open a (insert Vanguard or anyone else) account.” What's the legality of this?
I don't believe there is anything illegal about it. Ideally, you'll want to avoid any interaction with state taxes, but as a US taxable person (through your US citizenship) holding an account with a US broker or fund house should be fine.
Matej Vela wrote: Fri Mar 05, 2021 2:47 am
(2) Your own criminal and/or civil liability: this is basically fraud, one where you dig yourself into a deeper hole with every misrepresentation on the source of income etc. You need to take both US and Norwegian law into account. It's true that you are unlikely to end up with something like the head shot, but why take the risk? If the broker gets caught out by (1), they might go after you in civil suits.

You'll want to amend or delete your second post in light of forum policies against dishonest behavior and bypassing the law.
Hi Matej, if you are giving explicit legal advice it would be very helpful to state your qualifications or give a link. I am unaware that filling in a convenient address to my broker (I have used my office address in the past) is dishonest or illegal. Out of curiosity, I went to Vanguard right now to try signing up for an account. Under "do I need to live in the US?" the reply was "You must have a permanent legal residential address in the United States to open an account." It did not state that it needs to be my primary address or my legal domicile and it never asked for my legal domicile.

How certain are you of the legal advice you are giving?

Regards,
Sean
Personally, I think the view of it being "fraud" by using a US in non-sense and has no basis in law.

To understand why, one must look into the legal concept of domicile. It is important to know that you legally have multiple residences.

Legally, your domicile is the location you declare in legal documents, such as the address you use to vote, bank, register vehicles, and pay taxes. Ending a domicile association includes your efforts to close bank accounts, surrender your driver’s license, remove your name from voting rolls, and to pay taxes as a non-resident.

Your domicile carries legal consequences. It defines which country, state, and courts have jurisdiction to probate wills, administer estates, adjudicate lawsuits, and assess state income and death taxes. After a divorce, the legal domicile can affect your ability to claim and monitor payment of alimony and child support.
Domicile, in general, is the place which an individual intends to be his or her permanent home and to which such individual intends to return whenever absent. As indicated above, the location of a person’s domicile is dependent on a person’s intentions. Intent is a state of mind. A state of mind is difficult to prove. As a result, taxing authorities (and courts) look to a person's actions to determine their intent. Some of the factors that courts and taxing authorities look to include:

Amount of time you spend in one location versus another
Location of your spouse and children;
Location of your principal residence;
Where your driver’s license was issued;
Where your vehicles are registered;
Where you maintain your professional licenses;
Where you are registered to vote;
Location of the banks where you maintain accounts;
Location of your doctors, dentists, accountants, and attorneys;
Location of the church, temple or mosque, professional associations, or social and country clubs of which you are a member;
Location of your real property and investments;
Permanence of your work assignments in a location; and
Location of your social ties.
https://intltax.typepad.com/intltax_blo ... icile.html

What you have to watch out for are States that will consider the above to qualify you for taxation in their jurisdiction.

As for me, I maintain a DL, voting records and have declared FL my domicile such that should my estate need to be probated (it won't due to a trust but say I left something out), that is where it would be done. And I spend far more time in FL than anywhere else in the US due to a relative living there.

I find it highly offensive that anyone would accuse me of fraud. My intent is that I will return to Florida if/when I return to the US permanently. But no, I do not live there.

For most expats, if their estate needs to go through probate it will be in the State they last lived (or at least maintain closest ties). Why? Ask a lawyer but it'll likely come to something like the following which is the definition of Domicile: “the place where an individual has a fixed and permanent home for legal purposes; called also legal residence.”

In any case, I see nothing wrong with having a domicile in the US, and using that as your legal residence. A broker may not accept it of course, and may ask for proof of physical residence such as a utility bill but often that depends if you are in public records at that address. It's much easier for them to accept you if you are.
I thought the question was how you're maintaining domicile in the US. If you own a house, pay utilities and leave it empty while you live abroad, I think it's perfectly fine to use the address of the house.

What if you don't have anything like that like the OP?
Go St. Louis Cardinals!
typical.investor
Posts: 2933
Joined: Mon Jun 11, 2018 3:17 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by typical.investor »

Marseille07 wrote: Sun Mar 21, 2021 7:18 pm
typical.investor wrote: Sun Mar 21, 2021 6:59 pm
sean.mcgrath wrote: Sun Mar 21, 2021 12:41 pm
TedSwippet wrote: Mon Mar 01, 2021 5:46 pm
lootsuzette wrote: Mon Mar 01, 2021 4:08 pm 1. Many people say "just use a US address to open a (insert Vanguard or anyone else) account.” What's the legality of this?
I don't believe there is anything illegal about it. Ideally, you'll want to avoid any interaction with state taxes, but as a US taxable person (through your US citizenship) holding an account with a US broker or fund house should be fine.
Matej Vela wrote: Fri Mar 05, 2021 2:47 am
(2) Your own criminal and/or civil liability: this is basically fraud, one where you dig yourself into a deeper hole with every misrepresentation on the source of income etc. You need to take both US and Norwegian law into account. It's true that you are unlikely to end up with something like the head shot, but why take the risk? If the broker gets caught out by (1), they might go after you in civil suits.

You'll want to amend or delete your second post in light of forum policies against dishonest behavior and bypassing the law.
Hi Matej, if you are giving explicit legal advice it would be very helpful to state your qualifications or give a link. I am unaware that filling in a convenient address to my broker (I have used my office address in the past) is dishonest or illegal. Out of curiosity, I went to Vanguard right now to try signing up for an account. Under "do I need to live in the US?" the reply was "You must have a permanent legal residential address in the United States to open an account." It did not state that it needs to be my primary address or my legal domicile and it never asked for my legal domicile.

How certain are you of the legal advice you are giving?

Regards,
Sean
Personally, I think the view of it being "fraud" by using a US in non-sense and has no basis in law.

To understand why, one must look into the legal concept of domicile. It is important to know that you legally have multiple residences.

Legally, your domicile is the location you declare in legal documents, such as the address you use to vote, bank, register vehicles, and pay taxes. Ending a domicile association includes your efforts to close bank accounts, surrender your driver’s license, remove your name from voting rolls, and to pay taxes as a non-resident.

Your domicile carries legal consequences. It defines which country, state, and courts have jurisdiction to probate wills, administer estates, adjudicate lawsuits, and assess state income and death taxes. After a divorce, the legal domicile can affect your ability to claim and monitor payment of alimony and child support.
Domicile, in general, is the place which an individual intends to be his or her permanent home and to which such individual intends to return whenever absent. As indicated above, the location of a person’s domicile is dependent on a person’s intentions. Intent is a state of mind. A state of mind is difficult to prove. As a result, taxing authorities (and courts) look to a person's actions to determine their intent. Some of the factors that courts and taxing authorities look to include:

Amount of time you spend in one location versus another
Location of your spouse and children;
Location of your principal residence;
Where your driver’s license was issued;
Where your vehicles are registered;
Where you maintain your professional licenses;
Where you are registered to vote;
Location of the banks where you maintain accounts;
Location of your doctors, dentists, accountants, and attorneys;
Location of the church, temple or mosque, professional associations, or social and country clubs of which you are a member;
Location of your real property and investments;
Permanence of your work assignments in a location; and
Location of your social ties.
https://intltax.typepad.com/intltax_blo ... icile.html

What you have to watch out for are States that will consider the above to qualify you for taxation in their jurisdiction.

As for me, I maintain a DL, voting records and have declared FL my domicile such that should my estate need to be probated (it won't due to a trust but say I left something out), that is where it would be done. And I spend far more time in FL than anywhere else in the US due to a relative living there.

I find it highly offensive that anyone would accuse me of fraud. My intent is that I will return to Florida if/when I return to the US permanently. But no, I do not live there.

For most expats, if their estate needs to go through probate it will be in the State they last lived (or at least maintain closest ties). Why? Ask a lawyer but it'll likely come to something like the following which is the definition of Domicile: “the place where an individual has a fixed and permanent home for legal purposes; called also legal residence.”

In any case, I see nothing wrong with having a domicile in the US, and using that as your legal residence. A broker may not accept it of course, and may ask for proof of physical residence such as a utility bill but often that depends if you are in public records at that address. It's much easier for them to accept you if you are.
I thought the question was how you're maintaining domicile in the US. If you own a house, pay utilities and leave it empty while you live abroad, I think it's perfectly fine to use the address of the house.

What if you don't have anything like that like the OP?
As a US person without real estate, the OP would have to look at other factors such as:
Amount of time you spend in one location versus another
Location of your spouse and children;
Where your driver’s license was issued;
Where you are registered to vote;
Location of the banks where you maintain accounts;
Location of your real property and investments;
Location of your social ties
I personally believe it's a legal fact that if the OP were to die and needed their estate probated, that a determination would be made as to where the OP's domicile (legal residence) is. It's probably the place they last lived. If it isn't possible to use that address or another in the State, it might take more action.

Anyway, I think you only need to be in South Dakota for like 24 hours to declare residency (assuming a few things like no closer ties to any other state and an intent to return there in the future ... and why not retire in a low cost area). As to whether brokers accept the mail service address you'd have to set up seems to depend on the broker and how you label your address.

I'd probably try Passfolio- https://www.passfolioapp.com/ first using my foreign address though.
Topic Author
lootsuzette
Posts: 10
Joined: Mon Mar 01, 2021 3:45 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by lootsuzette »

SC is my home state, and I have a driver’s license from SC, my social ties (certainly the strongest, at least) are in SC, I’m registered to vote with SC, and when my parents pass (who live in SC, where I grew up), I would inherit whatever from them in SC. I’m usually there at least once a year for a few weeks as well.

Based upon what I’ve found, via correspondence with places like Thun Financial and one of those US-expat organizations, it appears there is nothing illegal about having a US-based account with a company who doesn’t accept foreign residents (Vanguard for example), in this expat-type situation. It seems it is the company who decides for themselves whether to service foreign residents or not, not a law. I'm not giving advice, I'm just sharing what I've found.
typical.investor
Posts: 2933
Joined: Mon Jun 11, 2018 3:17 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by typical.investor »

lootsuzette wrote: Sun Mar 21, 2021 11:57 pm SC is my home state, and I have a driver’s license from SC, my social ties (certainly the strongest, at least) are in SC, I’m registered to vote with SC, and when my parents pass (who live in SC, where I grew up), I would inherit whatever from them in SC. I’m usually there at least once a year for a few weeks as well.

Based upon what I’ve found, via correspondence with places like Thun Financial and one of those US-expat organizations, it appears there is nothing illegal about having a US-based account with a company who doesn’t accept foreign residents (Vanguard for example), in this expat-type situation. It seems it is the company who decides for themselves whether to service foreign residents or not, not a law. I'm not giving advice, I'm just sharing what I've found.
If you can safely use your parents address in SC, I would do that.
Marseille07
Posts: 5499
Joined: Fri Nov 06, 2020 1:41 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by Marseille07 »

Yeah this is what I was suggesting from the get go. Visit parents then go open an account at the local branch. There's nothing illegal about this, as your residential address is surely your parents' while you're visiting them.
Go St. Louis Cardinals!
plats
Posts: 433
Joined: Mon Dec 31, 2007 9:46 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by plats »

Marseille07 wrote: Mon Mar 22, 2021 12:09 am Yeah this is what I was suggesting from the get go. Visit parents then go open an account at the local branch. There's nothing illegal about this, as your residential address is surely your parents' while you're visiting them.
While I don't believe using your parents' address is fraud since there are no victims, it's not your residential address. Your residential address is where you live.
Topic Author
lootsuzette
Posts: 10
Joined: Mon Mar 01, 2021 3:45 pm

Re: Legality of US expat citizen using US address to open account (and more)

Post by lootsuzette »

Just wanted to update for anyone who is following this.

Passfolio does accept US citizens abroad, but European resident customers are still restricted from buying US ETFs (likely due to MiFID II or whatnot).
typical.investor
Posts: 2933
Joined: Mon Jun 11, 2018 3:17 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by typical.investor »

lootsuzette wrote: Wed Mar 24, 2021 2:49 pm Just wanted to update for anyone who is following this.

Passfolio does accept US citizens abroad, but European resident customers are still restricted from buying US ETFs (likely due to MiFID II or whatnot).
* sigh *

I wonder if that applies to all of the companies (posted earlier in the list) using DriveWealth's underlying system to make trades. I bet it does.

So I guess the possibilities are still:

1) use a US address such as a parent's (and deal with the employment question somehow) to open a US account
2) use options that settle in ETFs (loophole may close)
3) use options that settle in futures (PRIIPS KIDs offered so should stay possible)
4) set up a US LLC
5) invest in individual stocks perhaps using Interactive Broker's basket trader tool (or similar)
6) get professional trading accreditation
7) calculate PFIC taxes every year (and suffer the mismatch in tax credit unless you sell the holdings in the country of residence in the same year - ouch yearly taxes on gains ....)
wineandplaya
Posts: 195
Joined: Fri Sep 14, 2018 9:42 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by wineandplaya »

lootsuzette wrote: Mon Mar 01, 2021 4:08 pm Schwab also doesn’t accept Norway even if you are a US citizen.
I just asked a Schwab representative about maintaining a Schwab account in Norway and the answer I got was that while you cannot open an account as a Norwegian resident, you can keep and continue to use your existing account if you move to Norway.
trusquin
Posts: 5
Joined: Sun Sep 12, 2021 11:53 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by trusquin »

I am likely going to be in the same situation in few month (albeit in France, and currently in the US), and I have done some research about the LLC route and I am wondering if it changes anything :
The LLC may be registered in the US, for example in Nevada, but the brokerage account will ask, in addition to the information about the LLC, the names and legal residence of the authorized individuals. My assumption is that the limitation of what can be traded (e.g. ETF/funds) will be based on the individual account holder, and not the LLC.

If anyone has tried this route and can confirm ? I will try to dig further.
typical.investor
Posts: 2933
Joined: Mon Jun 11, 2018 3:17 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by typical.investor »

trusquin wrote: Mon Sep 13, 2021 11:12 am I am likely going to be in the same situation in few month (albeit in France, and currently in the US), and I have done some research about the LLC route and I am wondering if it changes anything :
The LLC may be registered in the US, for example in Nevada, but the brokerage account will ask, in addition to the information about the LLC, the names and legal residence of the authorized individuals. My assumption is that the limitation of what can be traded (e.g. ETF/funds) will be based on the individual account holder, and not the LLC.

If anyone has tried this route and can confirm ? I will try to dig further.
I see so issue with having an LLC. Depending on the State there are different requirements, but it doesn’t seem problematic in any way in the US side. Many site such a Nolo offer pretty good guides.

The real question is how would France tax your owning such a US company? That is probably what you need to resolve.
trusquin
Posts: 5
Joined: Sun Sep 12, 2021 11:53 am

Re: Legality of US expat citizen using US address to open account (and more)

Post by trusquin »

so - i checked with one broker (Schwab) and they seem to confirm that even if an LLC has non resident members - they would not place restriction on the account - even if the non resident member is allowed to trade. This seems encouraging.

i agree that the next step is to check with a French accountant to sort out the taxation. i already know that Trusts are a no go - will check on parterships.
Post Reply