US citizen living abroad in Europe and attempting to invest - help?

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capnnismo
Posts: 1
Joined: Sun Jul 29, 2018 6:45 am

US citizen living abroad in Europe and attempting to invest - help?

Post by capnnismo » Sun Jul 29, 2018 6:57 am

Hi folks,

I've been going through the forum for a bit now and have been reading up for several weeks on just how screwed I am as a US citizen living abroad (on a permanent basis) in Europe.

I started this journey by trying to set up a brokerage account on Flatex. Upon selecting my citizenship, I got essentially booted off the website and so began by introduction into the world of PFIC, FATCA, etc. Welcome to the show, right?

So I found a broker that is willing to deal with US citizens living abroad, namely Interactive Brokers. It took a couple of weeks to get my account setup but I finally did and funded it, too. I thought all was well and good, I picked out my ETFs that I wanted to initially buy (all US-domiciled to avoid the nasty PFIC situation) and got ready to make my first trades on IB. Upon initiating the buy order, I got an error that the order couldn't be completed but no real information why. I opened the chat bot and simply asked why I couldn't buy a particular Vanguard ETF and learned about KID, PRIIPS, MIFID II, etc... [OT comment removed by admin LadyGeek]

At this point I am at a total loss of what to do, aside from trying to put together some very exhaustive spreadsheets listing all of the stocks/bonds in the ETFs that I selected and buying them all individually. Are there any US-domiciled ETFs that are also EU-compliant? Is there any hope for a US citizen such as myself living abroad to do this stuff simply like a mere mortal?

If it makes any difference in the advice anyone here can give me, my wife is an Austrian citizen and has a brokerage account of her own. I don't know what the legal possibilities are of simply handing her a pile of cash and just handling it all that way but maybe it helps.

I also have an appointment with a tax adviser this week with someone who is familiar with both local Austrian and US tax law, but maybe someone here is in the same situation and can help me out. After being at this for weeks, I'm pretty deflated that every time I make a bit of progress, I find a new barrier to overcome.

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CyclingDuo
Posts: 2628
Joined: Fri Jan 06, 2017 9:07 am

Re: US citizen living abroad in Europe and attempting to invest - help?

Post by CyclingDuo » Sun Jul 29, 2018 5:35 pm

capnnismo wrote:
Sun Jul 29, 2018 6:57 am
I've been going through the forum for a bit now and have been reading up for several weeks on just how screwed I am as a US citizen living abroad (on a permanent basis) in Europe.

I started this journey by trying to set up a brokerage account on Flatex. Upon selecting my citizenship, I got essentially booted off the website and so began by introduction into the world of PFIC, FATCA, etc. Welcome to the show, right?

So I found a broker that is willing to deal with US citizens living abroad, namely Interactive Brokers. It took a couple of weeks to get my account setup but I finally did and funded it, too. I thought all was well and good, I picked out my ETFs that I wanted to initially buy (all US-domiciled to avoid the nasty PFIC situation) and got ready to make my first trades on IB. Upon initiating the buy order, I got an error that the order couldn't be completed but no real information why. I opened the chat bot and simply asked why I couldn't buy a particular Vanguard ETF and learned about KID, PRIIPS, MIFID II, etc... [OT comment removed by admin LadyGeek]

At this point I am at a total loss of what to do, aside from trying to put together some very exhaustive spreadsheets listing all of the stocks/bonds in the ETFs that I selected and buying them all individually. Are there any US-domiciled ETFs that are also EU-compliant? Is there any hope for a US citizen such as myself living abroad to do this stuff simply like a mere mortal?

If it makes any difference in the advice anyone here can give me, my wife is an Austrian citizen and has a brokerage account of her own. I don't know what the legal possibilities are of simply handing her a pile of cash and just handling it all that way but maybe it helps.

I also have an appointment with a tax adviser this week with someone who is familiar with both local Austrian and US tax law, but maybe someone here is in the same situation and can help me out. After being at this for weeks, I'm pretty deflated that every time I make a bit of progress, I find a new barrier to overcome.
We feel your pain for you!

Things have really changed a lot (thanks to the 2010 laws) since we moved back from Austria in 2003. Depending on where you live in Austria, there certainly are a large number of expats living in larger cities that you should be able to touch base with and get answers to some of your questions that are more up to date. We still have many friends who live there in a variety of situations (both US citizens, one US/one Austrian, some working, some retired, etc...). We tended to only talk financial matters with the former scenario as we were all going through similar situations. I was recommended to an excellent Austrian tax accountant (who is still in business in Vienna) from my Austrian friends who took care of filing our taxes in Austria for many years while we lived there, and we had our own "guy" back in the US for filing in the states.

We were not in your situation of one of us being an Austrian citizen, but had many friends who were in that scenario. In our case, it was all before the changes in 2010 and the subsequent doors being slammed on having brokerage accounts in certain countries (of which Austria seems to now be one of those).

My understanding, even though things are way more difficult now than when we lived there, is that you yourself as a US citizen can purchase individual stocks and bonds in your situation without any issues outside of it being impossible to have as diverse a portfolio as indexing allows.

Can you not still have an address of record in the US which means your account won't have any restrictions? I don't know if that is possible for you or if you are willing to do it, but worth exploring (see link below and others like it). Certainly having a competent tax accountant/lawyer/CPA on both sides of the pond is well worth it. We hired both and filed in both countries as it was all too overwhelming for us to take on alone (I had to deal with a pension I was paying into in Austria as well).

Personally, if I was in your situation, I would keep my investment accounts separate from your Austrian wife's brokerage account.

https://www.taxesforexpats.com/articles ... e-one.html

https://thunfinancial.com/top-ten-inves ... ns-abroad/
"Everywhere is within walking distance if you have the time." ~ Steven Wright

jminv
Posts: 981
Joined: Tue Jan 02, 2018 10:58 pm

Re: US citizen living abroad in Europe and attempting to invest - help?

Post by jminv » Sun Jul 29, 2018 6:13 pm

Don't put the assets in your wife's name.

For the account, you could use an address in the USA that you are associated with, assuming you have a close family member there and some connection to the address. If you don't have that, you could create residency in South Dakota in a day, get a drivers license, and establish a mailing address at one of the services that RVers use. This could potentially be flagged for review by the broker since they have lists of mailing centers but if you had the address, drivers license, and residency and they knew you travelled then that's something they deal with their RV customers frequently enough. You would be considered a resident which you may or may not want (South Dakota also has no capital gains tax).

Schwab is a good one to use if you go this route. If you are setting up the account from Austria, use a vpn ip in the usa. I also live overseas and haven't had a problem. I have my overseas number in my profile and they contact me on it and use it for two factor identification as well. Based on talking to Schwab reps at different times, they seem to have a lot of expat customers who do this which is one reason why their debit card has no foreign ATM fees and is virtually never blocked regardless of the random country you're in, they'll call you on your international number and send two factor authentication requests to it, their international wire fees are some of the cheapest around, etc.

You could create a trust in Europe that then invests in index funds of your choice and currency. You would need to look at the tax implications and fees and decide whether this is better than investing as an individual. You could also create a trust in the usa and do the same thing with us based broker but then there are similar downsides.

typical.investor
Posts: 1220
Joined: Mon Jun 11, 2018 3:17 am

Re: US citizen living abroad in Europe and attempting to invest - help?

Post by typical.investor » Sun Jul 29, 2018 7:34 pm

capnnismo wrote:
Sun Jul 29, 2018 6:57 am
I started this journey by trying to set up a brokerage account on Flatex. Upon selecting my citizenship, I got essentially booted off the website and so began by introduction into the world of PFIC, FATCA, etc. Welcome to the show, right?
Welcome to the show. "Flatex" suggests you are in Germany? Is that correct? If so you may be in luck. Keep reading.

capnnismo wrote:
Sun Jul 29, 2018 6:57 am
So I found a broker that is willing to deal with US citizens living abroad, namely Interactive Brokers.
Strictly speaking, this is not the broker's choice. Your country of residence sets the rules for it's residents, and brokers must obey. Interactive Brokers is set up to operate in most countries, and thus can accomodate most people. The new EU regulations is throwing a wrench into actually buying funds though!

In any case, it appears Schwab International can take German Residents. http://international.schwab.com/public/ ... intro.html

Select Germany and it let's you go through. It will give a notification about regulations and needing to call Schwab if they can't support you.

(oops update) Are you in Austria? If so, Schwab International takes Austrian residents via it's UK site. "Please visit the Schwab UK website if you live in the UK, Ireland, France, Italy, Netherlands, Austria, or Sweden."

Schwab International doesn't have the minimum monthly activity fee that IB has, and has good ETFs. Vanguard ETFs will cost you $4.95, so you might want to use Schwab's. The biggest difference is that international holdings are split into three funds (SCHF, SCHC, SCHE). There are lots of post about the best allocation to replicate the market.

Anyway, if you are in one of Schwab's currently supported countries, I'd open an account today or call them ASAP because rules are always changing. Please let us know if it works or not. Thanks.

* Note: Do look at the required documentation - Passport, utility bill and bank statement (with the utility bill and bank statement having the same street address that you will open the account with).

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BeBH65
Posts: 1555
Joined: Sat Jul 04, 2015 7:28 am

Re: US citizen living abroad in Europe and attempting to invest - help?

Post by BeBH65 » Mon Jul 30, 2018 2:25 am

Welcome to the forum,


The combination of the US laws together with the recent changes in the EU makes it more difficult for US-citizens to invest in Europe.

Have a look at our wiki pages non us domiciles: tax issues

And also analyse these recent threads:
- [EU] How to bypasses MIFID II, PRIPS and buy US ETFs
- American in the EU -- problems with IB acct
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles

MKGhandi
Posts: 8
Joined: Wed Feb 28, 2018 7:45 am

Re: US citizen living abroad in Europe and attempting to invest - help?

Post by MKGhandi » Thu Aug 16, 2018 11:00 am

jminv wrote:
Sun Jul 29, 2018 6:13 pm


Schwab is a good one to use if you go this route. If you are setting up the account from Austria, use a vpn ip in the usa. I also live overseas and haven't had a problem. I have my overseas number in my profile and they contact me on it and use it for two factor identification as well. Based on talking to Schwab reps at different times, they seem to have a lot of expat customers who do this which is one reason why their debit card has no foreign ATM fees and is virtually never blocked regardless of the random country you're in, they'll call you on your international number and send two factor authentication requests to it, their international wire fees are some of the cheapest around, etc.




Will a vpn interfere with schwab? I am currently using a Hulu VPN to unblock geo-restricted content online. My main concern is have you tried it with a VPN on?
Last edited by MKGhandi on Fri Aug 31, 2018 5:16 am, edited 1 time in total.

jminv
Posts: 981
Joined: Tue Jan 02, 2018 10:58 pm

Re: US citizen living abroad in Europe and attempting to invest - help?

Post by jminv » Thu Aug 16, 2018 2:44 pm

MKGhandi wrote:
Thu Aug 16, 2018 11:00 am
jminv wrote:
Sun Jul 29, 2018 6:13 pm


Schwab is a good one to use if you go this route. If you are setting up the account from Austria, use a vpn ip in the usa. I also live overseas and haven't had a problem. I have my overseas number in my profile and they contact me on it and use it for two factor identification as well. Based on talking to Schwab reps at different times, they seem to have a lot of expat customers who do this which is one reason why their debit card has no foreign ATM fees and is virtually never blocked regardless of the random country you're in, they'll call you on your international number and send two factor authentication requests to it, their international wire fees are some of the cheapest around, etc.

Will a vpn interfere with schwab? I am currently using a VPN to unblock geo-restricted content online. My main concern is have you tried it with a VPN on?
Yes, I have used it with a VPN service.

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