Author Topic: ETFs for American (USA) expats living in the EU  (Read 18753 times)

JohnnyZ

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Re: ETFs for American (USA) expats living in the EU
« Reply #100 on: July 08, 2021, 05:16:47 AM »
Hi all,

as an EU/US citizen living in Norway with no American address I was wondering if you have some advice for me?

1. Generally I would like to invest monthly into index funds but from reading through this thread there doesn't seem to be an option to do this, correct?

2. Is it fine to invest into individual stocks from a European account on European exchanges without complicating American taxes? Or is it better to open a Schwab international account even though that will complicate my Norwegian taxes (Norwegian taxes are manageable though)?

3. Is there somewhere where I can find a lets say 15 stock portfolio that I can copy that would track major indexes like the S&P500 with an accuracy over 90%? Other portfolio ideas that are well diversified would be fine too. I am just thinking I want to keep it simple with not too many stocks if I have to go this route.

I must admit American taxes are too complicated for me so your advice is really appreciated a lot!

 If you don't have a US address but are also EU citizen, the easiest way for you to invest would probably be through EU-based funds. You should be able to invest monthly into ETFs (not sure about mutual funds, it doesn't seem possible/easy but from what I understand they're basically the same except with ETFs you can't buy fractions of shares and you get them for their price at the moment you buy, not at closure). I don't know if you can do that automatically.
 You don't need to create your own indexes, you can invest in them on European exchanges (Paris, Amsterdam, Frankfurt, etc.) as long as an EU-based version exists.
 For example, with the SP500: https://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P0001CLZ9
You can use https://justetf.com/de-en/find-etf.html to search for ETFs tracking the indexes you want.
Regarding taxes, I didn't need to bother with US taxes even while investing in US companies because they were listed in EU-exchanges, it may be different for you as a US person and also depending on treaties between Norway (or the EU country you're a citizen of) and the US.

Kwill

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Re: ETFs for American (USA) expats living in the EU
« Reply #101 on: July 08, 2021, 05:32:33 AM »
If you're a US citizen, then you have to worry about US tax law regardless of where you live, so I wouldn't run off and invest in EU funds without doing some homework on tax implications. Vanguard US accepts foreign addresses, and other places have been mentioned in earlier posts. You'll want to check Norway's rules on US funds.

If you are eligible to join Navy Federal Credit Union, that might be a good option for US banking overseas. They are good with international addresses and allow you to deposit checks via a mobile app. You need to either be a veteran or have a family member who is a member, but they interpret family members very broadly. https://www.navyfederal.org/resources/articles/personal-finance/are-you-eligible-to-join-navy-federal.html

daverobev

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Re: ETFs for American (USA) expats living in the EU
« Reply #102 on: July 08, 2021, 01:29:55 PM »
Hi all,

as an EU/US citizen living in Norway with no American address I was wondering if you have some advice for me?

1. Generally I would like to invest monthly into index funds but from reading through this thread there doesn't seem to be an option to do this, correct?

2. Is it fine to invest into individual stocks from a European account on European exchanges without complicating American taxes? Or is it better to open a Schwab international account even though that will complicate my Norwegian taxes (Norwegian taxes are manageable though)?

3. Is there somewhere where I can find a lets say 15 stock portfolio that I can copy that would track major indexes like the S&P500 with an accuracy over 90%? Other portfolio ideas that are well diversified would be fine too. I am just thinking I want to keep it simple with not too many stocks if I have to go this route.

I must admit American taxes are too complicated for me so your advice is really appreciated a lot!

 If you don't have a US address but are also EU citizen, the easiest way for you to invest would probably be through EU-based funds. You should be able to invest monthly into ETFs (not sure about mutual funds, it doesn't seem possible/easy but from what I understand they're basically the same except with ETFs you can't buy fractions of shares and you get them for their price at the moment you buy, not at closure). I don't know if you can do that automatically.
 You don't need to create your own indexes, you can invest in them on European exchanges (Paris, Amsterdam, Frankfurt, etc.) as long as an EU-based version exists.
 For example, with the SP500: https://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P0001CLZ9
You can use https://justetf.com/de-en/find-etf.html to search for ETFs tracking the indexes you want.
Regarding taxes, I didn't need to bother with US taxes even while investing in US companies because they were listed in EU-exchanges, it may be different for you as a US person and also depending on treaties between Norway (or the EU country you're a citizen of) and the US.

No, US investors generally don't want to buy non-US domiciled funds, they run into complex tax reporting stuff - PFIC I think it is.

Honestly it pisses me off - the EU doesn't 'allow' me to buy non-EU ETFs because they don't have the 'right' documentation. Like... fuck off. Seriously. You're saying I can't buy a Canadian domiciled ETF because the paperwork doesn't quite conform to EU standards? Oh but it basically has the same info... and I'm a grown adult... Oh and a Canadian citizen!

I might be a little cynical but I suspect this is more to prevent competition to EU bank/financial companies than anything. It's very frustrating.

PDXTabs

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Re: ETFs for American (USA) expats living in the EU
« Reply #103 on: July 08, 2021, 04:12:48 PM »
Hi all,

as an EU/US citizen living in Norway with no American address I was wondering if you have some advice for me?

1. Generally I would like to invest monthly into index funds but from reading through this thread there doesn't seem to be an option to do this, correct?

2. Is it fine to invest into individual stocks from a European account on European exchanges without complicating American taxes? Or is it better to open a Schwab international account even though that will complicate my Norwegian taxes (Norwegian taxes are manageable though)?

3. Is there somewhere where I can find a lets say 15 stock portfolio that I can copy that would track major indexes like the S&P500 with an accuracy over 90%? Other portfolio ideas that are well diversified would be fine too. I am just thinking I want to keep it simple with not too many stocks if I have to go this route.

I must admit American taxes are too complicated for me so your advice is really appreciated a lot!

 If you don't have a US address but are also EU citizen, the easiest way for you to invest would probably be through EU-based funds. You should be able to invest monthly into ETFs (not sure about mutual funds, it doesn't seem possible/easy but from what I understand they're basically the same except with ETFs you can't buy fractions of shares and you get them for their price at the moment you buy, not at closure). I don't know if you can do that automatically.
 You don't need to create your own indexes, you can invest in them on European exchanges (Paris, Amsterdam, Frankfurt, etc.) as long as an EU-based version exists.
 For example, with the SP500: https://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P0001CLZ9
You can use https://justetf.com/de-en/find-etf.html to search for ETFs tracking the indexes you want.
Regarding taxes, I didn't need to bother with US taxes even while investing in US companies because they were listed in EU-exchanges, it may be different for you as a US person and also depending on treaties between Norway (or the EU country you're a citizen of) and the US.

No, US investors generally don't want to buy non-US domiciled funds, they run into complex tax reporting stuff - PFIC I think it is.

Honestly it pisses me off - the EU doesn't 'allow' me to buy non-EU ETFs because they don't have the 'right' documentation. Like... fuck off. Seriously. You're saying I can't buy a Canadian domiciled ETF because the paperwork doesn't quite conform to EU standards? Oh but it basically has the same info... and I'm a grown adult... Oh and a Canadian citizen!

AFAIK it is actually that foreign ETFs and mutual funds are treated as foreign trusts under the US tax code which results in them being taxed at your highest marginal tax rate. But I'm not a tax lawyer. From the above:

The tax treatment of PFICs is extremely punitive compared to the tax treatment of similar investments that are incorporated in the U.S.  For example, an American holder of a U.S. incorporated mutual fund invested in European stocks pays the low long-term capital gains rate of 0-20% if the fund is held for more than one year.  The same American investor who buys a nearly identical fund listed in the UK or in Switzerland (or any place outside the U.S.) will find their investment subject to the PFIC taxation regime, which counts all income (including capital gains) as ordinary income and automatically taxes it at the top individual tax rate (37.0%).

So as far as I'm concerned both the US and EU should really fuck off.
« Last Edit: July 08, 2021, 11:31:32 PM by PDXTabs »

MustacheAndaHalf

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Re: ETFs for American (USA) expats living in the EU
« Reply #104 on: July 08, 2021, 07:42:29 PM »
2. Is it fine to invest into individual stocks from a European account on European exchanges without complicating American taxes? Or is it better to open a Schwab international account even though that will complicate my Norwegian taxes (Norwegian taxes are manageable though)?
You might want to post that question in the "taxes" area, but I think the answer is that it requires very involved and complex tax accounting.  I'm a layperson, but I recall reading that if a foreign company doesn't pay dividends, you might still owe tax on those dividends.

In case you don't already know, your foreign bank accounts fall under "FATCA" reporting.  When you have $10,000 outside the U.S., you need to start reporting it.  There's additional reporting to the treasury department at $50,000.  The penalties are nasty - $100,000 or half your bank account assets.

The laws aren't designed for Americans living overseas - they're designed to catch criminals.  So a lot of the overseas rules are onerous with nasty penalties.

MrThatsDifferent

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NN6

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Re: ETFs for American (USA) expats living in the EU
« Reply #106 on: July 09, 2021, 03:29:05 AM »
Thanks everyone! Not entirely sure how I will proceed yet but for now it seems like I won't touch ETFs or funds through a European brokerage...

daverobev

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Re: ETFs for American (USA) expats living in the EU
« Reply #107 on: July 09, 2021, 06:56:15 AM »
Have you all seen this? https://jlcollinsnh.com/2020/04/22/investing-with-vanguard-for-europeans-2020-update/

After a skim read I don't think that addresses the OP's problem. Vanguard EU funds are EU compliant but not US compliant (ie, are PFICs).

daverobev

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Re: ETFs for American (USA) expats living in the EU
« Reply #108 on: July 09, 2021, 06:59:16 AM »
So as far as I'm concerned both the US and EU should really fuck off.

Oh absolutely. Taxing non-residents is absurd.

I hope all this crap will be resolved, now that there are a lot more people living in multiple countries during their lives.

I mean... the EU has a 'pan European pension plan' thing coming out. Part of the rules? Max 1% management fee. (Guess what they will mostly charge, eh).

Like... what. It should literally be 'oh here's a choice of 5 low cost ETFs, MER between 0 and 0.2%, and a 0.1% management fee on top', done.

But noooooo.

 

Wow, a phone plan for fifteen bucks!