Author Topic: "It's hard to do investing in Europe"  (Read 10438 times)

obstinate

  • Handlebar Stache
  • *****
  • Posts: 1147
"It's hard to do investing in Europe"
« on: November 26, 2015, 03:27:00 PM »
I've seen this complaint made a few times around the forums, most recently the Robert Kiyosaki thread discussing his latest bad advice.

Basically, the story goes that Vanguard doesn't exist in Europe, so investing doesn't work there. I don't really understand where that comes from. Vanguard itself is available in many European countries (https://global.vanguard.com/portal/site/home). And there are plenty of European exchanges where you can buy securities, like the Vanguard ETFs, using euros.

Where does this idea that investing doesn't work in Europe come from?

Mr FrugalNL

  • Stubble
  • **
  • Posts: 174
  • Location: Netherlands
Re: "It's hard to do investing in Europe"
« Reply #1 on: November 26, 2015, 04:04:55 PM »
There are a few things that make investing harder for Europeans than Americans. These can of course be overcome, but they're still barriers:

- Except for the British and Irish, most European investors cannot access as much pertinent investing information (Bogleheads, MMM, ERE, Jlcollins, etc.) in their native language.
- With the possible exception of the British (I'm unsure about them) you cannot transact business with Vanguard directly. You have to go through middlemen to access Vanguard index funds and pay a mark-up for the privilege. That can be either through the stock market by buying ETFs or through a financial institution, but you pay the price either way.
- There are fewer, if any, discount brokerage firms.
- Transaction costs and TERs of easily accessible investment solutions tend to be higher than those in the US.
- Investors in Vanguard's Irish ETFs do not own the funds, unlike investors in Vanguard's US-listed funds.
- I can't speak for any other European countries, but the Dutch tax system has fewer loopholes and tax-deferred/tax-exempt retirement account options than the US system.
- The euro area makes up about half of the USA in terms of market cap, meaning European investors face more currency risks than do US investors.

I think that's about it, though there may be more.

For reference, buying shares of Vanguard FTSE All-World UCITS ETF via my current broker costs me anywhere from €10 to €150 per transaction, being a €6.50 fixed sum plus 0.10% of the transaction value. Having done this, I get an ETF with an expense ratio of 0.25%. At year end, the government takes 1.2% of the value of my savings and investments in excess of €22,000. I suspect that doesn't stack up very favourably against the average US investor, although I haven't checked the US numbers. I do get reasonably affordable healthcare and other public facilities though, so at least there's that.

Don't take this as a 'Wha wha wha' post; it isn't intended as such. I'm considering changing brokers and investing in US-listed Vanguard ETFs, which would help a bit with the costs I incur.

Sarnia Saver

  • 5 O'Clock Shadow
  • *
  • Posts: 67
Re: "It's hard to do investing in Europe"
« Reply #2 on: November 26, 2015, 04:08:52 PM »
At year end, the government takes 1.2% of the value of my savings and investments in excess of €22,000.

Am I reading this right?  The government takes part of your savings?

Landlord2015

  • Bristles
  • ***
  • Posts: 264
Re: "It's hard to do investing in Europe"
« Reply #3 on: November 26, 2015, 04:12:39 PM »
I've seen this complaint made a few times around the forums, most recently the Robert Kiyosaki thread discussing his latest bad advice.

Basically, the story goes that Vanguard doesn't exist in Europe, so investing doesn't work there. I don't really understand where that comes from. Vanguard itself is available in many European countries (https://global.vanguard.com/portal/site/home). And there are plenty of European exchanges where you can buy securities, like the Vanguard ETFs, using euros.

Where does this idea that investing doesn't work in Europe come from?
I have never said investing is impossible in Europe for all stocks. I did literally believe wrongly that it is impossible to invest in Vanguard from Europe. That is my mistake. I stand corrected on that.

I checked the website. Yes apparently Finland my country is listed there.

Look I am not an expert on stocks or ETF. However IF I have understood correcly you are an USA citizen and invest in Vanguard I have understood you are entitled to certains special benefits among them less tax.

Vanguard is tied to USA recommened pension system well one of them there is 401k etc.

I don't speak as a GURU for stockinvestors in my country or elsewhere in Europe. Europe is also very divided in different laws and tax benefits.
Finland Europe has HIGH tax for stock investing and I seriously doubt you get any special tax benefits in Finland if you invest in USA Vanguard.

You are absolutely correct it is possible to invest in Vanguard from Europe. However I still believe it is better you invest with dollars from USA as a USA citizen.

My country uses EURO as currency if it makes any difference. Look I am a NEWBIE to stocks I had understood before that Vanguard is only America continent thing.

I can tell that if it comes to convert EURO to dollars back and forth there is always a cost for that.

European stock experts can guide me if they want and I will consider their advice and I am NOT an expert in stock investing.
That said I doubt it is as benefitial to invest from Europe and pay low tax and get tax benefits for Vanguard as in USA.

- Except for the British and Irish, most European investors cannot access as much pertinent investing information (Bogleheads, MMM, ERE, Jlcollins, etc.) in their native language.
 With the possible exception of the British (I'm unsure about them) you cannot transact business with Vanguard directly. You have to go through middlemen to access Vanguard index funds and pay a mark-up for the privilege. That can be either through the stock market by buying ETFs or through a financial institution, but you pay the price either way.
English language is not a problem for me. Paying broker fees and other extra fees is annoying problem. Even more annoying is high tax for stocks and then no whatsoever tax reducement from investing in Vanguard from Finland.

Vanguard investing does not tempt me from Finland after your analysis.
« Last Edit: November 26, 2015, 04:38:06 PM by Landlord2015 »

scottish

  • Magnum Stache
  • ******
  • Posts: 2716
  • Location: Ottawa
Re: "It's hard to do investing in Europe"
« Reply #4 on: November 26, 2015, 05:07:53 PM »
Quote
Am I reading this right?  The government takes part of your savings?

Wealth tax.   We don't have these in Canada or the US.  Yet.  That would be annoying.

Landlord2015

  • Bristles
  • ***
  • Posts: 264
Re: "It's hard to do investing in Europe"
« Reply #5 on: November 26, 2015, 05:16:30 PM »
Quote
Am I reading this right?  The government takes part of your savings?

Wealth tax.   We don't have these in Canada or the US.  Yet.  That would be annoying.
By Finland law there is tax if you buy apartments and then sell it for higher price then buying the apartment. However IF you live at least 2 years in the apartment yourself(you are still allowed to take a subrenter i.e somebody sharing your apartment while you live there) then the tax for sale profit for apartments is 0 euro according to my country's Finland law.

I am tired and will not post Finland tax for stocks now. but rest assured it is never 0 and it is annoying. You can also be sure that I make great effort to legally pay as little tax as possible.
« Last Edit: November 26, 2015, 05:21:51 PM by Landlord2015 »

JZinCO

  • Pencil Stache
  • ****
  • Posts: 705
Re: "It's hard to do investing in Europe"
« Reply #6 on: November 26, 2015, 09:27:31 PM »
Vanguard is tied to USA recommened pension system well one of them there is 401k etc.
Be careful with that word pension.

I do understand the difficulties, esp regarding currency risk and the realities of the global distribution of cap weight. It may be more advantageous for US investors and the barriers to entry for investing may be lower here.
However, don't forget your grass is green too. Americans need efficient ways to purchase and sell securities because we don't have access to adequate pensions if at all. For many folks, the 401k contains all the eggs in our basket. Europeans in many countries may in a situation where direct, cost- and tax-efficient investing is not make-or-break-it regarding retirement.

Maybe I am wrong. I've never lived in the EU and have no experience with investing there.

As an aside, this white paper has a decent comparison of investment taxation in countries belonging to the OECD, BRIC, and/or EU.
http://www.svensktnaringsliv.se/migration_catalog/Rapporter_och_opinionsmaterial/Rapporters/corporate-dividend-and-capital-gains-taxation-a-comparison-of-swe_533034.html/BINARY/Corporate%20Dividend%20and%20Capital%20Gains%20Taxation%20-%20A%20comparison%20of%20Sweden%20to%20other%20member%20nations%20of%20the%20OECD%20and%20EU,%20and%20BRIC%20countries.pdf
« Last Edit: November 27, 2015, 07:20:01 PM by JZinCO »

cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 2319
  • Location: England
Re: "It's hard to do investing in Europe"
« Reply #7 on: November 27, 2015, 02:03:09 AM »
By Finland law there is tax if you buy apartments and then sell it for higher price then buying the apartment. However IF you live at least 2 years in the apartment yourself(you are still allowed to take a subrenter i.e somebody sharing your apartment while you live there) then the tax for sale profit for apartments is 0 euro according to my country's Finland law.

That sounds pretty similar to the UK. If you sell your personal private residence (PPR) there is no capital gains tax. You need to have lived there for a couple of years and you're allowed to let rooms out while doing that. If you're selling say a rental property at a profit, then you pay tax on the profit you made (and you can count costs of repairs/improvements, index for inflation etc. when calculating that.)  I don't know the US system in any detail, but I thought that it's pretty similar there, except that it's only the first $250K/500K(for a couple) of profit that is tax free.

FWIW, I know a couple of people who've tried quite hard to renounce US citizenship in order to avoid US taxes after moving to low tax locations in Europe (Switzerland for example). They had to pay something like $50k as an exit fee to the IRS. So I don't think you can generalise from specific countries to "Europe".

Mr FrugalNL

  • Stubble
  • **
  • Posts: 174
  • Location: Netherlands
Re: "It's hard to do investing in Europe"
« Reply #8 on: November 27, 2015, 02:31:02 AM »
Quote
Am I reading this right?  The government takes part of your savings?

Wealth tax.   We don't have these in Canada or the US.  Yet.  That would be annoying.

Correct. They take a fixed percentage every year instead of taxing your actual returns; it's easier to administer for the tax authorities, or so they say.

Vanguard is tied to USA recommened pension system well one of them there is 401k etc.
Be careful with that word pension.

I do understand the difficulties, esp regarding currency risk and the realities of the global distribution of cap weight. It may be more advantageous for US investors and the barriers to entry for investing may be lower here.
However, don't forget your grass is green too. Americans need efficient ways to purchase and sell securities because we don't have access to adequate pensions if at all. For many folks, the 401k contains all the eggs in our basket. Europeans in many countries may in a situation where direct, cost- and tax-efficient investing is not make-or-break-it regarding retirement.

Maybe I am wrong. I've never lied in the EU and have no experience with investing there.

True. It's not all bad here. Far from it. In the Netherlands, many employees do have decent pension schemes, whereby a fixed contribution is deducted from their monthly salary and invested in investment funds. Most of the time those are fairly good for meeting your old-age retirement needs. If I understand the US system correctly, the Dutch system is more beneficial for the majority of workers because you opt in by default, can't really influence the investment process for the worse, can't lower your contributions at will and can't access the money before retirement age (67-70 here). Basically, people are taken by the hand and protected from their own stupidity. That's probably better in the vast majority of cases. You won't see a lot of 60-somethings here without any pension money. The system's not very conducive to early retirement though, but that won't keep me.

Bertram

  • Bristles
  • ***
  • Posts: 258
  • I'm not a chef
Re: "It's hard to do investing in Europe"
« Reply #9 on: November 27, 2015, 03:14:37 AM »
I think it's just the reflexive complaining. Everybody always picks individual things A, B, C that are better in county 2 than in country 1, but then neglects X, Y and Z, which is better in country 1 than in country 2. Think of those complainers just as you think of all the complainers in the US: They also will tell you a dozen reasons why FI is not possible, why it won't really work, why they don't/can't do it, why MMM is actually still sort of kind of working and not "really retired" and so on. And when the complainers are in a different country, they simply get to add 1 or 2 arguments on top of that.

I hear a lot of complainers here in germany, too. Yet there are people successfully saving, and successfully in retirement. Is it different in some aspects than in the US? YES! Can you pick out certain aspects that are worse? YES! Does it invalidate the overall process or strategy? No. Is it worse overall? Hard to say, and probably depends on how affected you personally are by a lot of the differences and what your political/social leanings are.

As for investments: In Germany there is a very big online trader where the account is free and per order you pay 4,90 EUR + 0,25% of the order volume. So if you buy 5.000€ of an ETF, you pay 18€, for 10.000€ you pay 30€ (overall expense per order is capped at 60€). You have ETFs on the MSCI WORLD index that have a volume of 656.126.698 USD. Another one from Luxor on the same Index has a volume of 1.149.100.000 EUR, iShares has one with a volume of 4.836.420.000 USD. There are ETFs that are replicating or swap-based - though swap based ones are often preferred because they are taxed more advantageously (for replicating funds you have to pay tax on automatically re-invested dividends every year; but when it's swap-based those gains are only taxed once you sell/realize the gain). You have ETFs that do and don't specifically hedge the exchange rate risk (with a higher TER of course), and so on and so on.

So: You have all the tools at reasonable cost available for stock market based FIRE. But people here on average are very wary of stocks. And I do blame the analog to social security for it. It used to be that people could live decently on it (given that you had a stale job and payed in for 35 or 40 years), but with demographic changes reforms required people to save privately for retirement (retirements are decreasing, will increasingly be taxed, and you have to pay for health insurance from that income) - the problem is that this came at a time where average wages were stagnant (decreasing if you count in inflation). At the same time decent company pensions plans were (for new employees) often hollowed out in such a way that you do not really benefit from them. And transportation costs really soared - in the 90s driving was cheap enough that everybody - even in cities got used to 2 cars per family (even when you had decent public transportation), but the cost for driving went up much, much faster than inflation: Gas prices especially (with extra "eco"-taxes), a lot more regulation increasing car prices, etc. etc., and still many people buy larger cars than 20 years ago.

Even most average earners have at best the goal to to buy a house and pay it off over 30 years when they will go into retirement. Not a lot of flexibility there for things like FIRE, especially since most will get the best house that they can barely (or not) afford.
« Last Edit: November 27, 2015, 03:16:54 AM by Bertram »

Bertram

  • Bristles
  • ***
  • Posts: 258
  • I'm not a chef
Re: "It's hard to do investing in Europe"
« Reply #10 on: November 27, 2015, 03:35:36 AM »
Quote
Am I reading this right?  The government takes part of your savings?

Wealth tax.   We don't have these in Canada or the US.  Yet.  That would be annoying.

Correct. They take a fixed percentage every year instead of taxing your actual returns; it's easier to administer for the tax authorities, or so they say.

According to this:
https://www.nordisketax.net/main.asp?url=files/nor/eng/i07.asp&c=nor&l=eng

Wealth tax is 0,85% on savings larger than 1,2M NOK (-140.000USD). So if you are "halfway" to FIRE at 600.000USD and have a nest egg of 300.000USD you'd pay 0,85% of 160.000 => 1400 USD. I see how that can add a few years until you can FIRE (depending on your saving rate), but that cost may easily be offset by for example cheaper health insurance.

And I don't think you'll have to worry about it when you have FIREd, because I am pretty sure it will eventually either go away or the impact significantly reduced.

cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 2319
  • Location: England
Re: "It's hard to do investing in Europe"
« Reply #11 on: November 27, 2015, 04:25:48 AM »
I think it's just the reflexive complaining. Everybody always picks individual things A, B, C that are better in county 2 than in country 1, but then neglects X, Y and Z, which is better in country 1 than in country 2. Think of those complainers just as you think of all the complainers in the US: They also will tell you a dozen reasons why FI is not possible, why it won't really work, why they don't/can't do it, why MMM is actually still sort of kind of working and not "really retired" and so on. And when the complainers are in a different country, they simply get to add 1 or 2 arguments on top of that.

Yes, you just have to take the principles and work out how to apply them best to your local economic/ investinment/ tax situation. I think for a lot of European countries, the salaries will be lower than equivalent in US and taxes higher, but general expectation/culture of consumerist lifestyle is also lower. There is much more of a safety net in terms of housing, healthcare, old age provision. Working hours are lower, there is much more holiday and things like cycling to work are pretty mainstream. Many of the things that cause Americans to want to FIRE are less pressing for us e.g. large numbers of young people in the UK will have spent a year travelling, for example, even if most of them do just bum around SE Asia & Australia. People in much of England will be spending much of their income during work years on buying a house, which, assuming that bubble does not burst, means that if they relocate to a LCOL area (in the UK or elsewhere in Europe particularly France) they have an instant retirement stash without much conscious planning or investment.

Mr FrugalNL

  • Stubble
  • **
  • Posts: 174
  • Location: Netherlands
Re: "It's hard to do investing in Europe"
« Reply #12 on: November 27, 2015, 05:51:30 AM »
Quote
Am I reading this right?  The government takes part of your savings?

Wealth tax.   We don't have these in Canada or the US.  Yet.  That would be annoying.

Correct. They take a fixed percentage every year instead of taxing your actual returns; it's easier to administer for the tax authorities, or so they say.

According to this:
https://www.nordisketax.net/main.asp?url=files/nor/eng/i07.asp&c=nor&l=eng

Wealth tax is 0,85% on savings larger than 1,2M NOK (-140.000USD). So if you are "halfway" to FIRE at 600.000USD and have a nest egg of 300.000USD you'd pay 0,85% of 160.000 => 1400 USD. I see how that can add a few years until you can FIRE (depending on your saving rate), but that cost may easily be offset by for example cheaper health insurance.

That's the Norwegian tax system. I was talking specifically about the Dutch tax system. Looks like Norwegian Mustachians get taxed less, but the costs of living in Norway are higher than here, so that evens things out.

@ Ceratonia: Agreed.

frugledoc

  • Pencil Stache
  • ****
  • Posts: 743
Re: "It's hard to do investing in Europe"
« Reply #13 on: November 27, 2015, 07:15:26 AM »
It is very easy to invest in the UK and we have quite generous tax allowances.

Capital gains allowance of 11k per year so 22k per year per couple.  Dividends are subject to extra tax over 5k in taxable accounts now for lower rate tax payers.

sam

  • 5 O'Clock Shadow
  • *
  • Posts: 59
    • Money Nest
Re: "It's hard to do investing in Europe"
« Reply #14 on: November 27, 2015, 07:55:34 AM »
Higher taxes (but we get more holidays and free healthcare in many countries!)

Less discount brokers (not so true in the UK, but other countries the platforms simply don't exist!)

Can't deal direct with Vanguard (correct, unless you have 100k I believe, you can find cheap alternatives).

2lazy2retire

  • Bristles
  • ***
  • Posts: 292
Re: "It's hard to do investing in Europe"
« Reply #15 on: November 27, 2015, 08:04:33 AM »
It is very easy to invest in the UK and we have quite generous tax allowances.

Capital gains allowance of 11k per year so 22k per year per couple.  Dividends are subject to extra tax over 5k in taxable accounts now for lower rate tax payers.

The UK is my backup FIRE location mostly because of it very favourable taxation of divs and LTG's - a couple there can draw approx 80k stg and be paying at most 4%-5% in taxes ( that's without even getting into ISA's etc) , that along with the NHS and its much lower property taxes.

WerKater

  • Bristles
  • ***
  • Posts: 351
  • Location: Germany
Re: "It's hard to do investing in Europe"
« Reply #16 on: November 27, 2015, 08:26:24 AM »
[Discussing Germany. The situation might be very different in other countries. Europe is quite heterogeneous.]

1.) From a purely mechanical point of view, it is harder to do investing in Germany than in the US (many reasons were mentioned). Usually, you need to buy your index funds directly via a broker instead of just shoveling money into a Vanguard account. That is a little bit more effort (and incurs some small expenses for fees), but it is easily overcome and, in the grand scheme of things, does not matter. Expense ratios are somehat higher and that does matter a bit but will also not make or break FIRE.

2a.) It is much harder in Germany to amass a huge stash. Income taxes are much higher, and there are either no or only really crappy methods of deferring taxes. As a result, my marginal income tax rate is about 40% and I pay about the same in income taxes each year as I spend on living. And I am not such a huge earner. And that is ignoring the social insurance taxes. If you ever tell any non-Mustachians that you own funds or stock, they will probably hate your guts (OK, that seems to be similar in the US, just for different reasons...).

2b) A much smaller stash is needed in Germany. Once I FIRE, I will probably get public health insurance for 170€/month. Many places have reasonable subsidied public transportation. Property taxes are much lower, generally COL seems to be much lower (but is highly regionally variable, of course).
« Last Edit: November 27, 2015, 09:34:35 AM by WerKater »

Landlord2015

  • Bristles
  • ***
  • Posts: 264
Re: "It's hard to do investing in Europe"
« Reply #17 on: November 27, 2015, 08:57:13 AM »
As an aside, this white paper has a decent comparison of investment taxation in countries belonging to the OECD, BRIC, and/or EU.
http://www.svensktnaringsliv.se/migration_catalog/Rapporter_och_opinionsmaterial/Rapporters/corporate-dividend-and-capital-gains-taxation-a-comparison-of-swe_533034.html/BINARY/Corporate%20Dividend%20and%20Capital%20Gains%20Taxation%20-%20A%20comparison%20of%20Sweden%20to%20other%20member%20nations%20of%20the%20OECD%20and%20EU,%20and%20BRIC%20countries.pdf
Those are not 100% correct. I can guess why? Finland law is NOT the same as Sweden. In Sweden you share crazily birthday and social security number.

I am 100% against sharing birth day info or age. Noone at a workplace has ever got an answer from me excpet it is none of your business. Of course if you begin to date a lady at some point you must tell truthfully your age.

I like movies like Divergent that are special in that way that it breaks the norm that you must be same age for relationship. Ok there is a limit to that I can understand a 60 year old does not work well with a 20 year old.

Your links say Finland has 0 at some points but that is because Finland refuse to share information that has to with private persons while companies might be more public.

I will give an example if you would call Elixia my gym in Finland and tell that my name and want to know my age. The cold answer in Finland would be it is totally illegal and you would be warned if I would be the Elixia worker that you are trying to commit an illegal offense! If you would insist I would give one more warning that if you continue asking you will be reported to the police!

Yeah I am that stonehard about my age not all of my friends even know my age. Facebook or any other social media? Lol do you honestly believe I put my age visible to the public or otherwise? No!

I have eaten 15+ years Carnoscine
https://en.wikipedia.org/wiki/Carnosine
"Carnosine (beta-alanyl-L-histidine) is a dipeptide of the amino acids beta-alanine and histidine. It is highly concentrated in muscle and brain tissues.

Carnosine and carnitine were discovered by Russian chemist V.Gulevich.[2] Researchers in Britain,[3] South Korea,[4] Russia[5][6] and other countries[7][8][9] have shown that carnosine has a number of antioxidant properties that may be beneficial.
"
==>
If I cut my hair short and I am cleanshaven people guess often very wrong my age to crystal clear much younger!
« Last Edit: November 27, 2015, 09:06:18 AM by Landlord2015 »

2lazy2retire

  • Bristles
  • ***
  • Posts: 292
Re: "It's hard to do investing in Europe"
« Reply #18 on: November 27, 2015, 10:01:14 AM »
Landlord2015 gets the prize everytime for veering off topic but in a way that is engaging:)

Landlord2015

  • Bristles
  • ***
  • Posts: 264
Re: "It's hard to do investing in Europe"
« Reply #19 on: November 27, 2015, 11:43:48 AM »
Landlord2015 gets the prize everytime for veering off topic but in a way that is engaging:)
You know it is black Friday after all. Perhaps I am real Vampire trying to hide that I am eternal and not aging! Take it easy I am not an evil vampire though if I would be that I would probably lie about that fact:)

Seriously I do like some cool vampire themes including this music:
.Funabashi ft.Angelina - The Shelter (Original Mix) + Lyrics .
https://www.youtube.com/watch?v=2E1G6wkWcG4&list=RD1vKxGl96X-4&index=3

Ahem on topic. Well sure there are good stock investors in my country Finland Europe. I am simply saying it is as not as good to invest in stocks from Finland as USA.  What advice I have read is this:
A. Do not do trading i.e buy and sell stocks during same day much often there is a fee and you end up loosing more then winning.
B. If you do invest in stocks then invest long term.
« Last Edit: November 27, 2015, 04:58:33 PM by Landlord2015 »

scottish

  • Magnum Stache
  • ******
  • Posts: 2716
  • Location: Ottawa
Re: "It's hard to do investing in Europe"
« Reply #20 on: November 27, 2015, 05:29:12 PM »
Quote
According to this:
https://www.nordisketax.net/main.asp?url=files/nor/eng/i07.asp&c=nor&l=eng

Wealth tax is 0,85% on savings larger than 1,2M NOK (-140.000USD). So if you are "halfway" to FIRE at 600.000USD and have a nest egg of 300.000USD you'd pay 0,85% of 160.000 => 1400 USD. I see how that can add a few years until you can FIRE (depending on your saving rate), but that cost may easily be offset by for example cheaper health insurance.

And I don't think you'll have to worry about it when you have FIREd, because I am pretty sure it will eventually either go away or the impact significantly reduced.

According to this web site you don't pay tax on investment income, you just pay tax on your wealth.  Is this correct?

cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 2319
  • Location: England
Re: "It's hard to do investing in Europe"
« Reply #21 on: November 28, 2015, 08:27:23 AM »

According to this web site you don't pay tax on investment income, you just pay tax on your wealth.  Is this correct?

Not sure that there are any Norwegians on the thread to comment from personal knowledge?

Plenty of places that do have a wealth tax (e.g. Spain) also tax investment income. There are some strange anomalies, though, Belgium and its lack of capital gains tax, for example, means that some people live there for a couple of years specifically for the purpose of selling shares.

Bertram

  • Bristles
  • ***
  • Posts: 258
  • I'm not a chef
Re: "It's hard to do investing in Europe"
« Reply #22 on: November 29, 2015, 02:33:52 AM »
They tax it. Countries that do not have a capital gains tax, usually tax it as regular income.

shelivesthedream

  • Walrus Stache
  • *******
  • Posts: 6744
  • Location: London, UK
Re: "It's hard to do investing in Europe"
« Reply #23 on: November 29, 2015, 05:39:52 AM »
Once again, EUROPE is not a country.

In the UK we have the following difficulties:
1. Higher taxes than the US
2. Cannot invest directly in Vanguard - need a broker who will charge you (transactions fees and/or percentage management fees)
3. Crazy property prices in many areas
4. Higher food prices than the US, I think

And the following advantages:
1. NHS and fairly reliable state pension
2. Decent public transport in all major cities, cycling encouraged by the government

So as someone said, I think about Germany, above: it's harder to amass a stash but once your house is paid off you need a much smaller stash.

Seppia

  • Pencil Stache
  • ****
  • Posts: 616
  • Age: 43
  • Location: NYC
"It's hard to do investing in Europe"
« Reply #24 on: November 29, 2015, 07:18:02 AM »
As for investments: In Germany there is a very big online trader where the account is free and per order you pay 4,90 EUR + 0,25% of the order volume. So if you buy 5.000€ of an ETF, you pay 18€, for 10.000€ you pay 30€ (overall expense per order is capped at 60€). You have ETFs on the MSCI WORLD index that have a volume of 656.126.698 USD. Another one from Luxor on the same Index has a volume of 1.149.100.000 EUR, iShares has one with a volume of 4.836.420.000 USD. There are ETFs that are replicating or swap-based - though swap based ones are often preferred because they are taxed more advantageously (for replicating funds you have to pay tax on automatically re-invested dividends every year; but when it's swap-based those gains are only taxed once you sell/realize the gain). You have ETFs that do and don't specifically hedge the exchange rate risk (with a higher TER of course), and so on and so on.

Great informative post (cut for ease of reading).
I'm an Italian who has lived and invested in the USA for a few years, will be moving back to Europe (Italy) in a month.
I have a brokerage company who gives me access to all the major European markets with reasonable fees, would you care to recommend some broad, low cost index funds that trade in Euros?
I understand the underlying currencies will stay, but I want to avoid the additional cost of having to purchase dollars or gbp.
I have never had to look outside of vanguard here, but in Europe options are significantly more limited, I only see two ETFs that trade in euro from vanguard.
The Europe ETF and the Europe Ex-UK one.
Would be looking for

All world
Emerging markets
An energy sector fund (kinda like vgenx)
Eventual cheaper alternatives to Vanguard's European (even though I suspect they don't come cheaper)

Any source of information on European  traded etfs

Thanks in advance.

cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 2319
  • Location: England
Re: "It's hard to do investing in Europe"
« Reply #25 on: November 29, 2015, 11:55:30 AM »
They tax it. Countries that do not have a capital gains tax, usually tax it as regular income.

Not Belgium, though. Not for sale of shares in multinational companies anyway. They keep talking about closing this particular loophole, but AFAIK, have not done so yet. I personally know British people who have moved there for a couple of years in order to avoid £500k+ tax bills.

Landlord2015

  • Bristles
  • ***
  • Posts: 264
Re: "It's hard to do investing in Europe"
« Reply #26 on: December 02, 2015, 07:56:56 AM »
This thread has discussed about landlord and stock investing and mostly about stockinvesting and generally about taxes.

There is an option to become entreprenur!

This is FACT! I will start an evening course entrepreneur in Finland during next  week Tuesday. The evening course is held 2 evenings week and once again it costs really nothing to study in Finland. This evening course will end at 18th February 2016.

I don't know about other countries in Europe, but in Finland if you want state support then you MUST do and pass such an entrepreneurship succesfully and there are both exercises, tasks and the written business plan is examined by an expert teacher.

The state support Finland can give is normally about 4200 euro, but that is better then nothing. However it is not automatically granted you must have done such a course and if you work full time and as side business start a company then you don't get any state support.

However IF you work parttime jobs as I do then I can apply for Finnish goverment support if you start a company.

NOTE! Statistics show that roughly 80-90% of the people in Finland that start such a entrepreneur course do NOT start a company or become entreprenurs even 1 year after such a course. Usually either they get answer not enough budget or bad idea or are not willing to take the risk.

I have never stated that I will become entreprenur! You see in Finland entreprenur ship is a bit curse also you automatically loose many state social benefits and to prove that you are no longer entreprenur is hard you literally have to sell every nail and carpet that the firm might have.

In addition there is huge risk becoming entreprenur. Many have done bankruptcy, but also many have become wealthy or risk and a huge group do like ok average workers that neither become rich or do bankruptcy.

HOW to protect yourself vs bankruptcy?
1. Make a succesful company.
2. Make it
https://en.wikipedia.org/wiki/Osakeyhti%C3%B6
Finnish: Osakeyhtiö i.e example Donald Duck Oy, Swedish: Aktiebolag exempel Donald Duck AB, English Donald Duck stock company...

In that way you are only responsible for your own investment and might not loose you house or apartment.

There are many different forms of entreprenurship, but this is one example. I want to do this course since I will keep it as one valid option among others to become more wealthy.

As regarding of 1000 questions regarding entreprenurship in Finland I rather answer such questions after doing such an entrepreneurship course.

I do know that Finland government has said that they will try to reduce bureaucracy regarding entrepreneurship in Finland. The government has been so far busy with other budget things and those changes might come late 2016, 2017 or 2018.







« Last Edit: December 02, 2015, 08:10:52 AM by Landlord2015 »

2lazy2retire

  • Bristles
  • ***
  • Posts: 292
Re: "It's hard to do investing in Europe"
« Reply #27 on: December 03, 2015, 07:03:12 AM »
Once again, EUROPE is not a country.

In the UK we have the following difficulties:
1. Higher taxes than the US
2. Cannot invest directly in Vanguard - need a broker who will charge you (transactions fees and/or percentage management fees)
3. Crazy property prices in many areas
4. Higher food prices than the US, I think

And the following advantages:
1. NHS and fairly reliable state pension
2. Decent public transport in all major cities, cycling encouraged by the government

So as someone said, I think about Germany, above: it's harder to amass a stash but once your house is paid off you need a much smaller stash.

As regards UK v US taxes the difference is not as vast as it would first appear especially when state and local township taxes are added. Also once FIRED the UK is very generous in it allowance for living off capital gains and dividends

KCM5

  • Pencil Stache
  • ****
  • Posts: 881
Re: "It's hard to do investing in Europe"
« Reply #28 on: December 03, 2015, 07:31:56 AM »
Once again, EUROPE is not a country.

In the UK we have the following difficulties:
1. Higher taxes than the US
2. Cannot invest directly in Vanguard - need a broker who will charge you (transactions fees and/or percentage management fees)
3. Crazy property prices in many areas
4. Higher food prices than the US, I think

And the following advantages:
1. NHS and fairly reliable state pension
2. Decent public transport in all major cities, cycling encouraged by the government

So as someone said, I think about Germany, above: it's harder to amass a stash but once your house is paid off you need a much smaller stash.

I don't think the food prices are higher. At least in grocery stores. But one more difficulty if living in Britain is that the wages are just so much lower. I make $60k in the US and would be lucky to make 25k pounds in the UK. Could be my field though (environmental science). We actually plan on making our "fortune" here in the US and then moving to the UK. Oh, the sweet, sweet lure of the NHS.

shelivesthedream

  • Walrus Stache
  • *******
  • Posts: 6744
  • Location: London, UK
Re: "It's hard to do investing in Europe"
« Reply #29 on: December 03, 2015, 10:54:29 AM »
4. Higher food prices than the US, I think

I don't think the food prices are higher. At least in grocery stores. But one more difficulty if living in Britain is that the wages are just so much lower. I make $60k in the US and would be lucky to make 25k pounds in the UK. Could be my field though (environmental science). We actually plan on making our "fortune" here in the US and then moving to the UK. Oh, the sweet, sweet lure of the NHS.

It's not a definite but I read a lot of US blogs and just kinda get a vague sort-of feeling that food prices are lower in the US for comparable products (e.g. standard supermarket stuff). Nothing I can put my finger on, but I'm constantly reading things like "$1 for three avocados" or "$0.40 for 1lb of carrots" and thinking "wow! that's cheap!" Maybe I'm overcompensating for the exchange rate (in my head it's still kind of £1=$2 because that's what it was when I first learnt about exchange rates...) but it all seems to be cheaper than over here.

KCM5

  • Pencil Stache
  • ****
  • Posts: 881
Re: "It's hard to do investing in Europe"
« Reply #30 on: December 03, 2015, 11:39:46 AM »
4. Higher food prices than the US, I think

I don't think the food prices are higher. At least in grocery stores. But one more difficulty if living in Britain is that the wages are just so much lower. I make $60k in the US and would be lucky to make 25k pounds in the UK. Could be my field though (environmental science). We actually plan on making our "fortune" here in the US and then moving to the UK. Oh, the sweet, sweet lure of the NHS.

It's not a definite but I read a lot of US blogs and just kinda get a vague sort-of feeling that food prices are lower in the US for comparable products (e.g. standard supermarket stuff). Nothing I can put my finger on, but I'm constantly reading things like "$1 for three avocados" or "$0.40 for 1lb of carrots" and thinking "wow! that's cheap!" Maybe I'm overcompensating for the exchange rate (in my head it's still kind of £1=$2 because that's what it was when I first learnt about exchange rates...) but it all seems to be cheaper than over here.

It could be regional, too. Those prices you quoted are cheap! For the record, I just paid $.79 for a pound of carrots (I think that's always the normal price) and avocados are about a dollar each - even in season. Maybe food is cheaper here. But one thing I remember about living in the UK was I would only use my tip money from the pub job I worked to buy groceries for myself and my now husband. So it was maybe 15 pounds a week max? Granted, we were young and poor and thought nothing of eating a ton of pasta and beans on toast.

Landlord2015

  • Bristles
  • ***
  • Posts: 264
Re: "It's hard to do investing in Europe"
« Reply #31 on: December 08, 2015, 02:46:55 PM »
I did start the entreprenur evening course today in Finland(Europe).

I am not sure IF I will become ever an entreprenur due to great risk and loosing many social good benefits if becoming entreprenur.

That said I really like the teacher and I got one new acctuintance a person that is MILLIONAIRE for sure I know that since we interviewed each other and I interviewed the richest in the class.

Millionaires are rare in Finland due to socialistic(though slightly more capitalistic then Sweden) high tax system.

It is a contrast. As a FRUGAL landlord I don't own any car despite me having a driving license. Please keep in mind that fuel is more expensive in Finland then say in USA and that public transport is cheaper then car.

The millionaire offered that since I don't have any car and we both come from same town that he will be my driver. I said yes!

As for what kind of entreprenur firm my new millionaire aquintance will start I refuse to tell that. I also refuse to tell his real name since we have agreed that we shall not tell our business plans outside of the course group.
« Last Edit: December 08, 2015, 03:05:57 PM by Landlord2015 »

Landlord2015

  • Bristles
  • ***
  • Posts: 264
Re: "It's hard to do investing in Europe"
« Reply #32 on: December 16, 2015, 01:02:17 PM »
Well the "The millionaire offered that since I don't have any car and we both come from same town that he will be my driver. " millionaire is much more old then me. He is something between 50-60 year old...

However I really like his car it is from year 2009. It is an more expensive model of Japanese Subaru 4 wheel driven. It is big car a farmar model.

It does consume lots of fuel but the millionaire can afford it. As new in my country it would cost about 40 000 euro but Finland has high tax for new cars.

Landlord2015

  • Bristles
  • ***
  • Posts: 264
Re: "It's hard to do investing in Europe"
« Reply #33 on: December 19, 2015, 03:10:47 AM »
Well ok now I have a hard situation.

Well I had to get FAST a saving Angel that would rent in Eastern 2015.

Stupid of me I met a beuatiful female gypsy. She was dressed completely normally i.e not in any special gypsy clothes. She behaved well and told me that in addition to governement 2 month rent deposit(which only covers repairs) she would pay me 1 month rent deposit(and this can cover unpaid rent also).

I was stressed because previous rental had paid a fee to preamture break a fixed term contract and this happened during Eastern holiday.

I asked for high rent(overprice more or less thought reasonable overprice so not extraordinary) and she agreed. There were no other renter applicants on such a short notice I wanted immediately a new renter.

I told myself to not prejudice gypsies. Foolish!
https://en.wikipedia.org/wiki/Names_of_the_Romani_people#Gypsy_and_Gipsy

Seems some things never change. Never ever trust a gypsy.[MOD NOTE: Not okay.]
It has been a ride... first of all house company got so many complaints that towards end of year they sent me a warning that unless I make the renter behave better they might take control of my apartment. Taking control is horrible it means you can not get any rental income for up to maximum 2 years.

During all my years as a landlord I have never get such a warning such a warning is never given due to one disturbance.

Well that is actually used in Finland as a warning to landlords to act. I did. I met with the renter and gave her written warning which she and her husband signed(he had moved in later). It basically said the disturbance must stop or we must break the contract i.e a formal legal warning.

I told what I had done to housecompany and they seemed pleased with my actions and told me good work she can live there until end of contract(fixed term contract 1 year) if she behaves ok.

In November I noticed that she paid all of November rent but that the government support for October was lacking and I had only got about rougly 65% of the October rent.

I called the renter and she told me that she should take "care of it".

Right all indication and evidence now shows that she has left the apartment and not tend to pay December rent January, Februrary, and Mars is the last if remember correctly.

The only option seems to me is to send her one final invoice in written and when that is not paid file a lawsuit so government will force her family to move out prematurely.

All evidence shows she has gone underground maybe moved to Sweden(I know she has lived in Sweden before also).

On Monday I will contract Suomen Vuokranantajat I am member of their landlord organisation and they will for free give me legal advice.

My option seems to file law suit and the Finland government after a long delay will send the police and other goverment officials to her apartment estimated time in february 2016. They will then forcefully if necessary throw out any residents and regarding their possible furniture it will likely be take to some government building.

The thing is since gypsies are unemployed(at least when it comes to legal income) I will not get one euro paid for December, January and February.

That is a hard setback.

My second worst renter is a renter from Irak he is insane in the membrain crazy as hell, but at least he has paid the rent but I will not make a new fixed term contract with him.

My golden egg i.e ELITE renter is a Finn he seems eager to even pay more we discuss it right now if he can live together with his girlfriend. The golden egg renter rents my newest apartment which is in excellent conditon and it is built year 2014.

You may call me racist if you want and I don't care but big no:s to rent candidaters from personal experience is: Gypsies, Irak, Africa. It is not the skin color sure I can rent to a black man from USA.

My political party Perussuomalaiset True Fins are those that are 100% against refugees in my country. There is a difference we are not racist that black man that is well educated doctor is welcome! Oh yeah sure there exist some more radical persons in my party also.

From my perspective if a foreign renter pays overprice I am like a vampire using that for my benefit. The problem is when it backfires and this gypsy example is extreme I have never had so much problems with a renter before.
« Last Edit: December 31, 2015, 10:26:26 PM by arebelspy »

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28444
  • Age: -997
  • Location: Seattle, WA
Re: "It's hard to do investing in Europe"
« Reply #34 on: December 19, 2015, 03:22:09 AM »
Mod Note: That has nothing to do with this thread, LL2015.  Please stay on topic, and start your own threads or journal for your stories/questions.  And please do not double post.  Thanks!
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

bigend

  • 5 O'Clock Shadow
  • *
  • Posts: 6
Re: "It's hard to do investing in Europe"
« Reply #35 on: December 21, 2015, 11:36:21 AM »
From my experience an important difference is that several countries have no tax deferred retirement accounts at all (i.e. no equivalents to IRAs, 401Ks, etc.). So you always pay tax on your full income and can only invest after that (this also means no employer matching at all).

This to me is the biggest drag when comparing the situation with the US.

There's also some important pitfalls for Europeans that decide to invest in US assets following the advice in the most popular FIRE blogs / sites (e.g. people that buy US listed Vanguard ETFs, as I did in the beginning):
 
First, the US charges withholding taxes on any dividends you get, so you pay 30% of your dividends to the US IRS and then get taxed again (in my case another ~30%) by your local tax authority.... you can try to recover part of this if your country has a double taxation treaty with the US or if you can get a W8-BEN in place, but from my experience you never get the full amount back.

Second, you become exposed to inheritance/estate tax. If you die holding US assets the US IRS will keep up to 40% of your stash above $60k... (source: https://www.bogleheads.org/wiki/Nonresident_alien_taxation)

I think a lot of non-US residents follow the advice in popular US blogs without being aware of this, and expose themselves to very significant risk (that was my personal case when I started investing)


Cap_Scarlet

  • Bristles
  • ***
  • Posts: 292
    • EarlyRetireFree
Re: "It's hard to do investing in Europe"
« Reply #36 on: December 21, 2015, 12:33:43 PM »
From my experience an important difference is that several countries have no tax deferred retirement accounts at all (i.e. no equivalents to IRAs, 401Ks, etc.). So you always pay tax on your full income and can only invest after that (this also means no employer matching at all).


I don't think that's true is it?

In Germany there are personal pension savings accounts (Rürup and Riester) which have quite significant tax benefits.

If you have a friendly employer there are also very significant benefits to be had through deferred income schemes.

It may not be the same as the US but there are schemes available.

WerKater

  • Bristles
  • ***
  • Posts: 351
  • Location: Germany
Re: "It's hard to do investing in Europe"
« Reply #37 on: December 21, 2015, 01:35:07 PM »
From my experience an important difference is that several countries have no tax deferred retirement accounts at all (i.e. no equivalents to IRAs, 401Ks, etc.). So you always pay tax on your full income and can only invest after that (this also means no employer matching at all).


I don't think that's true is it?

In Germany there are personal pension savings accounts (Rürup and Riester) which have quite significant tax benefits.
Unfortunately, both types of accounts have big drawbacks.
- There are only few options which offer investment in low-cost index funds (although this has been getting somewhat better recently).
- There are always significant annual fees on top of the funds expense rates. Over the course of 30 years, these will cancel out the initial tax advantage.
- Riester has maximum contributions of 2k€/year which is a drop in the bucket for someone aiming for FIRE.
- And the huge one: You can only access the money when you are 62 or older. And then (for the most part) only as an annuity.

I did the math on a Rürup contract recently and I found that it has no significant advantage over simply investing post-tax money into a regular stock depot (roughly breaks even). Considering the huge loss of flexibility that the Rürup account would give me, I decided against it.
Note that my marginal tax rate is over 40%. For anyone with a lower rate, Rürup loses clearly.
« Last Edit: December 21, 2015, 01:36:56 PM by WerKater »

JrDoctor

  • Stubble
  • **
  • Posts: 102
Re: "It's hard to do investing in Europe"
« Reply #38 on: December 22, 2015, 01:25:21 AM »
Once again, EUROPE is not a country.

In the UK we have the following difficulties:
1. Higher taxes than the US
2. Cannot invest directly in Vanguard - need a broker who will charge you (transactions fees and/or percentage management fees)
3. Crazy property prices in many areas
4. Higher food prices than the US, I think

And the following advantages:
1. NHS and fairly reliable state pension
2. Decent public transport in all major cities, cycling encouraged by the government

So as someone said, I think about Germany, above: it's harder to amass a stash but once your house is paid off you need a much smaller stash.

I came to post the same, the UK is markedly different from many EU countries, as our other EU countries.  I mean we have the nordic countries (high tax, high social equity, probably hjard to retire, versus the shit poor western countries, Germany and then all the new eastern european countries).  For Sure some living costs tend to be lower in America, but amongst the wastefulness of our government we have some shining stars.  The NHS is the mustachian health care system, striking the balance right at cost vs benefit, we have one of the best healthcare systems at the lowest price, free at point of service. 

Also there are some fantastically cheap areas to live in the UK: Wales, lots of Scotland and where I live the northeast.

Add to that ISA's, still generous pension tax discounts and its not to bad.  I'd say southern property is the biggest wrecker or saviour of many people retiring, sadly I have none.

KCM5

  • Pencil Stache
  • ****
  • Posts: 881
Re: "It's hard to do investing in Europe"
« Reply #39 on: December 22, 2015, 07:51:55 AM »
Once again, EUROPE is not a country.

In the UK we have the following difficulties:
1. Higher taxes than the US
2. Cannot invest directly in Vanguard - need a broker who will charge you (transactions fees and/or percentage management fees)
3. Crazy property prices in many areas
4. Higher food prices than the US, I think

And the following advantages:
1. NHS and fairly reliable state pension
2. Decent public transport in all major cities, cycling encouraged by the government

So as someone said, I think about Germany, above: it's harder to amass a stash but once your house is paid off you need a much smaller stash.

I came to post the same, the UK is markedly different from many EU countries, as our other EU countries.  I mean we have the nordic countries (high tax, high social equity, probably hjard to retire, versus the shit poor western countries, Germany and then all the new eastern european countries).  For Sure some living costs tend to be lower in America, but amongst the wastefulness of our government we have some shining stars.  The NHS is the mustachian health care system, striking the balance right at cost vs benefit, we have one of the best healthcare systems at the lowest price, free at point of service. 

Also there are some fantastically cheap areas to live in the UK: Wales, lots of Scotland and where I live the northeast.

Add to that ISA's, still generous pension tax discounts and its not to bad.  I'd say southern property is the biggest wrecker or saviour of many people retiring, sadly I have none.

This thread is kind of off the rails so I'm going to ask an off topic question:

Where in the northeast do you live? We're looking to move to Britain in a few years and live on a houseboat. We'd like a place with reasonable cost of living, a permanent mooring for our narrowboat, and good schools for our future teenager. Would we find something like that in the northeast?