Author Topic: Americans moving to Germany -- How to Mustache Munich??  (Read 603 times)

RetireeInTraining

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Americans moving to Germany -- How to Mustache Munich??
« on: May 16, 2018, 02:08:06 PM »
Hello friends

DW and I are looking at a job relocation to Munich for the next, say, 3 to 5 years and hoping the adventure won't slow down the phenomenal stash-building momentum we've built up since discovering MMM in 2016.

We'll probably head over with about $200,000 saved up in various 401k and Roth 401k accounts, plus ~$3,000 in Vanguard index funds (just got started there!). We'll also have just finished killing off our Student Loans and therefore will have no liabilities to worry about.

I'm a little confused by Germany's pension system, but my company will match 50% of my forgone-salary contributions (with the match capping around 5500 euros per year). Also, DW should be eligible to get a local job but also plans to be doing some freelance remote work for U.S. companies while we're over there.

I know there are some old threads on Germany on these boards, but they seem mostly from the perspective of Germans who plan to stay in the country for decades to come. Our plan is to return to the states in a handful of years and still be more or less on a path to achieving FI in, say, 2025-2027.

Any suggestions on what sorts of bank accounts, retirement accounts, investment accounts we should really consider? And any thoughts on tax-avoidance strategies (if they exist) in a relatively high-tax country like Germany?

Thanks!!


CoffeeR

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Re: Americans moving to Germany -- How to Mustache Munich??
« Reply #1 on: May 16, 2018, 07:01:09 PM »
I would post this question in an country specific expat forum
(e.g. http://www.expatforum.com).

« Last Edit: May 16, 2018, 07:04:51 PM by CoffeeR »

Pizzabrewer

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Re: Americans moving to Germany -- How to Mustache Munich??
« Reply #2 on: May 16, 2018, 07:11:03 PM »
I have no advice but just want to say that I am insanely jealous.

Have a great time in Germany!!

FINate

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Re: Americans moving to Germany -- How to Mustache Munich??
« Reply #3 on: May 16, 2018, 08:08:53 PM »
I was on short term assignment in Munich for about a year. That was...let's see..about 10 years ago! Geez time flies as I get older, I blame it on kids.

RE taxes and pensions and such: It depends on how your assignment is structured. I was paid out of the US office so continued with the same benefits, same 401k, but paid taxes to DE. Oh, one fun thing to consider if you're in the US: the US is sooo paranoid about people not "paying their fair share" that it's one of the few (the only?) OECD countries that taxes individuals on global income. Means you have to do tax returns for DE and US but, just to make it more interesting, they are on different schedules and since there is a tax treaty between the US and DE (a good thing for you - avoids double taxation) one affects the other. This means you get to do something with US taxes first (as I recall, maybe an extension?), then DE taxes (which affects your US taxes), then you get to do (or amend) your US taxes, which then affects your DE taxes. Ah, joy. Set aside some budget for professional help, maybe your company can include this is the package.

I don't think there's a way to really avoid taxes, though in the end I don't think they were much higher than our combined Federal and State taxes. I don't think Californians realize that they are already paying EU level taxes for State+Fed combined, but getting far less value. In DE (Munich in particular) you at least get safe, clean cities, extremely functional and affordable mass transit and other services. That said, the VAT makes things seriously expensive (19% in DE, I think?). If you can, esp. if you can get it included in your relocation package, ship out your "personal effects" like computer, bike, and such.

Taxes aren't as much of an issue as the HCOL. Housing in Munich is crazy expensive. Plan accordingly. May get a better deal further out, but will be outside the city and all it has to offer.

Munich is extremely bikeable AND it has wonderful mass transit. You really don't need a car, though you may want one for getting out into the countryside on weekends or IKEA trips. No idea what this runs since we didn't bother.

Something else to be aware of: In Munich an "unfurnished" apartment is quite literally an empty shell. No kitchen appliances. No countertops. No sinks. No light fixtures. No nothing. You provide the entire interior. We opted for a furnished apartment because we were there for just a year, but furnished apartments are pricy. For 3-5 years you're probably better off furnishing your own. Watch for used stuff online and plan on spending a fair amount of time getting established.

We also had an interesting catch-22 situation when we arrived in DE, not sure if this is still an issue. You need a bank account to pay rent (no one pays with paper cheques there, its all electronic bank transfers and this can only be done within the EU), but you need an address to get a bank account. I don't remember how we got around this, think we had a local "fixer" who new someone at Deutsche Bank who agreed to allow us to use the address of the extended stay hotel. Once that was done, was a pain to get money transferred to the DB account. BofA is a pain in the ass for international wire transfer, would only do it if we showed up at a US branch in person (umm, not flying 10 hrs just to wire money to myself). In the end I think we found that we could transfer money to Vanguard, and then Vanguard allowed us to transfer to our DB account after a ~2 week verification period. Again, no idea what the situation is like now, but worth researching before you move.

Getting the work visa was also a pain. Unless you speak fluent German you will want help getting through the process. Hopefully the company bringing you out there is providing and paying for this. Make sure you have details worked out for DW before you go out there. They are very picky, very detailed oriented. I can't stress this enough...if you're counting on DW working while there get this worked out before you go. Don't show up expecting that she'll sail through the process, could take many months to sort out.

Plan on living out of a suitcase for a month or more. Yeah, yeah, an air shipment can arrive in under a week but is likely to get held up in customs for weeks.

Once you get a bank account, funds in said account, an apartment, furnishings, and your shit finally arrives, it's a wonderful place to live. Lots to see in Munich and even more throughout Bavaria. The Bayern Ticket provides cheap train travel (on slower regional trains) to the entire state, and in many cases includes transit within cities as well.

Munich is very centrally located to the rest of EU and the airport is extremely nice and efficient, and an easy/quick/affordable S-Bahn ride from the city, and the train station in the city center is convenient as well. Have fun traveling throughout the EU without jet lag or the stress of long travel days. This will probably impact your FIRE plans more than anything else, but IMO it's worth it. And if you travel to lesser known places, stay in cheap hotels, and travel off-peak (easy to do when you live in DE) then you can travel without totally wrecking your retirement plans.
« Last Edit: May 16, 2018, 08:15:05 PM by FINate »

RetireeInTraining

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Re: Americans moving to Germany -- How to Mustache Munich??
« Reply #4 on: May 16, 2018, 08:26:53 PM »
Wow, thanks soooo much for that detailed response FINate; just read your reply to DW and we're even more excited about the move -- and PizzaBrewer, come visit! First beer's on me ;-) And thanks for the link, CoffeeR