Author Topic: American living in Germany- Securities and exchange act of 1934  (Read 3401 times)

JoanOfSnark

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Hi- so I'm an American citizen living long-term in Germany with no real plans to become a resident (and it would be 6+ years away even if I DID want to...), and I've run into a bit of an interesting problem here.

I'm not allowed to touch the stock market.

No stocks, index funds, retirement accounts dealing in mutual funds, nothing.

Has anyone else run into this issue before? As far as I can see it, my options are either sending all of my money back to my financial adviser in the US to invest and eat the conversion fees for the currencies ($15/per), let him play in the Euro sandbox and eat the .2% fee that comes with that, or... buy property? No banker will help me out, and none will point me to a legal document I can quote, though I have heard the name "Securities and Exchange Act of 1934" bandied about.

Has anyone here dealt with this? Apparently it applies to Americans, Canadians, and Aussies in Germany, not sure who else.

beltim

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Re: American living in Germany- Securities and exchange act of 1934
« Reply #1 on: August 18, 2014, 08:29:08 AM »
I don't have any specific knowledge of Germany, but I was looking at a similar issue in Switzerland, where it's difficult for Americans to even open bank accounts because of US reporting laws.  The conclusion I came to was that it was easiest to just handle everything through US accounts, and eat the currency exchange fees.  However, I was always planning to come back to the US, so I wasn't worried about exchange rates in the long term.

bwall

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Re: American living in Germany- Securities and exchange act of 1934
« Reply #2 on: August 23, 2014, 04:22:50 PM »
I lived in Germany in the 1990's and I opened a brokerage account without any problems, so it has nothing to do with a law from 1934. It may have to do with anti money laundering efforts of the US govt' and the corresponding reporting requirements.

Where/who did you ask? Who gave you that info? Have you tried an online broker (of which there are many), such as Targobank.de? How well do you speak German?

Are you familiar with the differences between the stock market in Germany and the USA? Dividend distribution and taxation?

As a side note, most Germans do not trust the stock market and view it more as a casino than a reliable wealth building tool used by smart money managers.

dragoncar

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Re: American living in Germany- Securities and exchange act of 1934
« Reply #3 on: August 25, 2014, 01:31:43 PM »
I lived in Germany in the 1990's and I opened a brokerage account without any problems, so it has nothing to do with a law from 1934. It may have to do with anti money laundering efforts of the US govt' and the corresponding reporting requirements.

Where/who did you ask? Who gave you that info? Have you tried an online broker (of which there are many), such as Targobank.de? How well do you speak German?

Are you familiar with the differences between the stock market in Germany and the USA? Dividend distribution and taxation?

As a side note, most Germans do not trust the stock market and view it more as a casino than a reliable wealth building tool used by smart money managers.

What do Germans invest in?  Bonds and real estate?

FrugalZony

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Re: American living in Germany- Securities and exchange act of 1934
« Reply #4 on: August 25, 2014, 02:53:51 PM »
My guess is that you are a "victim" of FATCA
These investment options are available to locals, who are NOT subject to US taxes
Any Americans living in Germany or Germans living in the US have had these issues recently
I have many friends, who were told by their banks, that they can not longer keep investment accounts, due to the ridiculous reporting requirements imposed by FATCA

There are several banks that still allow US persons (citizens, residents, greencard holders) to have an investment account, but there are few an far in between.
Commerzbank only keeps it for existing customers, as the due diligence for new customers is to cumbersome (but it does not hurt to ask, if you are an existing customer)
Online brokers
https://www.flatex.de/
and
https://www.interactivebrokers.com/ind/en/main.php
have been recommended by friends, who needed fo find solutions.

I don't have experience with neither, so take this with a grain of salt.

Generally speaking, aside from the exchange rate risk, you are probably better off to invest directly in the US.
I would research cheaper and more efficient ways to transfer money to the US and invest directly with Vanguard, especially as you are not considering to stay in Germany long term

bwall

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Re: American living in Germany- Securities and exchange act of 1934
« Reply #5 on: August 25, 2014, 09:37:11 PM »
I agree with Frugalzony; I think that FATCA is the culprit. You can still invest in Germany as an American, but some institutions will simply decline your business. This is hard to fathom for most Americans, but, well, the risk/reward calculation doesn't quite add up for them.

Dragoncar; investments tend to be more in physical objects; real estate, classic cars, very little debt (I.e who would buy stocks when the house/appt isn't paid for?), CDs, Insurance, collectables, anything that can be turned into money when times get tough. The 20th Century was a rough one for Germans and thus the mind-set is different than we in N. America are familiar with.

Alabaster

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Re: American living in Germany- Securities and exchange act of 1934
« Reply #6 on: August 25, 2014, 09:58:57 PM »
Ok, the FATCA is scary. I like America and intend to stay here, but I've always had the idea that if taxes become too much, I could bail to another country. If everyone is registered and accounted for all over the world, I imagine the US could start making it very difficult for the wealthy to leave. Since, you know, they'll only be leaving if they are being taxed extremely heavily and the only way in hell that will happen is if we finally manage to spin up enough debt that not taxing them heavily would leave us bankrupt.

bwall

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Re: American living in Germany- Securities and exchange act of 1934
« Reply #7 on: August 26, 2014, 07:52:10 AM »
FATCA is designed to disrupt the flow of money between terrorist organizations. Unfortunately, it also sweeps up a lot of 'normal' people in the net. Many Americans living overseas have given up their citizenship over this. It is kinda a big deal outside the USA.

911 changed quite a few things, including allowing the US and Western Europe to finally break the Swiss banking hold on hiding untaxed money. Now the bad guys will have to put their hard-stolen millions in bank accounts in poor, unstable countries.