Essential Advice for Americans in Europe
Are you a US citizen or a US connected person living in Europe? If you are you have probably experienced the hassle of managing your money, from opening a bank account, to planning for your future.
The good news is we can help you! Black Swan Capital are experts in providing independent investment and financial planning advice for Americans living in the EU.
Below we summarise some key points of advice for US citizens in this part of the world. If you would like to read more, you can download our Essential Guide for Americans and their families in Europe, or you can book an a no obligation initial call with us here.
The first question to clarify is whether this applies to you. If you are a US citizen it does, and it also does if you are US connected or an ‘Accidental American’.
1. Am I an Accidental American?
The US regulations cover the reporting obligations and investment restrictions for US citizens and US connected individuals living around the world. They also define who is covered by the regulations.
Our advice is to not just presume that because you don’t consider yourself American you can avoid the requirements for reporting. The FACTA net can be broad. Whilst this ruling is being challenged and debated it remains in place.
Here are some examples of who might be an Accidental American:
you were born in the US, have a US passport but left as a child.
You have a parent that is a US citizen,
Your spouse is American (depending on how you and they file taxes)
You have a green card that is still functional, even if you live outside the US
If you are a US citizen, or even think you could be connected, here are some further actions we recommend:
2. Check your existing investments are compliant
As an American living in Europe, if you have an existing investment, it is important to check that the investment is compliant, that it isn’t a dreaded PFIC (another acronym- we are happy to explain this to you) and won’t incur punitive tax rates or worse, penalty charges. Contact us and we can arrange a time for a meeting or a video call. We can conduct a review of your situation and ensure your investments will help you get to your goals, whilst being compliant with all the US FATCA regulations, and your country of residence, as well as anywhere else you have reporting obligations. Getting it wrong can be expensive so this can be a worthwhile exercise.
3. Check if you are up to date with your US tax filing. If you are not up to date, fix it now!
People who have not filed their US tax returns or who have misrepresented their financial information can – when identified by the IRS – potentially be fined or prosecuted.
Filing doesn’t necessarily mean you will get another tax bill. Many people end up not having to pay additional tax, due to double taxation treaties, but if you are in the wrong investment, you can potentially incur steep tax bills.
The action here is to ensure that your US tax filing is accurate and up to date for at least the last six years. You can do it yourself on the IRS website or you can speak with a tax professional here in Europe that has experience in the US system.
4. Link your goals to your investments and start investing compliantly
We speak with a lot of Americans in Europe and we often hear similar stories, of people that have felt like they cannot invest the way they want to achieve their goals.
The three obstacles Americans most frequently mention are that:
They have to leave their money in cash- this is not true;
No investment companies will work with their money- some will, and we can help; and
They have to lock their money away in a restrictive structure for many years or until they retire- this does not have to be the case.
The good news is there are US-compliant investment solutions that you can access in Europe, where you can maintain liquidity and invest in accordance with your goals, but you need to make sure they are right for you. You don’t have to leave your money in cash, and you also don’t have to lock your hard-earned investments away in a convoluted pension or long-term contract.
What you do need to do is get specialist independent advice from a European licensed professional with US expertise- that’s Black Swan Capital!
We are very aware that life for international professionals can change suddenly and you may need to change that investment or move it to another jurisdiction. We always make sure you have that flexibility should you need it.
In summary, it can be difficult to invest as a US person living in Europe, but you don’t have to lose this time and miss out on growth in your portfolio. Investing in a compliant way whilst living in Europe can help you to get closer to your goals. Speak with the team at Black Swan Capital and we can help you navigate the complexities for you.
