Keep your financial life coordinated across borders.
Living abroad adds new variables to investing, income, and account management. Adrian Flambard and Bennett Linsky lead this area of US Expat, helping you see the whole picture and coordinate the right advisory support.
What cross-border financial planning involves
Living abroad layers new variables onto decisions you may already have in hand. These come up for most households.
- Managing U.S. investment and retirement accounts while living overseas.
- Building reliable income across currencies and account types.
- Understanding how account access and custody can change once you’re abroad.
- Coordinating U.S. and non-U.S. professionals so nothing falls through the cracks.
- Planning for currency movement, banking, and day-to-day cash flow.
Nothing about the assets changes when an American moves abroad. What changes is access: the firm holding the account applies a policy keyed to the address on file, European distribution rules block most US-domiciled funds, US tax law makes most local substitutes expensive to hold, and retirement balances built under one tax system are drawn down under two.
The address on file, not the passport, drives what a US brokerage does
A US brokerage account does not become unlawful when its owner moves overseas. No federal statute directs a broker-dealer to close one because the address of record is in Lisbon rather than Louisville. What exists instead is firm-level policy, which is why two Americans in the same city, at different firms, report opposite experiences and are both right.
The constraint the firms are answering sits in foreign law, not US law. Charles Schwab’s account-eligibility material states that the firm is not registered in any other jurisdiction and that its products may be unregistered where an applicant lives; it declines applications from residents of certain countries on that footing. MiFID II article 39 lets a member state require that a third-country firm intending to provide investment services to retail clients in its territory establish a branch there.
The narrow opening is reverse solicitation, under which a third-country firm may serve a client who initiates the provision of an investment service at their own exclusive initiative. ESMA has said publicly that this cannot be manufactured with paperwork: the exemption fails regardless of any contractual clause or disclaimer purporting to establish it, and advertising, brochures or phone calls can defeat it. So the usual outcome is narrowing, not closure: the account survives while what the firm will do inside it shrinks.
- A block on new purchases of the firm’s own funds, while existing holdings can be held or sold.
- Withdrawal of research and of any service the firm treats as regulated where the holder lives.
- Transfer to a separate international arm of the same firm, on different minimums and fees.
- Refusal or closure where the country of residence is on the firm’s restricted list.
The key information document, and why US-domiciled ETFs disappear inside the EU
The PRIIPs Regulation, Regulation (EU) No 1286/2014, covers packaged retail investment products — investments where the amount repayable to the retail investor fluctuates because of exposure to reference values or to the performance of one or more assets. An exchange-traded pooled fund sits inside that.
Article 5(1) requires the manufacturer, before the product is made available to retail investors, to draw up a key information document and publish it on its website. Article 13(1) places delivery on distribution: the key information document must be provided by whoever distributes or sells the product, in good time before those retail investors are bound by any contract. Article 7 requires it in an official language used where the product is distributed. The regulation has applied since 1 January 2018.
A US sponsor selling into the US market has little reason to produce a document written to an EU template, in EU languages, for a market it does not distribute into. Where none exists, a European distributor cannot discharge article 13(1), so it does not offer the product. Article 24 backs that with fines reaching EUR 5,000,000 or 3 per cent of annual turnover for a legal person and EUR 700,000 for an individual. Familiar, low-cost US-listed ETFs become unpurchasable through distribution law, not any ban on ownership.
PFIC treatment and the cost of the obvious substitute
The obvious substitute, whatever fund the local platform does offer, meets US law travelling the other way. A foreign corporation is a passive foreign investment company if 75 per cent or more of its gross income for the tax year is passive income, or if at least 50 per cent of the average percentage of assets it held that year produce passive income. Pooled funds organised outside the United States meet both tests by construction.
Holding one produces a separate Form 8621 per fund and a default regime under section 1291. An excess distribution — the part exceeding 125 per cent of the average received on that stock over the three preceding tax years — is spread across the holding period, with the portion allocated to earlier years taxed at the highest ordinary rate for those years plus an interest charge. Two elections displace that default. A qualified electing fund election under section 1295 requires annual inclusion of a pro rata share of the fund’s ordinary earnings and net capital gain, which depends on information most non-US funds do not produce. A section 1296 mark-to-market election reaches marketable stock only.
The available relief is reporting, not tax: a $25,000 exception, $50,000 for joint filers, under which a shareholder need not complete Part I for a section 1291 fund, provided no excess distribution was received and no gain recognised that year.
| Question | US-domiciled fund or ETF | Non-US-domiciled fund, such as an EU one |
|---|---|---|
| Does a PRIIPs key information document exist? | Generally not, as a US sponsor has no reason to produce one | Yes, required of the manufacturer by article 5(1) |
| Can an EU distributor sell it to a retail investor? | No, since article 13(1) requires it from whoever distributes or sells the product | Yes, once provided in good time |
| US tax characterisation | Domestic fund, on ordinary US rules | PFIC, meeting the 75 per cent income or 50 per cent asset test |
| Origin of the obstacle | EU distribution law | US tax law |
What happens to 401(k), IRA and Roth balances once tax residency moves
Nothing happens to the accounts on the day of departure. A US citizen’s worldwide income is generally subject to US income tax regardless of where they are living, so distributions stay on the US return wherever the recipient sits. What changes is that a second country now also has a claim, and the relief most Americans abroad lean on does not reach it: pension and annuity payments, including social security benefits, sit on the IRS list of amounts not included in foreign earned income, so the exclusion does nothing for a 401(k) or IRA withdrawal.
Treaties allocate the competing claims, generally by assigning pensions to the country of residence: the 2016 US Model provides that pensions beneficially owned by a resident are taxable only in that contracting state. Every US treaty qualifies this with a saving clause — the protocol to the US-Portugal convention preserves the right of the United States to tax its citizens as if the convention had not come into effect. Relief from double taxation runs through the credit mechanism, not the residence rule.
The Roth is where this becomes genuinely unsettled, and saying so is more useful than asserting an answer. A qualified Roth distribution is tax-free under US law, but that is a US characterisation, and it travels abroad only if a treaty carries it. The 2016 US Model contains the clause that would: article 17(1)(b) exempts, in the residence country, any pension amount that would be exempt from taxation there if the beneficial owner were a resident. That clause is not in every treaty in force — the US-Portugal convention has no equivalent. Where it is absent, whether a Roth withdrawal is an exempt pension, a taxable one, or investment income in a wrapper the local system does not recognise turns on domestic law and practice that are unsettled.
Currency and sequence risk when income and spending diverge
Amounts on a US return must be expressed in US dollars, and the IRS directs use of the spot rate prevailing when an item is received, paid or accrued, adding that it has no official rate and accepts any posted rate applied consistently. That is a reporting rule, but it names the condition: dollar assets paying euro or yen bills are two moving variables, not one.
Sequence-of-returns exposure is the arithmetic of drawing a fixed real amount from a balance that moves. Units sold during a decline never participate in the recovery, so two periods with an identical average return end differently depending on the order the years arrive in. A currency leg adds a second engine: a balance can be flat in dollars and materially lower in local purchasing power over the same year, and the withdrawal is sized by the grocery bill, not the account statement.
- Social Security and most US pension income is fixed in dollars wherever the recipient lives.
- Rent, healthcare and everyday costs are fixed in the local currency.
- Conversion spread and transfer timing sit between the two, on every movement of money.
Estate and gift exposure when a spouse is not a US citizen
The unlimited marital deduction — under which property passing to a surviving spouse escapes federal estate tax at the first death — is switched off by section 2056(d) where that spouse is not a US citizen. Section 2056A restores it through a qualified domestic trust, elected by the executor on the estate tax return. The IRS instructions state that the QDOT rules apply only where a decedent’s surviving spouse is not a US citizen. A QDOT defers the tax and imposes it on certain distributions; the exposure does not vanish.
Lifetime transfers run in parallel. Gifts to a US citizen spouse are unlimited; gifts to a spouse who is not are capped by an inflation-indexed annual exclusion, set at $194,000 for 2026, against a general annual gift exclusion of $19,000. Estates of decedents dying during 2026 have a basic exclusion amount of $15,000,000.
The triggering events here are ordinary life abroad, not deliberate financial manoeuvres: marrying a national of the country of residence, retitling a home into joint names for a local matrimonial regime, moving money between spouses at a bank’s request. Each meets federal rules written around a different fact pattern, and each is easier to foresee than to unwind.
- Internal Revenue Service, Instructions for Form 8621 — https://www.irs.gov/instructions/i8621 — checked 28 August 2026
- EUR-Lex, Regulation (EU) No 1286/2014 on key information documents for packaged retail and insurance-based investment products — https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX%3A02014R1286-20240109 — checked 28 August 2026
- ESMA, MiFID II article 39, establishment of a branch, Interactive Single Rulebook — https://www.esma.europa.eu/publications-and-data/interactive-single-rulebook/mifid-ii/article-39-establishment-branch — checked 28 August 2026
- ESMA, Public statement on reverse solicitation requirements under MiFID II — https://www.esma.europa.eu/sites/default/files/library/esma35-43-2509_statement_on_reverse_solicitation.pdf — checked 28 August 2026
- Charles Schwab, Restricted countries, international account eligibility — https://international.schwab.com/open-account-intro/restrict — checked 28 August 2026
- Internal Revenue Service, Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad — https://www.irs.gov/publications/p54 — checked 28 August 2026
- Internal Revenue Service, Foreign earned income exclusion, what is foreign earned income — https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-what-is-foreign-earned-income — checked 28 August 2026
- US Department of the Treasury, United States Model Income Tax Convention, 2016 — https://home.treasury.gov/system/files/131/Treaty-US-Model-2016_1.pdf — checked 28 August 2026
- Internal Revenue Service, Convention between the United States and the Portuguese Republic for the avoidance of double taxation — https://www.irs.gov/pub/irs-trty/portugal.pdf — checked 28 August 2026
- Internal Revenue Service, IRS releases tax inflation adjustments for tax year 2026 — https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill — checked 28 August 2026
- Internal Revenue Service, Instructions for Form 706-QDT — https://www.irs.gov/instructions/i706qdt — checked 28 August 2026
- Internal Revenue Service, Yearly average currency exchange rates — https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates — checked 28 August 2026
Common financial planning topics
Investment accounts
How U.S. accounts can be affected by living abroad, in general terms.
Retirement income
Coordinating Social Security, IRAs, pensions, and taxable accounts.
Banking & currency
Considerations for moving money and managing multiple currencies.
Account access
Why some providers treat non-resident clients differently.
Estate & legacy
Why cross-border estate planning often needs specialist review.
Tax coordination
Keeping financial decisions aligned with tax realities.
Common questions.
Can I keep my U.S. brokerage and retirement accounts abroad?
Often, but not always automatically. Some providers treat non-resident clients differently and may restrict accounts. This is worth reviewing before you move.
How do I create retirement income overseas?
It usually involves coordinating Social Security, IRAs, pensions, and taxable accounts across currencies and tax systems. The right sequence depends on your circumstances.
Does US Expat manage investments?
US Expat is education-first. Where regulated advisory services are referenced, they are offered separately through the appropriate advisory relationship and documentation.
When is the right time to plan?
Generally before a move and before major financial decisions, then reviewed at least annually as your situation and the rules change.
Related insights.
US Estate Tax for Americans in Europe: 2026
The United States taxes the estate. Most of Europe taxes the heir, and several countries dictate who the heirs must be. Two provisions decide how those systems meet — and Portugal and Spain, the two largest American destinations in Europe, sit outside the treaty network entirely.
Currency Risk for Americans Retiring Abroad 2026
Two retirees can earn the same average return and end up in different places, because withdrawals make the order of returns matter. An American retiring into the euro area is exposed to a second ordering problem — the exchange rate — and central bank data show it has been as large as the market one.
WEP and GPO Repeal: Social Security Abroad 2026
Two provisions that reduced benefits for people with non-covered pensions were struck from the statute outright. The repeal is complete, its implementation is finished, and it leaves several rules that apply only to beneficiaries living outside the United States entirely untouched.
A note on financial planning content
Financial planning topics discussed by US Expat are educational and general in nature. They should not be treated as personalized investment, financial, or retirement advice unless provided through the appropriate advisory relationship and documentation. Where regulated advisory services are referenced, they are offered separately and are subject to applicable jurisdiction, registration, and compliance requirements.
Where does this fit in your move?
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