Essential cross-border investment tips for US expats
- 9 hours ago
- 8 min read
TL;DR:
US-domiciled funds avoid PFIC rules and simplify US tax reporting for expats.
Expats should choose brokerages like Interactive Brokers or Charles Schwab for compliance and access.
Ongoing cross-border estate and tax planning is essential due to changing laws and treaty gaps.
Moving to Europe as an American brings real excitement, but it also brings a financial minefield that catches many expats off guard. The dual US and EU legal environment means you remain fully subject to US tax law on your worldwide income and assets, even while navigating entirely different European rules. Get it wrong and you face steep penalties, restricted investment access, and potential double taxation on your estate. Get it right and you can build genuine, lasting wealth across two continents. This article gives you practical, evidence-backed tips on fund selection, brokerage access, estate planning, and coordinated investment strategy so you can move forward with confidence.
Table of Contents
Key Takeaways
Point | Details |
Avoid PFIC tax traps | Choosing US-domiciled funds can prevent harsh US taxes on foreign investment products. |
Select expat-friendly brokers | Platforms like Interactive Brokers and Charles Schwab are suitable for US citizens abroad. |
Beware of double estate taxes | Differences in US and EU inheritance laws mean careful planning is vital to avoid double taxation. |
Review strategies yearly | Changing laws and account rules mean annual reviews are necessary for expat investors. |
Understand the tax pitfalls: PFIC rules and fund selection
Having acknowledged the complex regulatory landscape, let’s start by tackling the biggest and most costly investment tax pitfall: PFICs. A PFIC, or Passive Foreign Investment Company, is any non-US entity that earns mostly passive income or holds mostly passive assets. The definition sounds technical, but the practical impact is simple and painful: almost every European mutual fund and ETF qualifies as a PFIC under US tax law.
Why does this matter so much? Because PFIC tax treatment can push your effective US tax rate to 40% or higher, plus interest charges that compound over time. You must also file Form 8621 for every single PFIC you hold, every year. Miss one and you face additional penalties on top of an already punishing regime.
Here is what typically catches new expats out:
Buying a locally recommended index fund at a European bank, not realising it triggers PFIC rules
Assuming that because a fund is regulated in the EU, it is also compliant for US tax purposes
Holding PFIC investments for years without filing Form 8621, creating a growing liability
Believing that small or low-value holdings are exempt (they are not)
“Avoid non-US mutual funds and ETFs as they are PFICs under US tax law, triggering punitive taxes and Form 8621 filing per PFIC. Prefer US-domiciled funds.”
The safest route is to stick with US-domiciled funds. These are funds registered and based in the United States, such as those offered by Vanguard, Fidelity, or iShares US. They fall outside PFIC rules entirely and integrate cleanly with your existing US tax reporting. Solid cross-border tax planning from the outset protects you from this trap before it becomes expensive.
Pro Tip: Before purchasing any investment product recommended by a European bank or adviser, ask directly whether it is US-domiciled. If they cannot confirm this, consult a cross-border specialist. A good investment structures guide can help you identify compliant options quickly.
Choose the right brokerage: Access and compliance for US expats
Once you have chosen compatible investment products, the next step is finding a broker that will not close your account or block your trades. This is a genuine problem. FATCA, the Foreign Account Tax Compliance Act, requires foreign financial institutions to report US account holders to the IRS. Many European platforms find this burden too costly and simply refuse to onboard US citizens altogether.
The good news is that expat-friendly brokerages do exist. Interactive Brokers and Charles Schwab International are the two most consistently recommended options for US expats in Europe. Both accept US citizens living abroad, support US tax reporting, and offer access to global markets.
Here is a practical comparison to help you decide:
Feature | Interactive Brokers | Charles Schwab International |
Accepts US expats | Yes | Yes |
Global market access | Extensive | Primarily US markets |
US tax reporting support | Yes (1099 forms) | Yes (1099 forms) |
Account minimum | None (standard) | None |
Trading costs | Low commissions | Commission-free US stocks |
Customer support for expats | Good | Strong US-focused support |
Beyond these two, your options narrow considerably. Most EU-based platforms, including popular apps like Trading 212 or Degiro, either block US citizens outright or impose restrictions that make them impractical.
Confirm the broker accepts your country of EU residence as well as your US citizenship
Check whether they issue standard US tax forms such as 1099-DIV and 1099-B
Verify that the platform supports the specific asset classes you want, including US ETFs
You can find useful cross-border investment examples that illustrate how expats structure accounts across platforms. Understanding SEC regulation for expats is also worth your time, as it shapes what products US-registered advisers can recommend to you while you live abroad.
Pro Tip: Open your expat-friendly brokerage account before you leave the US if possible. Some brokers are more flexible about account creation for US residents than for those already abroad.
Plan for estate and inheritance taxes: Cross-border strategies
Investing for the future also means considering what happens to your assets after you. Here is how to plan for cross-border estate and inheritance taxes, because the interaction between US and EU regimes is one of the most underestimated risks for American expats.
The US estate tax applies to the worldwide assets of every US citizen, regardless of where you live. In 2026, the individual exemption is $15 million, or $30 million for married couples. Anything above that threshold is taxed at 40%. For most expats this exemption feels comfortable, but property values, retirement accounts, and business interests can push estates over the threshold faster than expected.
Key figures to keep in mind:
Threshold | Rate |
Up to $15M (individual) | 0% |
Up to $30M (married couple) | 0% |
Above exemption | 40% |
On the European side, the picture is more varied. EU inheritance tax rules differ significantly by country. The US has estate tax treaties with France, Germany, and the UK that help prevent double taxation. However, popular destinations such as Italy and Portugal have no such treaty, leaving your estate potentially exposed to both regimes.
There is another layer of complexity in civil law countries. France, Spain, and Italy all operate forced heirship rules, meaning local law may override your will and dictate how a portion of your assets must be distributed. This can conflict directly with your estate planning intentions.
Practical steps to protect your estate:
Work with an adviser experienced in both US and EU succession law
Identify whether your EU country of residence has a tax treaty with the US
Review your will to ensure it is valid and enforceable in both jurisdictions
Consider structures such as trusts that can offer flexibility across borders
Exploring the full investment process steps and reviewing wealth management tips tailored to US expats will help you build a plan that holds up on both sides of the Atlantic.
Coordinate your investment strategy: Cross-border best practices
Once you grasp the risks and tools, here is how to build a cohesive, compliant investment plan that works both sides of the Atlantic. The sections above give you the building blocks. Now it is about putting them together in a way that is sustainable over the long term.
Structure your investments first. Decide which accounts and asset types you will use before you invest. US-domiciled funds held through an expat-friendly broker is your baseline. Refer to a reliable investment standards guide to confirm your choices are compliant.
Select your platform carefully. Use Interactive Brokers or Charles Schwab as your primary broker. Confirm that EU platforms often exclude US persons before opening any local account.
Optimise for both tax regimes. Work with advisers who understand both US and EU tax law. A US-only adviser may miss European obligations; an EU-only adviser may overlook FBAR or PFIC reporting requirements.
Review your accounts annually. Tax laws change. Exemption thresholds shift. Platforms update their terms. An annual review keeps you compliant and catches problems before they become costly.
Keep US reporting top of mind. Even after years abroad, you must file US tax returns, report foreign accounts via FBAR, and track PFIC holdings. This does not go away simply because you feel settled in your new country.
Consider European property carefully. If you invest in European property, factor in local purchase taxes, rental income reporting obligations in both jurisdictions, and potential capital gains exposure.
Pro Tip: The best cross-border investors treat compliance as a standing agenda item, not a once-a-decade task. Pair a US-based CPA with an EU-based financial adviser and schedule a joint review every year. The value of fiduciary advice from someone legally obligated to act in your interest cannot be overstated in this context.
Why cross-border investing requires adaptable strategies
These technical steps matter enormously, but what really sets successful cross-border investors apart is their mindset. Too many American expats build a solid plan at the point of relocation and then treat it as finished. That is a mistake that costs people real money.
Regulations shift. The PFIC rules have been tightened. Estate tax exemptions have changed multiple times in a decade. EU countries update their inheritance frameworks. Brokers revise their terms for non-resident clients. A strategy that was fully compliant and well-optimised in 2022 may have gaps by 2026.
The expats who manage expat wealth management well are those who treat it as an ongoing process. They schedule annual reviews, stay connected to advisers in both jurisdictions, and act quickly when rules change. Static strategies fail not because they were wrong at the start, but because the world moved and the strategy did not. Building long-term wealth across borders means staying curious, staying connected, and never assuming that last year’s plan is still this year’s best option.
Get support for your cross-border investment journey
Navigating PFIC rules, restricted brokerages, and competing estate tax regimes is genuinely complex. You do not have to work through it alone.
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At Linkindependent.com, we connect US expats in Europe with verified, regulated financial advisers who specialise in exactly these challenges. Whether you need a cross-border tax specialist, a licensed investment adviser familiar with both US and EU law, or an estate planning expert, we match you with the right professional for your situation. Our process is straightforward: tell us what you need, we match you with a verified expert, and you receive a free initial consultation. Take the guesswork out of cross-border investing and get personalised guidance you can trust.
Frequently asked questions
Can US expats in Europe invest in local mutual funds and ETFs?
US expats can technically purchase local funds, but these are almost always classified as PFICs under US tax law, triggering severe penalties and complex annual reporting. US-domiciled funds are the safer, compliant alternative.
Are there any brokers that US expatriates can access in Europe?
Yes. Expat-friendly brokers such as Interactive Brokers and Charles Schwab International accept US citizens living abroad, unlike most EU-based platforms which exclude US persons due to FATCA compliance costs.
How does US estate tax apply to expats with assets in Europe?
The US estate tax applies to your worldwide assets as a US citizen regardless of where you live, with a $15 million individual exemption in 2026 and a 40% rate on amounts above that threshold.
Can I be taxed twice on inheritance by the US and my EU country?
Double taxation is a real risk unless a tax treaty exists between the US and your EU country of residence. Popular destinations such as Italy and Portugal currently have no such treaty with the US.
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