What about investment accounts? This is/has been a huge hurdle due to:
US PFIC taxes on the one hand (applying to US citizens who want to own non-US based investments); and
US investment firms (e.g. Vanguard, Fidelity, etc.) not wanting to deal with residents of the EU (including US citizens) due to EU investment disclosure requirements that the US mutual funds and ETFs don't comply with.
Quite a difficult issue, especially for retirees who need to stay invested in order for their funds to last the decades needed!
Yep, investment accounts are a whole separate beast.
The short version: most US Citizens abroad keep their US brokerage and only buy US-registered funds (before exiting). That sidesteps PFIC entirely.
The hard part is finding brokerages that don't freeze your account when you update your address. A select few work well abroad, most don't.
There are also ways to invest outside of funds altogether (individual stocks, real estate abroad, even physical gold). Each has reporting req but nothing like the PFIC.
I'll cover this in one of the modules of my upcoming Retire Abroad Blueprint program in more detail.
I was pleased to have retained a credit union account after WF closed our financial accounts for to the foreign address. Our CU provides international services and also hosts traditional IRAs. Any comment on credit unions as opposed to traditional commercial banks?
That's great John. You got lucky with your CU. Most are actually more restrictive than big banks when it comes to foreign addresses and international transactions. They tend to be risk-averse and will close accounts without warning if they see too much overseas activity. But if yours is expat-friendly and hosts IRAs, definitely hold onto it.
This great advice. You’ve provided simple straightforward methodology. As a Canadian I still follow the same rules.
We lived in Switzerland, France, and New Zealand for a number of years. As diplomats we were able to easily get a local bank accounts, but not without its own challenges and restrictions.
Thanks Roberta! It's eye opening for me, what (in my eyes) simple systems that I have been using for years, are so valuable to others. I have to put myself in first-timers shoes more ;)
That depends on a few factors, what company type, what business and also nationality and what kind of payments will be received (subscription, coaching, physical goods etc.).
For US citizens, FATCA is THE issue when it comes to money matters. Eg, most local banks consider you are a "persona non grata" and you are rejected in a first screening.
Just an FYI: Wise has recently (last six months) required me to use a wire transfer to fund the transfer which incurs the fee you are advising to avoid by using a fintech. I don’t know why this is happening because it didn’t in the past. Maybe because it was over a maximum threshold to avoid it. Nevertheless, it is irksome.
I’m pretty sure it’s a threshold thing. In the past, if the amount was under $10k, Wise handles the transaction seamlessly and the transaction fee is minimal. When I was sending tens of thousands, Wise website would take me to a different page and I would be instructed to have my bank issue a wire transfer and it would take a few days for it to be completed. I could return to my account on Wise to monitor the status. I’m sure it had to do with the U.S. banking laws reporting requirements.
Got it, thanks, and that makes sense. Yes, this is a threshold thing. For smaller amounts Wise lets you link your bank directly, but for larger transfers they require a wire because of ACH limits and banking regulations. That's always been the case. My advice in the article is aimed at typical expat transfers (monthly expenses, rent, etc.) which usually fall under those thresholds. Good callout though, I should probably add a note about this for people moving larger sums.
Hey Frank, I want to make sure I understand this correctly. What do you mean by "fund the transfer"? Can you walk me through what you're trying to do step by step? Sometimes it's a threshold thing, if it's over a certain amount being sent.
What about investment accounts? This is/has been a huge hurdle due to:
US PFIC taxes on the one hand (applying to US citizens who want to own non-US based investments); and
US investment firms (e.g. Vanguard, Fidelity, etc.) not wanting to deal with residents of the EU (including US citizens) due to EU investment disclosure requirements that the US mutual funds and ETFs don't comply with.
Quite a difficult issue, especially for retirees who need to stay invested in order for their funds to last the decades needed!
Yep, investment accounts are a whole separate beast.
The short version: most US Citizens abroad keep their US brokerage and only buy US-registered funds (before exiting). That sidesteps PFIC entirely.
The hard part is finding brokerages that don't freeze your account when you update your address. A select few work well abroad, most don't.
There are also ways to invest outside of funds altogether (individual stocks, real estate abroad, even physical gold). Each has reporting req but nothing like the PFIC.
I'll cover this in one of the modules of my upcoming Retire Abroad Blueprint program in more detail.
I was pleased to have retained a credit union account after WF closed our financial accounts for to the foreign address. Our CU provides international services and also hosts traditional IRAs. Any comment on credit unions as opposed to traditional commercial banks?
That's great John. You got lucky with your CU. Most are actually more restrictive than big banks when it comes to foreign addresses and international transactions. They tend to be risk-averse and will close accounts without warning if they see too much overseas activity. But if yours is expat-friendly and hosts IRAs, definitely hold onto it.
Ben,
This great advice. You’ve provided simple straightforward methodology. As a Canadian I still follow the same rules.
We lived in Switzerland, France, and New Zealand for a number of years. As diplomats we were able to easily get a local bank accounts, but not without its own challenges and restrictions.
Great post.
Thanks Roberta! It's eye opening for me, what (in my eyes) simple systems that I have been using for years, are so valuable to others. I have to put myself in first-timers shoes more ;)
RETIRE
Added you ;)
RETIRE
You're on the list! ;)
Retire
Added you! :)
What do recommend for company accounts as an expat with an online business?
That depends on a few factors, what company type, what business and also nationality and what kind of payments will be received (subscription, coaching, physical goods etc.).
I'll DM you details…
Sure!
Hi Benjamin. Not sure where "Reply" is - technical luddite here. Wanted to send "RETIRE" to you. Thanks!
Hi Dawn! I got you ;) Will add you to the mailing list of the retire group now!
RETIRE
Added you!
Retire
Hey Jack, happy to add you. Once you subscribe, I'm able to add you to the list (or you can send me your e-mail via DM). Best, Ben
Retire.
Added you Renee!
Retire
Thanks Nick, added you!
Retire
Added you ;)
For US citizens, FATCA is THE issue when it comes to money matters. Eg, most local banks consider you are a "persona non grata" and you are rejected in a first screening.
Yep, FACTA is the issue here, absolutely right.
RETIRE
Added you! :)
RETIRE
Added you! :)
Retire
Hey Janine, happy to add you! Send me your e-mail and I will put you on the list :)
Just an FYI: Wise has recently (last six months) required me to use a wire transfer to fund the transfer which incurs the fee you are advising to avoid by using a fintech. I don’t know why this is happening because it didn’t in the past. Maybe because it was over a maximum threshold to avoid it. Nevertheless, it is irksome.
I’m pretty sure it’s a threshold thing. In the past, if the amount was under $10k, Wise handles the transaction seamlessly and the transaction fee is minimal. When I was sending tens of thousands, Wise website would take me to a different page and I would be instructed to have my bank issue a wire transfer and it would take a few days for it to be completed. I could return to my account on Wise to monitor the status. I’m sure it had to do with the U.S. banking laws reporting requirements.
Got it, thanks, and that makes sense. Yes, this is a threshold thing. For smaller amounts Wise lets you link your bank directly, but for larger transfers they require a wire because of ACH limits and banking regulations. That's always been the case. My advice in the article is aimed at typical expat transfers (monthly expenses, rent, etc.) which usually fall under those thresholds. Good callout though, I should probably add a note about this for people moving larger sums.
Hey Frank, I want to make sure I understand this correctly. What do you mean by "fund the transfer"? Can you walk me through what you're trying to do step by step? Sometimes it's a threshold thing, if it's over a certain amount being sent.