Americans Moving to germany
Financial Planning and Investing Considerations for Americans Moving to Germany
Germany has always been among the most popular destinations for Americans moving to Europe, thanks to it’s incredible cities, history, and culture.
Moving to Germany comes with financial planning and investing challenges though, many of which should ideally be considered before you move, or as soon as possible afterwards. Seeking advice as soon as possible can make a significant difference to your financial situation,
The financial challenges that Americans in Germany face include maintaining and opening US brokerage accounts as an expat, retirement planning, how and where to invest, minimizing currency exchange loss, US and German tax optimization, and international estate planning.
Download our guide below or schedule a consultation.
What else do US Citizens moving to Germany need to know?
The list of financial factors that Americans making the move to Germany doesn’t end there. You’ll also have to think about where to invest, how to open a German bank account, which residency visa to apply for (and how to apply for it), and find out about local and national German taxes and how they interact with US taxes for cross-border Americans.
In the video opposite, we provide a very brief overview of some of the factors you should consider.
Download our in-depth guide below, or schedule a consultation to discuss your situation with one of our expat experts.
Our Story
EuroAmerican Financial Advisors is the only independent financial advisory firm specializing in serving Americans in Germany.
We provide investment advice and financial planning services tailored for Americans in Germany. The financial issues faced by Americans in Germany are quite different compared to Americans living within the United States due to cross-border taxation, currency fluctuations, as well as global investment questions.
We are regulated and licensed in Germany, and our advisors are also licensed in the US. We offer Americans in Germany a personalized and optimized service, transparent fees, easy communication, tax efficient investment strategies; and most importantly the peace of mind that comes from dealing with an investment advisory firm that specializes in financial planning in to both the US and Germany.
We’ve created an in-depth guide to the financial planning considerations for Americans moving to Germany, which you can download below.
EAFA Financial Planning Considerations Guide for Americans moving to Germany
Enter you details below to download our guide to financial planning considerations for Americans moving to (or living in) Germany
Our Services
Investment Advice
Most firms use model portfolios that don’t take into account your situation as an American in Germany affected by both jurisdictions’ tax and regulatory regimes, and your withdrawal plans or future needs in Euros and/or dollars. Such portfolios also don’t allow the flexibility to adapt depending on the economic cycle, market volatility, or your cash needs.
At EAFA, we build a personalized investment strategy for you as an American in Germany. We work with our partners and utilize expat-compliant investments and brokerage accounts to implement the strategy and make tactical adjustments when necessary. In this way, we ensure that you remain optimally on track to meet your financial goals.
Financial planning
We have the experience and knowledge to manage cross-border portfolios in a tax efficient manner in both the US and Germany while also mitigating risks arising to your wealth or income from dollar/Euro currency movements. We have advisors with both the US Certified Financial Planner (CFP) designation, and the European Financial Planner (EFP) designation.
At EAFA, our financial planning process encompasses the additional complexities that living as an American expat in Germany entails while maintaining an unwavering focus on your financial goals. We also address non-investment issues such as estate planning, US and German taxation, education planning for children or grandchildren, and retirement considerations.
Retirement planning
Most firms don’t have experience working in both Euros and dollars to minimize costs, currency exposure and taxes in both Germany and the US.
At EAFA, we will create a retirement plan based on your plans and aspirations, that will minimize taxes and currency exposure, and which is globally diversified. We understand that you may want to maximize travel and leisure in the early years of retirement when you are most active, and we will stress test our plans using historical scenarios like the global financial crisis, pandemics, and periods of high and low interest rates, to ensure you are prepared and protected for whatever may come.
Why EAFA?
We specialize in providing financial planning and investment advice for Americans living in Germany.
We are independent advisors, licensed and regulated in Germany, and regulated US advisors, allowing us to manage and globally diversify your investments in your best interests, not ours. We have the knowledge and experience to minimize your tax exposure in both jurisdictions as well as risks of losses relating to dollar/Euro currency movements.
We take a holistic approach, learning about your current situation, future plans and investment goals. We are expats ourselves, so we fully understand the issues and challenges Americans in Germany face, as well as the peace of mind that comes from trusting your finances to experts, allowing you to relax and enjoy the great adventure of living abroad.
Ready to Plan your Move to Germany ?
Schedule a complementary consultation to discuss your options. We can transfer your existing investments to an expat-compliant US brokerage account without creating a taxable event if necessary.
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When you’re ready, sign our Know Your Client form and advisory agreements online.
Immersing yourself in the culture and beauty of Germany as an American expat can be an incredible experience. However, Americans moving to Germany will face particular financial challenges, especially when it comes to making investment decisions. In this article, we outline the main considerations for American expat investors in Germany, emphasizing the importance for expats of not just adapting to a new culture, but also to the complexities of a new financial reality.
A complex investment landscape for US expats in Germany
Investment decisions for US citizens and green card holders living in Germany are more complex compared to Americans living in the United States. One of the main reasons for this is that, regardless of their residence abroad, US citizens are subject to both US and German reporting and taxation. This means that financial accounts and investments in Germany held by Americans must be reported to the IRS, and certain types of German investments can trigger new US tax liabilities.
Moreover, American expats in Germany may be limited in investing in US-based funds due to European Union regulations like MIFID II and PRIIPS (Packaged Retail and Insurance-Based Investment Products). These regulations restrict EU residents from investing in non-EU (e.g., US) based funds that don’t have specific characteristics. Nevertheless, specialized expat financial advisory firms can provide tailored solutions for expats to have investment portfolios that align with each individual’s situation, goals, and future plans.
To further complicate matters, Americans in Germany may not be able to maintain a US brokerage account, as many American brokerage firms aren’t able to work with clients who reside in Germany. Again though, specialist US expat financial advisors can offer custom solutions.
The impact of tax rules for American investors
While Germany and the United States have signed income tax treaties and Social Security agreements, the worldwide income of American expats is potentially subject to taxation by both the U.S. and Germany. To mitigate double taxation, there are IRS provisions such as the U.S. Foreign Tax Credit available that expats can claim that offer US tax credits based on the value of German taxes paid. Seeking professional guidance from an expat specialist CPA can help you take full advantage of these tax benefits and reduce your worldwide tax obligations. Note also that Americans in Germany have obligations to report any non-US registered bank and investment accounts they may have, too.
Special expat tax regime in Germany
German income tax law generally does not offer a special tax regime for expats. However, certain expenses related to relocation and business travel can be tax-deductible or reimbursed tax-free under specific conditions:
- Moving expenses: If you move for work-related reasons, certain moving expenses can be claimed as tax-deductible or reimbursed by your employer tax-free. This includes costs like transportation of household goods and travel expenses for house hunting.
- Per diems for business trips: Tax-free per diems can be granted by employers to cover meals and incidental expenses during business trips. The per diem rates vary depending on the duration of the trip and the location.
- Double housing costs: If you maintain two households due to work requirements (e.g., keeping a home in another city or country while working in Germany), you can claim double housing costs as a tax deduction. This includes rent, utilities, and other related costs, but certain criteria must be met, such as the necessity of maintaining both residences for work reasons.
These provisions aim to mitigate the financial burden of relocation and temporary work assignments but are subject to certain conditions and caps.
Investment and taxation
US tax-advantaged accounts and German taxation
The US-German tax treaty doesn’t cover tax-advantaged retirement accounts, meaning that Germany doesn’t recognize the tax benefits of accounts such as IRAs, Roth IRAs, or 401(k)s, so seek advice before deciding how you save for retirement as an expat in Germany.
Owning foreign mutual funds (PFICs)
American expats in Germany should exercise caution when considering investing in non-US mutual funds, ETFs and private pension plans, which the IRS classifies as Passive Foreign Investment Companies (PFICs). These investments can lead to complex US tax reporting and potentially result in new US tax liabilities. It’s normally a more tax-efficient approach for American expats to opt for certain US-domiciled funds and individual stocks through an advisor specializing in expat investment services.
Managing currency exposure
Managing different currencies is another important consideration for American expats in Germany. It’s important to minimize fees associated with currency conversion, whether you’re making investments back in the US, or drawing on existing investments. Furthermore, the value of investments in multiple currencies can rise or fall due to exchange rate movements. Again, your expat financial advisor will provide guidance on how to manage these risks. Factors that affect whether you invest in the US or Germany will include how long you plan to live in Germany, where you’ll be living when you wish to draw on your investments, and where your current income is paid.
Diversification
The best investment strategies for American expats in Germany depend on factors such as your income and your long-term plans and goals. However, the core principle of diversification to mitigate investment risks remains important. How diversification is applied can vary depending on each expat’s particular situation and goals though. For example, it may make sense to invest in both Germany and the US, or it may not, depending on your long term plans and goals. Note also that owning assets in Germany as well as the US will have estate planning implications, too. But the principle of diversifying your investments in terms of currency, geography, and asset class as a strategy to reduce risk remains.
Wrapping up
Germany offers a vibrant and culturally rich experience for American expats, but careful financial and tax planning is crucial when investing as a US expat. Navigating the complexities of investing as an American in Germany ideally requires guidance from a financial advisor with expertise in international investing to ensure that you make informed decisions that optimize your financial while minimizing the risks associated with possible pitfalls.
If you have any questions about financial planning as an American living in the EU, get in touch.
This article is for informational purposes only; it is not intended to offer advice or guidance on legal, tax, or investment matters. Such advice can be given only with full understanding of a person’s specific situation.
Americans Moving to Germany Financial FAQs
What financial planning issues should Americans consider before moving to Germany?
Americans should review taxes, investments, pensions, currency exposure, estate planning, and US reporting obligations before relocating to Germany.
Can Americans living in Germany keep their US brokerage accounts?
Some US brokerage firms restrict services for clients abroad, so Americans in Germany may need expat-friendly investment account solutions.
How are Americans in Germany taxed on investments and retirement accounts?
Americans in Germany may face tax obligations in both countries, making coordinated US-German tax and investment planning important.
What investment challenges do US citizens face while living in Germany?
Challenges include PFIC rules, brokerage restrictions, currency risk, cross-border tax treatment, and aligning investments with long-term residency plans.
How can Americans in Germany reduce currency exchange and cross-border investment risks?
They can diversify currency exposure, plan cash needs carefully, and structure portfolios around both US and German financial considerations.
Why is specialist cross-border financial advice important for Americans moving to Germany?
Specialist advice helps coordinate US and German rules, avoid investment mistakes, and create a financial plan suited to expat life.