How to Invest in the US: A Guide for Europeans

by | Mar 17, 2025 | Investing

US markets are the largest and most dynamic in the world, offering a wealth of opportunities for investors. If you’re a European investor looking to invest in the US, you’re in the right place. Whether you’re interested in stocks, ETFs, mutual funds, or real estate, there are numerous opportunities for growth. In this article, we’ll walk you through how to start investing in the US. 

Choosing a right brokerage firm 

To invest in the US as an international investor, you’ll need a brokerage account that accommodates non-residents. Most US brokerage firms are unable to work with non-US residents, due to US anti-money laundering and Know Your Client rules. There are still some that can though, and depending which country you’re a resident in, including Interactive Brokers, and Charles Schwab. 

Some investors also consider tax-efficient structures, such as investing through a corporate or trust structure, to optimize tax efficiency. Seek advice from an expat-specialist investment advisor if you’d like to explore these options. 

Investment options in the US 

Stocks, bonds and ETFs listed on the NYSE and Nasdaq provide diverse investment opportunities, with ETFs tracking the S&P 500 or Nasdaq-100 offering broad market exposure. However, US mutual funds are generally not accessible to European investors living in the EU due to MiMID II and PRIIP regulations and residency requirements. Real estate investment in the US can be another viable option, though investors should carefully consider tax implications and property management responsibilities. Investing in US private markets, such as private equity and venture capital, can offer exposure to startups and private companies, however access is often limited to accredited investors who meet certain income or net worth requirements. 

US tax considerations for European investors 

Investing in the US comes with important tax implications for investors. The US imposes a 30% withholding tax on dividends, though some tax treaties can reduce this for European investors. While the US does not tax non-residents on capital gains from stock sales, your country of residence may. You’ll also probably have to pay income tax on distributions from local investments in your country of residence, depending on the rules in your country, though you should be able to claim tax credits to avoid double taxation. 

  • Withholding tax on dividends: A standard 30% rate applies, but tax treaties often lower it to 15%. 
  • Capital gains tax: Non-residents are generally exempt from US capital gains tax, though local tax obligations still apply.  
  • Estate tax risk: Non-American investors with over $60,000 in US assets could face estate tax upon death. Some investors use tax treaties or offshore structures to reduce this risk. 

Currency and fees 

Currency risk is another factor to consider when investing in the US, as exchange rate fluctuations can impact the returns on your investments, as can fees when transferring funds between Europe and the US. As the value of your home country’s currency relative to the US dollar can either increase or decrease the value of your investments, to mitigate this, some investors explore hedging strategies to protect themselves against unfavorable currency movements. Additionally, don’t forget to factor in transaction fees, including brokerage charges, foreign exchange costs, and any potential US transaction taxes. These costs can add up and affect the overall profitability of your investment, so they should be taken into consideration from the outset. 

Dividend reinvestment Plans (DRIPs) 

Dividend Reinvestment Plans (DRIPs) offer European investors a convenient way to reinvest their US dividend income automatically into more shares of the same stock or fund. This can help compound returns over time without triggering additional taxes on reinvested dividends. Keep in mind that DRIPs are subject to US withholding tax, but they can be a cost-effective way to grow your investment. 

Compliance and regulations 

European investors looking to invest in the US must consider both US tax implications and EU regulations that can affect their access to certain US investment products. 

US regulations  

Comply with US tax & reporting requirements 

Brokers may require tax documentation to comply with US regulations. The W-8BEN form in particular is commonly needed to certify foreign status and claim tax treaty benefits to reduce tax withholding rates on US dividends. 

EU Regulations  

The PRIIPs (Packaged Retail and Insurance-based Investment Products) 

EU PRIIPs regulations require investment products marketed to EU retail investors to provide a Key Information Document (KID) in a standardized format. Many US funds, including mutual funds and ETFs, do not comply with this requirement, meaning EU resident retail investors may not be able to buy them through EU-based brokers. There are workarounds though, so consult a financial advisor who specializes in US cross-border investing. 

Final thoughts 

European investors should consult a financial advisor who understands both US and European tax regulations. Advisors can help structure portfolios to comply with both US and EU rules while optimizing for tax efficiency in both jurisdictions. 

Investing in the US offers diversification and access to the world’s biggest market. With the right guidance and a personalized strategy based on your situation, risk tolerance and financial goals, it can be both accessible and rewarding. 

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.   

Shane Clark, EFP

Shane Clark, EFP

Shane Clark is President of EuroAmerican Financial Advisors and holds the European Financial Planner (EFP) designation, specializing in financial planning and investment advice for Americans moving to or living in Europe. Shane has over 10 years of cross-border financial advisory experience, has been an expat for 15 years, and holds an MSc in Financial Economics and an MPhil in Economics from the University of Strathclyde.

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