If you are an American living in Europe and you have tried to invest, you have probably run into a wall. A European platform greys out the US funds you actually want. A US broker sends a letter saying it can no longer hold your account now that you live abroad. You open a local tax-free savings account and find that the sensible index funds are somehow off limits. It can feel as though the system is designed to stop you doing the one responsible thing you are trying to do, which is to invest for your future.
You are not imagining it, and you are not doing anything wrong. You have walked into the gap between two tax systems that were never built to work together. This guide explains, in plain English, why the walls are there and how to invest properly around them.
Who This Guide Is For
This guide is for US persons living in Europe. That means US citizens, including so-called accidental Americans who may never have lived in the States, and green card holders, including those whose cards have lapsed but who have not formally given up the status. If that is you, the US expects you to file, and potentially pay tax on, your worldwide income for life, wherever you live. That single fact is the root of almost everything that follows.
First, the Good News
Most of the difficulty here is structural, not personal. Once you understand the handful of rules causing the walls, the path through becomes surprisingly clear. There is even a part of the system that works strongly in your favor, and we will get to it. But first, the two hidden causes.
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The Two Hidden Causes of Every Wall
Almost every problem a US person hits in Europe comes from two rules pulling in opposite directions.
The US side: PFIC rules make European funds toxic
The US taxes its citizens on worldwide income, and it treats most non-US investment funds extremely harshly under what are called PFIC rules (Passive Foreign Investment Company). In plain terms, almost any pooled fund domiciled outside the US, which includes nearly every European UCITS fund, index fund, ETF and investment company, is a PFIC. Holding one exposes you to punitive US tax rates and heavy annual reporting. So the sensible European funds you would naturally reach for are exactly the ones you most want to avoid. We explain how platforms respond to this in our guide to PFIC restrictions and why platforms block US-connected investors.
The European side: KID rules make US funds hard to buy
The obvious answer would be to buy US funds instead, because a US fund is not a PFIC. But a European rule gets in the way. Under the PRIIPs regime, an EU retail platform can only offer you a packaged investment if it publishes a short disclosure called a Key Information Document. US funds do not publish one. So European platforms block the very US funds that would solve your PFIC problem.
The catch-22: buy a European fund and the US punishes you. Try to buy a US fund and Europe blocks you. That tension sits at the heart of investing as an American in Europe.
The third wall: brokers who do not want you
On top of all this, many brokers simply do not want the compliance burden of a customer who lives in the other country. Some restrict what you can buy. Some freeze accounts. Some close them outright, which can force a sale of your holdings and an unexpected tax bill. We have seen this play out with several UK platforms exiting the US-resident market, as covered in our guide to a major platform closing US-resident accounts. We come back to which providers do work with US persons in Europe further down.
The One Thing That Changes Everything: Pensions
Inside a pension, the PFIC problem disappears.
This is the single most important idea in this guide. PFIC rules do not apply to investments held inside a pension, and US retirement accounts are recognized as pensions wherever you live. US 401(k)s and IRAs give you a reliable, PFIC-free home for diversified funds in any European country. Many US tax treaties with European countries also protect local workplace and state pensions, though that varies treaty by treaty rather than following one single rulebook.
That means inside a pension you can hold the diversified funds you actually want, with no PFIC penalty. It is why, for most Americans in Europe, pensions are not just one option among many but the foundation of the whole plan. Fill the pension wrappers first, and most of the catch-22 simply falls away.
US Tax Treaties in Europe, in Plain English
A tax treaty is the rulebook that stops the two systems double-charging you. The US has treaties with most European countries, and although the detail differs from one to the next, three things are generally worth knowing.
It protects you from genuine double taxation. In almost no situation will you pay full tax to both countries on the same income. As a rough rule, you pay the higher of the two rates, split between the two governments, rather than both rates stacked on top of each other.
It protects pensions. As above, this is the most valuable feature of a treaty for most people.
It does not recognize everything. Some accounts that are tax free in one country are fully taxable in the other. The big ones to remember: a local tax-free wrapper such as a French Assurance Vie or PEA is tax advantaged locally but fully taxable by the US, and a US 529 college plan or HSA is tax advantaged for the US but fully taxable by your country of residence. Neither country gives you credit for the other tax break.
Your Accounts, in Order of Priority
Here is how the main accounts stack up for a US person in Europe. Individual circumstances vary, but this is the typical order of preference.
| Account | US recognized? | PFIC-safe? | Verdict for US persons |
|---|---|---|---|
| US 401(k) / IRA | Yes | Yes | Reliable PFIC-safe foundation wherever you live. |
| Roth IRA | Often | Yes | Excellent where the local treaty recognizes it. |
| Local workplace / state pension | Sometimes | If a pension | Treaty-dependent, varies by country. |
| Local tax-free wrapper (Assurance Vie, PEA) | No | No | Trap. Individual shares only. Situational. |
| Local taxable brokerage | No | No | Use once pension wrappers are full. |
| HSA / 529 plan | US only | No | Usually not worth keeping once abroad. |
US 401(k) and IRA (usually first)
For most US persons in Europe, US retirement accounts are the place to start. A 401(k) or IRA is recognized as a pension wherever you live, is free of PFIC issues, and lets you hold the diversified funds you actually want. If you still have access to a US employer plan with a match, that match is free money worth capturing. The trade-off is access: retirement accounts are designed to be left until you reach retirement age, with tax penalties for drawing early. Our guide to 401(k) to IRA rollovers under SEC-regulated advice walks through the mechanics. These accounts are the reliable foundation precisely because they do not depend on any single country treaty recognizing them.
Roth IRA (excellent, with one condition)
A Roth IRA offers tax-free growth and qualifying withdrawals, with no PFIC issue. Many US tax treaties in Europe respect Roth treatment, though it is worth confirming for your specific country, because treaty recognition is not perfectly uniform. The one condition to contribute is that you must have US earned income, and you cannot manufacture that by excluding your salary under the Foreign Earned Income Exclusion. In practice this usually means using the Foreign Tax Credit instead. It is also far easier to open a Roth before you leave the US.
Consolidating old US plans (strong)
If you have old or scattered US employer plans, rolling them into a single IRA is often the cleanest move. You keep the same pension treatment and the same absence of PFIC issues, usually with better and cheaper investment options and one account to manage instead of several. A local workplace or state pension you build up while living in Europe can also be valuable, but whether the US gives it pension treatment depends on your country’s treaty, so it needs checking case by case.
Local tax-free wrappers (the famous trap)
This is where Americans get caught. Local tax-free wrappers, such as a French Assurance Vie, Portuguese Compliant Investment Bonds or PEA and their equivalents across Europe, are tax advantaged locally and can look a little like a Roth, but the US does not recognize them, so they give you no PFIC protection. That means you cannot sensibly hold pooled index funds or ETFs inside them, and you are pushed toward individual shares instead. Some of these wrappers, the Assurance Vie in particular, can also create US foreign trust reporting. Such a wrapper can still make sense if you are investing meaningful sums, you are comfortable holding individual stocks, and you expect to stay in that country. It rarely makes sense if you still have a US retirement allowance available, if you can use a Roth instead, or if you plan to move back to the US soon.
Local savings incentives (niche)
Some European countries offer state-bonused savings or home-purchase schemes, the kind that add a government top-up if you lock money away for a first home or for retirement. The local bonus is usually taxable by the US, and any pooled funds inside carry the same PFIC issue as any other local wrapper. Occasionally useful, but rarely central to a US person’s plan.
Local taxable brokerage account (last resort)
A local taxable brokerage account has no limits and no tax shelter. To use one safely you need investments that are non-PFIC, with local tax treatment that varies country by country, or individual shares, which is a narrow path. It is normally the last place you invest, after pensions and, where appropriate, a local wrapper.
Local workplace and state pensions
If you work in Europe you will often build up a local workplace or state pension. Whether the US treats it as a pension, and so leaves the investments inside it free of PFIC trouble, depends on your country’s treaty with the US, and the position is not uniform across the continent. Where it is recognized, it can be a useful PFIC-safe wrapper alongside your US accounts. Where it is not, the funds inside may need closer attention. Withdrawals are where it gets technical, and a lump sum and regular payments can be taxed differently by each country, with credits to prevent true double tax.
HSAs and 529 plans (usually not worth it)
Both are US tax breaks that most European countries simply ignore, taxing them as ordinary investment accounts, sometimes at higher income rates. You also usually cannot keep funding an HSA once you live abroad. In many cases these are best dealt with before you move, with advice.
A Note From Jonathan Laws
Jonathan Laws, ACA, Ch.FCSI, Senior Financial Adviser, Cameron James
In my experience, the Americans who struggle most in Europe are not the ones who did something wrong. They are the ones who did what their local bank suggested, bought a sensible-looking European fund or took out an Assurance VIE, and only later learned it was a PFIC. By then the tax and the reporting headache are already done. The walls in this article are real, but the investor is almost never the one at fault.
My advice is simple. Treat this as an access problem rather than a tax problem, because the funds you actually want are usually fine once they sit in the right place. Fill the pension wrappers first, use US listed funds where they belong, and make sure one adviser is looking at both your US and your European position at the same time. Get those three things right and most of the catch-22 quietly falls away.
So How Do You Actually Buy US ETFs?
This is the question that brings most people here. The short version: the US ETFs you want are not PFICs, and in many European countries their local tax treatment is reasonable, so the real obstacle is access rather than tax. The main routes are holding them inside a US IRA or rolled-over 401(k),, qualifying as an elective professional client, or using a SEC regulated cross-border adviser to hold and manage them for you.
Finding a Broker That Will Actually Take You
Not every broker will work with a US person living in Europe, but some do, and the right choice depends on which accounts you need. On the US side, custodians such as Charles Schwab and Interactive Brokers operate international arms that serve Americans abroad and can hold US listed, but they require an adviser for retail clients to own. Interactive Brokers also has European entities. Each enforces the rules differently, eligibility can depend on your country of residence, and not all of them offer every account type, so always check current terms before committing.
If you hold a US brokerage account, the bigger risk runs the other way: a US broker deciding it no longer wants non-resident customers. Responses range from blocking new purchases to closing the account altogether, and a forced closure can trigger an unwanted, taxable sale. It is wise to have a backup account in place before you tell any broker you have moved abroad.
A Word on IRS Form 3520 and Foreign Trusts
You may come across alarming talk that a local pension or a wrapper such as a French Assurance Vie must be reported to the IRS as a foreign grantor trust on Forms 3520 and 3520-A, with heavy penalties for getting it wrong. This is a genuinely unsettled area with several respectable views, and it does not change the PFIC position. It is exactly the kind of judgement call where coordinated US and local advice earns its keep.
Doing This Without the Headache
The reason this is so hard to do alone is that no single adviser usually sees both halves. A local European adviser may not understand PFIC or US filing. A US adviser may not understand local wrappers, local pensions or local fund tax rules. The whole point of coordinated cross-border advice is to make the two systems work together rather than against each other.
About Cameron James and how we are regulated
Cameron James advisers hold individual SEC authorization in the US through Beacon Global Advisor Network, LLC (CRD 288833), and hold individual EU and EEA authorizations where applicable. This adviser-level authorization on both sides is what allows us to advise on your US accounts and your European accounts within a single coordinated plan, rather than leaving you to stitch together US-only and local-only advice that does not join up.
In practice, that means we can:
- Build your plan around the PFIC-safe pension wrappers first, where your money can actually grow without penalty
- Use US listed, non-PFIC ETFs where appropriate, inside the wrappers where they belong
- Handle the provider and account-opening problems that stop most people before they start
- Keep your US and local tax reporting aligned, so nothing falls down the gap between the two systems
Get a coordinated US and European plan
Cameron James advisers are authorized to advise on both your US accounts and your European accounts, so your pensions, investments, and tax reporting are planned together rather than left to fall down the gap between two systems. Fee-based, with no products sold on commission.
Related Articles
More guidance for US persons with cross-border finances, published on cameronjamesusa.com:
- Fidelity PFIC Restrictions: What US-Connected Persons Need to Know Why platforms block US-connected investors, and what PFIC exposure means for your portfolio.
- 401(k) to IRA Rollover: the SEC-Regulated 2026 Guide How rollovers and Roth conversions work for a US person abroad, and the tax points to get right.
- UK Expat Retirement Planning in the US: A Cross-Border Guide How US and overseas accounts, drawdown, and pensions fit into one coordinated retirement plan.
- How the SEC-registered BGAN advice model works The fee-based, fiduciary framework that lets us advise on US and overseas accounts together.
- When a Platform Closes US-Resident Accounts: What to Do Next The steps to take when a broker exits the US-resident market, without forcing a costly sale.
Frequently Asked Questions
Why can I not buy US ETFs or index funds in Europe as a US citizen?
Two rules collide. European funds are PFICs, which the US taxes punitively, while platforms block US funds because they do not publish a Key Information Document under the PRIIPs rules. There are legitimate routes to US ETFs, mainly inside pension wrappers or through a cross-border adviser. Our guide to PFIC restrictions explains the platform side in full.
Can a US citizen use a local tax-free wrapper like an Assurance Vie?
You can, but the US does not recognize these local wrappers, so they give no PFIC protection. That means pooled index funds and ETFs are effectively off the table inside them, leaving individual shares, and some wrappers also create US trust reporting. Whether one is worthwhile depends on your circumstances.
Will my US brokerage close my account if I move to Europe?
Some brokers do, and responses range from blocking new purchases to full closure. A forced closure can trigger a taxable sale, so it is sensible to have a backup account in place before you notify any broker of a move abroad.
Do I still have to file US taxes while living in Europe?
Yes. The US taxes its citizens and green card holders on worldwide income for life, regardless of where they live. The tax treaty between the US and your country of residence exists to prevent you being taxed twice on the same income.
What is the single best account for an American in Europe?
For most people it is a US retirement account. A 401(k), IRA or Roth IRA is recognized as a pension wherever you live and is free of PFIC issues, which makes US accounts the natural foundation before anything else.
Is a local tax-free wrapper really tax free for me as a US person?
It is tax advantaged for local purposes, but the US still taxes the income and gains inside it, because the IRS does not recognize the wrapper. So it is not the tax-free account it appears to be.
DISCLAIMER
This article is for general information only and does not constitute financial, tax or legal advice, nor a personal recommendation. Tax treatment depends on your individual circumstances and may change. The value of investments can fall as well as rise and you may get back less than you invested. PFIC, foreign grantor trust and treaty treatment are complex areas, and provider policies change over time. Access to specific funds and account types depends on the provider, on your country of residence and on your individual eligibility. You should seek advice tailored to your own situation before acting. Cameron James does not offer tax advice.
Advisory services in the United States are offered through Beacon Global Advisor Network, LLC, a registered investment adviser with the Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Cameron James USA is a marketing name; advisory services to US persons are provided through Beacon Global Advisor Network, LLC, and the two are not affiliated. Advice on non-US accounts is provided by Cameron James advisers under the relevant local authorizations where applicable.
Charles Schwab, Interactive Brokers and other provider names are mentioned for general information only and are not recommendations or endorsements. Provider eligibility and terms change over time and should be confirmed directly with the provider.
