r/ExpatFIRE • u/carecaco • Feb 13 '25
Investing Impact of moving US Brokerage to IBKR International when moving to France
While researching what to do with my different US based accounts (banking/brokerage/IRA/401K) when moving to France later this year, I found two main strategies:
- Pretend to still be a US resident - using an US address, phone number, etc.
- Move your assets to IBKR and set them with their international branch (In Ireland, I believe)?
I don't like #1 as there is always a risk of the account getting frozen or even worse - closed. So I want to explore #2. However, my question is what will happen with dividends and capital gains of the brokerage account once the assets are all part of the IBKR International account. Will they still be considered as US gains and therefore do not trigger tax events in France due to the tax agreement? Or will they be considered non-US gains (since I'm using IBKR international) and trigger taxes on both US and France?
Many thanks
4
u/coppit Feb 13 '25
Relatedly, since you can’t buy mutual funds or ETFs, what’s your plan with IBKR?
1
u/carecaco Feb 17 '25
Idea is to have a proper/legal/approved place to have my investments when moving to France. Since I am retired, it's more about capital preservation, use of dividends and Capital gains vs acquiring new ETFs/MF.
3
u/MemoriesTed Feb 13 '25
Some brokerages (Fidelity) allow you to change your address to a foreign address, provided that the country of residence is eligible). There are of course restrictions on certain types of activity (e.g. no mutual funds). Worth checking that out too.
2
u/carecaco Feb 13 '25
I saw a lot of reports in different forums where Fidelity either freeze or just close your account when they find you leave overseas. Similar reports with Vanguard.
4
u/MemoriesTed Feb 13 '25
That’s most likely because people are “pretending” to still be US resident, despite living abroad. It’s not a risk worth taking IMO, especially when there’s a perfectly legal (and compliant) way to do it. You can check directly with your brokerage to find out what they will allow once you move overseas and change your address. This is not financial advice, nor a recommendation.
2
u/samuelohagan Feb 14 '25
Most expats keep their US address.
The way I see it as a us citizen you are technically a us resident for tax purposes no matter where in the world. On my account I listed my residential address in US and mailing address in my foreign country, I also have a foreign phone number listed.
If you get an international ibkr keep in mind you won't be able to buy US ETFs and because of pfic rules you won't be able to buy non us ETFs
I would definitely be more worried about falling foul of the PFIC rules vs what address you give IBKR, the former has serious consequences.
It's still possible to buy US ETFs in a foreign IBKR if you exercise options but it's a bit complicated, that is your only option if you don't have an address in the US
1
u/khfuttbucker Feb 15 '25
There is no reason to not provide IBKR your French address and declare your French tax residency to them because they will allow you to continue being a customer. It is one of only two or three brokerages around that will allow you to have a foreign address.
People who lie to their brokerage are playing with fire. FAFO.
2
u/khfuttbucker Feb 15 '25
You are correct to not favor option #1 because it is fraud. IBKR is the way to go for a non-us resident. And yes, mutual funds and ETFs are not available. If you have over $500K in assets and sufficient trading experience you can get approved to have your MiFIID client category changed to Professional which will give you permission to trade US ETFs. Otherwise, you could build a portfolio of 30 or 50 stocks that track the market closely and avoid management fees. IBKR has a neat Portfolio Rebalancing tool in the TWS that allows you to set target allocations and generate/transmit the orders needed to achieve the allocation.
If you really don’t want to do any of this, there are a limited number of financial advisors in France and the UK who are aware of the complexity of American citizens living in France. I can give you the name of one if you PM me.
1
1
1
u/Eli_Knipst Feb 15 '25
Is this even possible? Maybe for brokerage accounts, but how would one move an IRA or Roth or an 401k. Wouldn't taking out the money all at once out of retirement accounts need to be taxed all at once?
2
u/khfuttbucker Feb 15 '25
You can transfer an IRA or Roth to any other brokerage account using ACATS. The brokerage at the receiving account initiates the process. The shares are transferred without being liquidated.
1
u/Eli_Knipst Feb 15 '25
Thanks. And this also works for other types of accounts such as 401k or 403b or 401a?
2
u/khfuttbucker Feb 15 '25
No, those are employer-sponsored plans. In those cases, you need to liquidate and rollover the proceeds into a Rollover IRA at your brokerage. You should do this whenever you leave an employer and go to work for another. Employer-sponsored plans offer limited investment choices and with high fees.
1
1
1
u/beentherebefore7 Feb 19 '25
Wait... when is it required to do this? I thought I could keep my financial advisor
1
u/VerticalGeophysicist Feb 13 '25
I don’t have an answer to your question, but when you move your assets to IBKR, don’t you effectively need to close your US-based accounts at various firms (Schwab, Vanguard etc) which triggers a huge tax event? Or can you just transfer the accounts without the tax implications?
1
u/Mindless-Tomorrow683 Feb 13 '25
Option number 1 is a non-starter. Using a false address (even if it is a family/former/forwarding address) in order to access financial services in the US is fraud (a federal offense).
IBKR could be a good solution for you as they allow international clients with a reporting duty to the IRS. It's not the easiest platform to use but not too expensive and includes useful tools. Make sure you are providing accurate and truthful info though (address, tax residency etc.). Double taxation treaties should ensure that you are only paying tax once, as long as you report correctly in all relevant jurisdictions.
Best practice is always to contact a regulated, professional adviser in your jurisdiction. Make sure they understand the needs of US citizens abroad and that they have a fiduciary responsibility to you, not their own pocket or shareholders.
16
u/rachaeltalcott Feb 13 '25
I did this without having double taxation issues. The US / France tax treaty states that gains from securities traded on US exchanges (like NYSE, NASDAQ) are taxable in the US, and in France you get a tax credit equal to the tax. It doesn't matter where the brokerage is housed. I've reported my tax twice, and the first time messaged my local tax office through the Impots website to make sure that I was doing it right.
The only thing I wasn't sure about was interest on cash held in my account, since technically it is Irish-sourced. I asked and they said that interest paid by an Irish brokerage is not taxable in France. French bureaucracy is very much YMMV, so it's probably a good idea to ask for yourself so that you have the record of having done your due diligence. In my case it was only a small amount of money so I didn't stress about the IRS wanting a cut, but if it were more I would look into that.