Can I keep my European ETFs in my private pension plan if I relocate to the US?

Q: Can I keep my European ETFs in my private pension plan if I relocate to the US?

Understand what happens to your European ETFs inside a German private pension plan if you move to the US, including tax implications and practical considerations.

Relocating to the US introduces both investment access issues and tax complications for your European ETFs held in a German private pension plan.
The answer depends on your tax residency, pension provider rules, and US tax law (PFIC rules).

Quick Answer

Yes, you can usually keep your European ETFs inside a German private pension after moving : but you may not be able to make new contributions.
The US taxes many non-US funds under Passive Foreign Investment Company (PFIC) rules, which can create punitive tax treatment.
You may need to adjust your investment strategy to avoid PFIC penalties while keeping your pension benefits intact.

1. How private pensions work when moving abroad

German private pension plans (e.g., Rürup, Riester, or private annuities) typically:

Allow you to remain invested if you move abroad.
Restrict withdrawals until retirement age.
May stop government subsidies (Riester) if you are no longer an EU resident.
May not accept new contributions from outside Germany.

2. The US tax issue : PFIC rules

The US treats non-US mutual funds and ETFs as PFICs.
PFICs face:
- Complex annual reporting (Form 8621).
- Possible excess distribution tax up to ~37% plus interest.
Even if you don’t sell, annual unrealized gains may be taxed.

If your German pension holds EU-domiciled ETFs (e.g., Ireland or Luxembourg), these will be PFICs.

3. Options when relocating

Leave the pension as is
- Pros: Keeps German retirement benefits, avoids liquidation costs.
- Cons: Potential PFIC tax every year in the US.
Switch to US-compliant investments inside the pension
- Some providers may allow switching to individual stocks or US-listed ETFs (rare).
- This can remove PFIC risk.
Freeze the pension and stop contributions
- You keep what’s invested, but stop adding more.
- Plan for PFIC compliance each year.

4. Common pitfalls

Not informing your provider about your move : could cause communication and compliance issues.
Assuming “tax-deferred in Germany” = “tax-deferred in the US” : US tax law doesn’t recognize most German pension wrappers.
Failing to file PFIC forms : can lead to massive IRS penalties.

5. Practical example

You have €100,000 in a private pension invested in an iShares MSCI World UCITS ETF (Ireland-domiciled).

Upon moving to the US in 2025, the ETF becomes a PFIC for US tax purposes.
If it grows by €10,000 that year, you could owe US tax on that gain immediately, even without selling.
Filing Form 8621 for each PFIC is mandatory.

6. Recommendations before moving

Consult a US-German cross-border tax advisor before relocation.
Consider switching investments inside the pension to reduce PFIC exposure.
Keep detailed statements for US tax filings.
Check if your provider can hold US-listed ETFs or direct equities.

Disclaimer

⚠️ IMPORTANT LEGAL DISCLAIMER:

This content is for educational and informational purposes only and does not constitute financial, tax, legal, or investment advice. You should not rely on this information as a substitute for, nor does it replace, professional financial or tax advice. Always consult with qualified professionals (tax advisors, financial planners, lawyers) before making any financial decisions or taking any actions based on this information.

Disclaimer: This is general information and may differ for individual cases. Learn more about financial planning with Financemate in a discovery call. Always seek professional advice before making changes.