What do I do with my US-based investments (index funds, mutual funds, 401k) when moving to Germany?

Q: What do I do with my US-based investments (index funds, mutual funds, 401k) when moving to Germany?

Learn how to manage your US-based investments when relocating to Germany, including tax implications, broker restrictions, and cross-border strategies.

Relocating to Germany with US-based investments presents tax, access, and compliance challenges.
The right approach depends on account type, investment type, and your future relocation plans.

Quick Answer

You can generally keep your US accounts, but may face trading restrictions once you update your address to Germany.
US tax treatment stays the same, but German taxation applies too, with potential for double reporting.
Non-US investments inside US accounts may trigger different German tax rules than in the US.

1. Understanding account types

Tax-advantaged accounts (401k, IRA, Roth IRA):

Remain under US tax rules : Germany also taxes withdrawals, but the US-Germany tax treaty usually avoids double taxation.
Cannot add new contributions from Germany unless you have US-sourced income.

Taxable brokerage accounts:

Fully taxable in Germany from the date you become tax resident.
You must declare capital gains, dividends, and interest annually to the Finanzamt.

2. Access & trading restrictions

Many US brokers (Vanguard, Fidelity, Schwab) restrict mutual fund purchases for non-US residents.
ETFs may still be tradable, but some platforms require a US address.
If you keep an old US address on file, ensure this is compliant with your provider’s policies.

3. Tax considerations when moving

Capital gains:

In the US: taxed only when sold.
In Germany: taxed when sold, but only on gains after becoming a German resident.
You must document the value at your move date for tax purposes.

Dividends:

US withholds tax at source (15% for treaty residents).
Germany taxes them again, with a credit for US tax paid.

4. Common strategies before moving

Rebalance portfolio into investments that are easier to manage from abroad (e.g., US ETFs instead of US mutual funds).
Take profits on high-gain positions before moving to avoid German taxation on them later.
Consolidate accounts to brokers with better international service (Schwab, Interactive Brokers).
For IRAs/401ks, leave them in place and coordinate withdrawals in retirement for tax efficiency.

5. Example scenario

You have:

$300,000 in US mutual funds in a taxable account.
$200,000 in a 401k.
You move to Germany in June 2025.
Mutual funds may not be tradable from Germany : consider switching to US ETFs before moving.
401k remains in place; withdrawals later will be taxed in both countries but coordinated by treaty.

6. Pitfalls to avoid

Forgetting to record market values on your move date : critical for German capital gains calculation.
Selling US assets while a German resident without planning for the combined tax hit.
Holding PFICs (non-US funds) inside your US taxable account : can trigger German tax complexity.

7. Next steps

Review each US account type separately with a cross-border advisor.
Update your broker about your move to avoid compliance issues.
Keep USD bank accounts for transfers between the US and Germany.
Use currency hedging for large planned transfers.

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. Seek professional advice before making significant changes.