Lots of questions from soon-to-be American expat in Amsterdam

[goodchristianguy]

Hi, my husband and I are moving to the Netherlands in January from the U.S., both with new NL jobs lined up so we both qualify for the 30% ruling.

We currently have taxable brokerage accounts (husband with Charles Schwab, myself with Vanguard), plus multiple 401(k) accounts with Fidelity and other companies.

We currently bank with Ally and a local credit union.

We are about to close on selling our house ahead of the move and I’m trying to decide (1) which bank account to send the house proceeds to and (2) what to do with the money once we are abroad. We will have Dutch bank accounts set up in January, but not before we sell the house/move.

Note that we want to buy a house in NL in the next year.

Questions:

1. Which U.S. bank account should we hold the money in? Or does it not matter since we can use wise.com for transfers in the future? Ally does have better interest rate than the credit union fwiw.
2. With the current bear market, my husband wants to keep the money in savings rather than invest (but I’m a boglehead and want to invest at least some of it while stocks are on sale). On that front, should we open an account with Interactive Brokers or some other international brokerage that will let us do things by the books? And if so, is it better to have the $ in a U.S. bank account or Dutch, or does it not matter?
3. For the portion that we hold in savings, should we eventually transfer to a Dutch bank account (will most likely open with ABN Amro). Thinking ahead to whether this makes things easier when we eventually buy a NL house.
4. Finally, unrelated but still financially focused: We have been doing a backdoor Roth for a few years with Vanguard. To do achieve this outside the U.S., I assume we will need to do this under the radar via VPN using $ in our U.S. accounts?

Thanks!

 

[eee27]

@goodchristianguy Regarding point 2, you will find it almost impossible to continue your Boglehead strategy "by the books" while in NL.

As a US citizen, you will not want to invest in any non-US ETFs or mutual funds, due to PFIC tax rules.

As an EU resident, it is not legal for a US brokerage to sell you US-based ETFs because they don't publish a KID as required by the PRIIPS regulation (sorry for the acronyms, you can Google them for full info). If you change your address with Schwab, they will remove your ability to buy these instruments (holding and selling what you already have is fine).

Your options are to maintain a US address with your US broker(s), or switch to some other strategy like buying a basket of individual stocks, or investing in diversified US holding companies like Berkshire-Hathaway. It may also be possible to use options to get assigned shares of an ETF (a loophole because you're not buying the ETF directly) but I've never tried this myself (I don't have options trading enabled on my accounts).

Regarding money transfer, if it's house-value level of cash, you can do better than Wise for rates. Look into doing the conversion with Interactive Brokers, trading directly on the ForEx market yourself. There are some limits and holding periods on cash withdrawal, but for a one-off transfer of a large amount they will almost certainly be the cheapest option.

 

[nathanh83]

@eee27

As an EU resident, it is not legal for a US brokerage to sell you US-based ETFs because they don't publish a KID as required by the PRIIPS regulation

Is this correct? EU brokers are not allowed to sell these funds to EU resident, but is this also disallowed for US brokers?

Of course some US brokers will not allow you to make transactions if you are not a US resident.

 

[eee27]

@nathanh83 If they don't want to get fined and banned from accepting EU clients at all, yes. In practice, every US broker that I'm aware of complies with this rule.

 

[nathanh83]

@eee27 TIL

I had heard that brokers like tastyworks, Robin hood, a d possibly others even accept EU customers and allow them to buy US funds.

 

[eee27]

@nathanh83 I have heard from time to time of brokers that don't implement restrictions, but in the past all of them have eventually complied. Of course, I've not actually checked with every broker, so it's possible that there are some where you can "fly under the radar", at least for a while.

Currently, RobinHood website says they only open accounts with valid US residential addresses. Not sure what happens if you sign up and then change it (or if it's even possible to change it to a non-US address).

 

[trantrang2461]

@goodchristianguy

1. This won't matter in the short term, wise works fine (though accepting transfers can sometimes be delayed for a day or two vs other banks). Some people will try to demand you have an NL bank account, inform them that this is illegal - https://www.acceptmyiban.org/
2. Don't try to time the market. If you are a US citizen, it's generally better to have a US-based Interactive Brokers account which you can open now. IBKR is very useful because they will allow you to sell securities and get the proceeds in EUR, then transfer to an EU bank account
3. Worry about this later
4. You should look into whether this is actually worth it to you, as non-US taxation often undo the tax benefits of US retirement accounts (i.e. the NL tax authority may view this account as a normal brokerage)

 

[iceangel]

@goodchristianguy This isn't specific to your question, but you might find it helpful:

https://www.youtube.com/@JoviesHome