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When Americans relocate overseas, they often find that the investment landscape changes meaningfully. Local banks and investment platforms may offer products that are common within their own jurisdictions but treated differently under U.S. tax law. Likewise, U.S.-based brokerage firms may apply additional servicing rules for individuals living outside the United States.
Most U.S. citizens abroad continue to face questions such as:
This guide provides an overview of the considerations relevant to U.S. citizens investing while living overseas. It is general educational information, not personalised advice. Individual circumstances - including country of residence, tax position, future plans, and risk tolerance - determine the most suitable approach.
This guide provides U.S. expats with an overview of how investing changes when living overseas. After reading, you will understand:
This guide is for educational purposes only and does not constitute personalised tax, legal, or investment advice.
Moving abroad does not sever U.S. tax obligations. Americans remain subject to U.S. tax rules regardless of where they live. This creates several cross-border considerations.
Some U.S. investment platforms may:
These rules vary significantly by custodian and jurisdiction.
They are not IRS requirements; they arise from firm-specific compliance policies.
A Passive Foreign Investment Company (PFIC) is generally a non-U.S. corporation meeting certain passive income or passive asset thresholds. Many foreign-domiciled pooled investment vehicles may be classified as PFICs.
Examples include:
PFIC classification may result in:
Whether a particular investment is a PFIC depends on its structure and the investor’s elections.
Investors should understand PFIC implications before purchasing foreign-domiciled pooled investments.
U.S. citizens and residents must:
Therefore, even when living abroad, U.S. individuals often find it simpler to use U.S.-domiciled investment vehicles.
An individual may:
Exchange rates may affect long-term outcomes. Multi-currency planning often becomes part of the investment approach.
Where an individual plans to retire (or relocate next) may influence:
Investment planning becomes more effective when future residency is taken into account.
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The following framework provides general considerations.
These are not recommendations, but common themes observed among U.S. citizens investing from overseas.
Many foreign mutual funds, ETFs, and pooled investments may fall under PFIC rules.
Because PFIC classification can lead to:
…many U.S. expats choose to review foreign-domiciled investment products carefully before purchasing them, unless a tax professional confirms they are appropriate.
This includes products widely used in the UK, Europe, Asia, and Australia.
U.S.-domiciled investments often simplify tax reporting and avoid PFIC considerations.
These may include:
However, access to U.S.-listed ETFs may depend on the custodian’s servicing policies for individuals with foreign addresses. Accessibility varies.
Even while avoiding foreign-domiciled funds, investors can achieve global exposure using U.S.-listed ETFs that provide:
This allows for diversification without engaging PFIC rules.
Investment decisions may be influenced by where an individual expects to live in the future.
Examples of considerations:
Long-term goals should inform investment structure.
Multi-currency planning may be relevant when:
There is no “right” approach. Some may prioritise USD stability; others may prefer exposure closer to retirement currency.
Some U.S. custodians have dedicated processes for individuals living abroad. Key considerations include:
Custodian choice should reflect individual needs and long-term planning.
Regardless of jurisdiction, many investors benefit from:
This approach may help maintain stability across different market cycles.
PFIC rules exist to align U.S. tax treatment of foreign pooled investments with domestic standards.
Key PFIC considerations:
Before purchasing foreign funds, investors may wish to understand whether PFIC rules apply.
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U.S.-domiciled funds generally:
Examples include:
These examples are hypothetical and do not represent actual clients or outcomes.
Skybound Wealth USA assists individuals with:
Conflict Disclosure:
As disclosed in our Form ADV, Skybound Wealth USA may receive compensation when assets are managed under our advisory programs, including in contexts involving consolidation or rollovers.
Individuals should consider all available options before engaging any investment strategy.
If you would like to review your investment structure or understand how U.S. rules apply to your circumstances while living abroad, you may schedule a discussion with Skybound Wealth USA.
Suitability of any approach depends on individual circumstances, goals, and risk tolerance.
Tom Pewtress is a fee-based fiduciary adviser and Head of USA at Skybound Wealth USA. He helps U.S. citizens, dual-nationals and internationally mobile families manage their financial lives across borders. Tom specialises in U.S. retirement accounts, 401(k) and IRA decisions, Roth strategies, tax-aware investing and long-term planning for globally mobile households.
This material is for educational purposes only and does not constitute personalised investment, tax, or legal advice.
Investment decisions should be based on individual circumstances, including financial objectives, tax position, and risk tolerance.
Tax rules vary by jurisdiction and may change.
Hypothetical examples are for illustration only and do not predict future outcomes.
Past performance is not indicative of future results.
Skybound Wealth USA is an SEC-registered investment adviser; registration does not imply a certain level of skill or training.
Please refer to our Form ADV Part 2A, Part 2B, and Form CRS for full disclosures.
In this 30-minute session, an adviser will help you:
Get clarity on how to invest effectively as a U.S. citizen while living internationally.
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Copyright © 2021. Skybound Wealth Management USA, LLC. All rights reserved. Skybound Wealth Management USA, LLC is registered with the SEC: CRD 313358. SEC No. 801-121157.
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