Moving to France as an American?

Why You Should Think Twice Before Moving Your Investments Abroad

If you’re a U.S. citizen planning a move to France, one of the most common and costly mistakes is transferring your investments to Europe. I get this question constantly from Americans relocating to France:
“Should I move my investment accounts to France?”

My answer is almost always: No. Don’t do it.

And the reason has nothing to do with France being a bad place to live; it’s because the U.S.–France tax treaty strongly favors U.S. citizens who keep their investments in the United States.

In this article, I’ll explain exactly why, what to avoid, and how to protect your investment accounts when moving overseas.

🔍 Why Most Americans Should Keep Their Investments in the United States

The U.S.–France tax treaty offers a major benefit:

👉 France gives you a tax credit equal to the French tax liability on your U.S.-sourced interest, dividends, and capital gains.

In other words:

You don’t get double-taxed

As a result, you pay your taxes in the United States on your US based investments.

If you try to move your money into French financial products, things get complicated and expensive very quickly. You will be subject to the 31.4% flat tax on dividends, capital gains, and interest in France.

❌ The Big Problem: PFIC Rules for Americans in France

Most European investment products are considered PFICs (Passive Foreign Investment Companies) by the IRS, and PFIC taxation is… brutal.

The following French/European investments are typically PFICs:

• EU mutual funds (UCITS)

• European ETFs

• Assurance-vie unit-linked investments

• SCPI (French REITs)

• OPCIs

• Robo-advisor portfolios using ETFs

Holding PFICs means:

• Punitive U.S. tax treatment

• Annual Form 8621 reporting

• Potentially higher taxes than on U.S. investments

• Very limited ability to optimize your portfolio

This alone is a strong reason to avoid transferring your investments to France.

🚫 Why Americans in France Can’t Buy U.S. ETFs or Mutual Funds Locally

Many Americans assume they can open a brokerage account in France and simply buy their U.S. funds there.

Unfortunately, that is not possible.

The reason?

U.S. fund managers cannot produce an EU-compliant Key Information Document (KID).

The KID requires fund managers to:

• Predict future returns,

• Provide standardized risk metrics,

• Format disclosures according to EU regulations.

But U.S. securities law makes forward-looking performance statements extremely risky.
Producing a KID could expose U.S. fund companies to huge liability.

👉 So U.S. mutual funds and ETFs simply choose NOT to create a KID.
Without a KID, European residents cannot buy U.S.-domiciled ETFs or mutual funds from EU-based brokers.

This leaves Americans living in France stuck between:

• EU products they can buy but are PFICs, and

• U.S. products they want but EU brokers can’t offer.

🏦 Brokerage Restrictions: What Happens When You Change Your Address to France

Even if you plan to keep your U.S. accounts, there’s another trap:

Most U.S. brokerages restrict your account when you update your address to France.

Common restrictions include:

• ❌ No new purchases of mutual funds

• ❌ No new purchases of ETFs

• ❌ No new purchases of stocks (depending on brokerage)

• ❌ Inability to add new money

• ❌ Forced account closure (rare, but common for Merrill Edge customers)

Many brokerages (Fidelity, Vanguard, Schwab, etc.) simply do not want to service clients who live in the EU due to regulatory burdens.

What about retirement accounts?

Brokerages are generally more lenient with:

• IRAs

• Roth IRAs

• 401(k) rollovers

…but even then, you may be limited to selling only, not buying and some brokerages such as Merrill Edge have even asked customers to close their IRAs.

🧭 What About Interactive Brokers?

Interactive Brokers (IBKR) is one of the few platforms that accepts U.S. citizens living in France.

However:

• It is much less practical than typical U.S. brokerages

• The interface is more complex

• Funding and transfers are less user-friendly

• Many investors prefer the simplicity of Vanguard, Schwab, or Fidelity; which often restrict accounts for French residents

IBKR is usually the backup option, not the ideal one. If you plan to move a lot of USD to EUR, interactive brokers could be a good option for your brokerage as they have the best exchange rates, but you would need to maintain investments in Interactive Brokers otherwise they will shut-down your account as it isn't meant to be used for FX only.

Interactive Brokers doesn't allow you to trade US based ETFs unless you are a professional investor. If you are interested in learning more about Interactive Brokers, you can see my dedicated article to this topic here

🛑 Should You Keep a U.S. Address?

Many Americans living abroad maintain:

• A U.S. mailing address

• A U.S. phone number

They do this to prevent their brokerage from placing restrictions on the account.

But be aware:

• Brokers check IP addresses and login locations

• Even with a U.S. address, they may still restrict your account if they determine you’re living abroad

• Some require periodic proof of address

This strategy works for some people, but it is not guaranteed.

🗝️ What You Should Do Before Moving to France

Here’s the best plan of action:

✔️ 1. Get all your U.S. investment accounts in order before relocating

• Open any new accounts you think you might want

• Consolidate accounts where possible

• Verify your ability to keep them as a non-U.S. resident

• Purchase the funds you want before you change your address

✔️ 2. Keep your U.S. investments at U.S. brokerages

This:

• Avoids PFICs

• Keeps tax filing simpler

• Lets you take advantage of the U.S.–France tax treaty

• Gives better investment choices at lower cost

✔️ 3. Leave retirement accounts in the U.S.

IRAs and 401ks are not easily transferrable abroad.

✔️ 4. Avoid French investment wrappers

Assurance-vie, SCPI, OPCI, and EU mutual funds are almost always tax-inefficient for Americans.

✔️ 5. Consider maintaining a U.S. address if your broker requires it

With the caveats mentioned above.

⭐ Bottom Line: Keep Your Investments in the U.S. When You Move to France

Moving to France doesn’t mean your money has to move with you; and for most Americans, moving your investments abroad creates more problems than benefits.

By keeping your investment accounts in the United States, you benefit from:

• The U.S.–France tax treaty protections

• PFIC-free investing

• Better investment options (U.S. ETFs, mutual funds)

• Lower fees

• Simpler reporting to the IRS

For most U.S. citizens living in France, this is the smartest and most tax-efficient strategy.

Want help getting your finances France-ready?

If you would like help understanding the financial implications of a move to France. Feel free to reach out to me at Timothy@mybestmoneylife.com

The content on this website is for educational and informational purposes only and is not intended as financial, tax, or investment advice. Nothing on this site should be considered a recommendation to buy, sell, or hold any investment.

My Best Money Life

Helping you live your best life in both France and the United States

Disclaimer

The content on this website is provided for informational purposes only and does not constitute financial, legal, or professional advice. We recommend that you consult a qualified professional before making any financial or investment decisions.

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