One may invest as an American expat through several US expat investment options, such as US brokerage accounts, FATCA-compliant offshore platforms, and in some cases property or retirement schemes abroad.
The challenge lies in avoiding PFIC taxes, managing limited broker access, and meeting US tax obligations while living overseas.
This article explains:
- Can US expats invest in mutual funds abroad?
- Can you invest in stocks outside your country?
- How do I know which broker to choose as an American expat?
My contact details are hello@adamfayed.com and WhatsApp +44-7393-450-837 if you have any questions.
The information in this article is for general guidance only. It does not constitute financial, legal, or tax advice, and is not a recommendation or solicitation to invest. Some facts may have changed since the time of writing.
Can a US citizen living abroad invest in mutual funds?
Technically, yes — but in practice, it’s complicated.
US expats often face restrictions when trying to invest in non-US mutual funds abroad.
The IRS classifies many foreign mutual funds as Passive Foreign Investment Companies (PFICs), which trigger complex reporting and often punitive tax treatment.
Because of this, many American expats prefer US-domiciled mutual funds or ETFs, which are more straightforward to report.
The challenge lies in maintaining access to US brokerage platforms while living overseas, since many brokers restrict or close accounts for foreign residents.
Can a US citizen living abroad invest in stocks?
Yes, US citizens abroad can invest in stocks.
While some brokers limit non-resident accounts, expat-friendly platforms still provide access to US and global markets.
Stocks are often easier for expats to manage than mutual funds, since they don’t trigger PFIC rules and reporting complications.
Why are US brokerage accounts of American expats being closed?
- Regulatory complexity – Brokers must comply with cross-border investment rules that differ for each country where clients reside.
- FATCA compliance – The Foreign Account Tax Compliance Act requires strict reporting on American clients abroad, adding cost and liability for firms.
- High compliance costs – Many brokers decide it’s not worth the expense of serving expat clients.
- Mutual fund restrictions – US expats face hurdles accessing non-US mutual funds, which are often treated as Passive Foreign Investment Companies (PFICs) by the IRS and taxed punitively.
- Account limitations – Some firms allow expats to keep existing holdings but block new trades, while others close accounts entirely.
These challenges leave many American expats scrambling to find alternative solutions, such as expat-friendly brokerage firms or international investment platforms.
Choosing the best brokerage for US expats
Selecting the right brokerage is a crucial step in investing as an American expat, as it determines access to US and global markets while ensuring compliance with IRS reporting obligations.
A few categories stand out:
- Specialized expat brokerages: Firms that cater to Americans abroad and are fully FATCA-compliant. These allow global diversification while remaining IRS-reportable.
- US-based brokers with international arms: Some banks operate both domestic and offshore divisions, offering continuity if you move.
- Cross-border financial advisors: Independent platforms often work with multiple brokers to build compliant, globally diversified portfolios.
When selecting the best brokerage for US expats, look for:
- FATCA compliance and IRS reporting
- Access to US-listed ETFs and stocks
- Multi-currency functionality
- Strong customer service across time zones
How to Invest as an American Expat in Europe?
Europe presents additional hurdles due to MiFID II regulations.
Many European platforms cannot sell US-domiciled ETFs to residents, pushing expats toward PFIC-classified funds, which should be avoided.
The best solution for Americans in Europe is usually to:
- Use a US-friendly expat brokerage that can access US-listed securities.
- Avoid local European mutual funds to prevent PFIC tax treatment.
- Consider dual tax treaty benefits, such as between the US and the UK, France, or Germany, to reduce withholding taxes.
Cross-border advisors with US and EU expertise are especially valuable for long-term residents.
How to Invest as a US Expat in the UK
British ISAs (Individual Savings Accounts), for instance, are highly tax-efficient for UK residents but not recognized by the IRS, meaning income remains taxable in the US.
Instead, Americans in the UK should:
- Stick to US-domiciled ETFs and mutual funds via expat-friendly platforms.
- Explore UK pension contributions, which may still offer benefits depending on treaty coverage.
- Watch out for currency risk, since investments in GBP may fluctuate against the dollar.
The UK-US tax treaty helps reduce double taxation, but compliance must still be carefully managed.
Can a US citizen buy property in another country?
Yes, US citizens can buy property abroad, but for expats the decision is often more about investment strategy than lifestyle.
The rules vary by country: some markets restrict foreign ownership to leasehold structures, while others permit full freehold rights.
From an investment perspective, American expats should weigh key factors:
- US tax reporting – Rental income and capital gains from foreign property must be declared to the IRS, even if already taxed locally.
- Currency exposure – Returns can rise or fall depending on exchange rate movements.
- Financing challenges – Mortgages for expats can be harder to obtain and often come with higher interest rates.
- Estate planning concerns – Local inheritance laws may conflict with US succession planning, creating added complexity.
Do American expats pay tax twice?
Yes, American expats risk being taxed twice because the US taxes worldwide income. This includes capital gains, dividends, rental income, and interest.
Double taxation is often reduced through tax treaties and credits.
Countries such as the UK, France, Germany, Canada, and Australia have agreements with the US that prevent the same income from being taxed twice.
Expats can also use the Foreign Tax Credit (FTC) or the Foreign Earned Income Exclusion (FEIE) to offset taxes paid abroad.
Still, expats must file with the IRS every year and comply with FBAR and FATCA reporting if thresholds are met.
What are the mistakes an American expat makes when investing?
- Holding PFICs without realizing the tax consequences
- Failing to file FBAR or FATCA reports
- Relying only on a US mailing address workaround for brokerage accounts
- Ignoring currency and country risk in long-term planning
- Working with financial advisors unfamiliar with US expat rules
Conclusion
Investing as an American expat is not about chasing the highest returns but about balancing growth with compliance.
The best approach combines FATCA-compliant platforms, global diversification, and professional cross-border advice.
Whether you’re in Europe, the UK, or further afield, the key is to avoid PFIC traps, maintain access to US-listed investments, and stay tax compliant.
With the right structure, expats can grow wealth abroad without sacrificing peace of mind.
FAQs
What is the 7% rule in investing?
The 7% rule is a stock trading strategy popularized by William O’Neil, founder of the CAN SLIM method.
It recommends selling a stock if its price falls about 7% below the purchase price to limit losses.
This approach helps investors preserve capital by cutting losses early and avoiding larger downturns.
What is the best country for American expats?
Popular choices include Portugal and Spain for lifestyle and residency options, Singapore and the UAE for low taxes, and Mexico or Costa Rica for affordability and proximity to the US.
Can I keep my stocks if I leave the US?
Yes, but some brokers restrict non-resident accounts. You may need an expat-friendly brokerage to continue holding or trading US stocks.
Pained by financial indecision?
Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.
