Alan, did you use direct bank to bank transfers or did you use a service like Transferwise?
Moving back to Europe
- Thread starter FIREd
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Alan, did you use direct bank to bank transfers or did you use a service like Transferwise?
It may be called the ex-patriation tax but it is just a different form of the exit tax.
I use Transferwise a lot for sums up to $15k which is their ACH limit, but when it came to transferring very large sums of money to buy a house (>$100k) you can ask the bank for what is called I think the “dealing desk” rate and the fees are then much more comparable to forex brokers like Transferwise. We have an HSBC account in the USA and in the UK, which is the one we have always had and the accounts are linked which also made it very easy for us, plus competitive rates at these very high sums.
On the expat forums people report using Transferwise with great results for moving large sums to buy a house. Set up the transfer details then wire the money to Transferwise and the transfer is complete within 1 or 2 business days
One piece of advice I would give is to avoid moving money to any sort of stock or bond fund until after you have fully expatriated and filed your final US tax return, which may well be after you have moved back.
This is because all such funds are treated as PFIC’s and taxed punitively. Owning individual stocks and bonds is no problem.
This is because all such funds are treated as PFIC’s and taxed punitively. Owning individual stocks and bonds is no problem.
If you have paid enough into SS then you will be entitled to take that under the same rules as anyone else, early from age 62 etc. Lots of non-US citizens living overseas do this and the SS admin are very familiar with setting payments directly into foreign banks and at an exchange rate that can't be beaten. You will need to check the tax treaty between the US and your destination country but it will probably state that SS payments are only taxable in your country of residence, so no need to file a return in the US and no withholdings will be made.
That reminds me, once resident in another country, even before expatriation is complete, you can file form W-BEN8 with any US financial institution to stop them making withholdings.
If you have not done so already, create an account with SS.gov while you are in the USA so you can view your benefits while abroad. Their 2nd level verification for log in is via a code sent to your email account so no need for a US phone number. (It used to be by text, only to a US cell phone, but enough complaints came in to cause them to change it)
That reminds me, once resident in another country, even before expatriation is complete, you can file form W-BEN8 with any US financial institution to stop them making withholdings.
If you have not done so already, create an account with SS.gov while you are in the USA so you can view your benefits while abroad. Their 2nd level verification for log in is via a code sent to your email account so no need for a US phone number. (It used to be by text, only to a US cell phone, but enough complaints came in to cause them to change it)
Ronstar
Moderator Emeritus
FIREd - I can't offer any advice other than to have an enjoyable transition.
Moemg
Gone but not forgotten
Best of luck on whatever you decide !
I need to correct my post. According to Fairmark, the 10% penalty would be on the entire withdrawal amount ($67K), not just the gain - if I am less than 59.5 years old and the conversions are less than 5 years old, which is my case. I don’t want to keep my Roth IRA open in the US if I expatriate (as it would seriously complicate my tax situation), so I either have to delay my expatriation by a few years or bite the bullet and give $7K to the tax man...
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Excellent practical information!
NYEXPAT
Thinks s/he gets paid by the post
For 7k I would be "in the wind" before you could finish my post!
Souschef
Thinks s/he gets paid by the post
Alan,
I am not advocating any tax cheating, but aren't there banks in the English Channel Islands where you do not have to be a resident to have an account?
There certainly are, as well as other countries, and I think they are usually used for savings accounts rather than mainstream checking accounts that new residents to a country need asap. With some big banks you can open an account without being resident if you already have an account in another country. (For clarification, The Channel Islands are not part of the UK and not part of the UK banking system)
When our son moved to England in 2017 he was already a customer of HSBC in the USA and was able to open an account in the UK before moving so it is possible.
Just remembered another potential avenue if you want to open a EU bank account before shifting residence.
You can try Estonia. E-residency first, then one physical trip and done. It's pretty recent though, so your mileage may vary!
https://e-resident.gov.ee/faqs/banking/#estonian-banks
You can try Estonia. E-residency first, then one physical trip and done. It's pretty recent though, so your mileage may vary!
https://e-resident.gov.ee/faqs/banking/#estonian-banks
NYEXPAT
Thinks s/he gets paid by the post
This is a great tool to see if your potential FFI is compliant with the USA.
https://apps.irs.gov/app/fatcaFfiList/flu.jsf
https://apps.irs.gov/app/fatcaFfiList/flu.jsf
NYEXPAT
Thinks s/he gets paid by the post
Here is another tool I check first to see if there is an agreement with the US Treasury. They only advertise the countries they have agreements with or pending. Noticeably missing near me are Argentina,Uruguay,Ecuador. Peru has a agreement pending, but if you drill down on the prior posting you can see if anyone you are doing business with is complying. For Europe, I see Andorra,Monaco are not on the list and I am sure there are others.
https://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA.aspx
https://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA.aspx
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BigNick
Thinks s/he gets paid by the post
I have an account with Standard Chartered in Jersey, mostly for investments, but it has a fully functioning cash account attached to it. I could have a debit card on that account if I wanted, and they can do direct debits and standing orders; the account has an IBAN but is also integrated with the UK BACS payment system. The main limitation is that you need a certain amount of money overall in your relationship with the bank (in effect, every customer is a "private banking" customer), but I don't have to keep a minimum cash balance.
Do you have the TransferWise debit card yet? I'm not normally an evangelist for any sort of consumer item, but this card is very clever. It is tied to your TW "borderless account", in which you can hold multiple currencies (say, USD, EUR, GBP, CHF). When you make a payment in one of those currencies, it looks like a "local" card, so there are no fees. If you pay 50 USD but you only have 30 USD in your account, it will make up the rest from one of the other currencies, with only TW's small conversion fee to pay. On a driving trip across Europe this can save quite a lot in $2-3 transaction fees every time you stop for gas or coffee.
I already have a Transferwise borderless account (in $ and €), and I will definitely get the debit card once I am in Europe (it is not available in the US yet, I believe).
According to their website, it’s not. That’s a shame. I have a yearly bill I need to pay in Europe and they won’t accept my US based debit/credit cards. I always have to ask family to help out, which is less than ideal. Eventually I’d like to figure out a better solution.
I see that the Channel Islands (Guernsey and Jersey) are on the FATCA compliant list. The UK also signed agreements with them in 2013 to report on accounts as part of an IGA.
I have been taking the first few steps this week towards the move:
- I have started liquidating investments in the US. I feel so fortunate that I get to do this when the market is doing well! I would have hated liquidating during a bear market because the money may not be reinvested for a while.
- I made an appointment with a lawyer specializing in the exit tax and expatriation process to make sure that I do this by the book.
- I called HSBC and it looks like they would be able to help me transfer my savings from the US to France. I need to open a US account and a French account with them. They can apparently open the French account 1-2 months before I actually leave the US (I will need to prove that I am actually moving to France and I will need to appear in person at one of their offices in the US to verify my identity - a bummer because their closest office is 1,000 miles away). Then I can link the 2 accounts and transfer money myself using their online banking platform.
- I have started liquidating investments in the US. I feel so fortunate that I get to do this when the market is doing well! I would have hated liquidating during a bear market because the money may not be reinvested for a while.
- I made an appointment with a lawyer specializing in the exit tax and expatriation process to make sure that I do this by the book.
- I called HSBC and it looks like they would be able to help me transfer my savings from the US to France. I need to open a US account and a French account with them. They can apparently open the French account 1-2 months before I actually leave the US (I will need to prove that I am actually moving to France and I will need to appear in person at one of their offices in the US to verify my identity - a bummer because their closest office is 1,000 miles away). Then I can link the 2 accounts and transfer money myself using their online banking platform.
Sounds like you are making good progress. Pity you don’t already have a bank account in France, we had maintained ours in England.
However, our son didn’t have a bank here and he went the HSBC route you talk about. He opened an HSBC account online in the USA and when it came to opening a UK account he set it all up then went into their branch in LA during a visit to his sister. A real pain I know but I think for money laundering laws they need to have in person id checks.
Both he and us have HSBC accounts in the USA and UK and it is very easy and fast to move money between the accounts although for small amounts (under $100k) I use Transferwise to move money between the accounts. In your case then when the time comes you will be moving it all, with us we still have US pensions going it every month.
Like you we have been so lucky with the timing of both the markets and the forex rate as the pound collapsed against the dollar.
I still have a bank account in a small bank, but they don't handle international transactions particularly well.
If you haven’t already I would give Transferwise a whirl, if they don’t recognize the routing and account numbers then nothing lost but I think they do the conversion to euros so it should just be a regular local French bank to French bank transfer at the France end.
These links describe the way it works and how it is different from an international transfer. No money actually transfers internationally as they have their own bank accounts in all the countries they operate. You put the money you want into your US account using ACH or wire and in France they then move Euros to your bank using that country’s banking system. It relies on the fact that people in France are also wanting to move money to the USA. I use them a lot and once you have set up the first ACH transfer you don’t have to enter your bank details again, or if you are someone who never likes to give your bank details to anyone then they provide you with their US bank details and you simply wire money to them. I have done it both ways. Last week on Friday I sent $15k and had the option of ACH and receive the money on Monday or use a wire transfer and get it same day. Since it would have cost me $7 more to do the wire I opted for ACH. (The exchange rate and final amount in the bank was the same, I was just happy to wait over the weekend). If I do an ACH transfer method early in the morning the money is usually in my U.K. bank the same day.
https://www.telegraph.co.uk/money/transferwise/how-does-it-work-and-is-it-safe/
https://transferwise.com/gb/blog/how-does-transferwise-work
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Thanks Alan. I have used Transferwise to move small amounts of money to my French bank account before. It worked well. I transfer some USD from my US bank account to my borderless account at Transferwise. Then I convert the USD to Euros (still in my borderless account). Then I transfer the euros to my French bank account.
I have now decided to make my final move from the US to France at the end of the year (unless I run into some delays). I thought that I would take a few years to regroup after the divorce before making my move, but I want to get on with my new life.
My lifestyle is going to change dramatically. I will be leaving a 2500 sqft house in the US for a 1-bedroom, ~400 sqft condo, which I will be purchasing in the spring (and which costs about the same as the house). Real estate is expensive where I am going and I don't need much room anyway. Actually I am looking forward to having a smaller place with much less maintenance. I already have a (much larger) vacation condo in the area. But I think that I would prefer renting it out than living in it for now (I might change my mind later).
My new target monthly budget, after purchasing the smaller condo, is also going to be drastically reduced. It will be around 2,300 euros a month, all in (trying to keep my withdrawal rate where it was before the divorce).
I reached out to some people who live in the area to have an idea about my expected bills:
monthly recurring bills should be about 1,400 euros (food, health insurance, electric, water, internet, phone, car insurance, gasoline, HOA fees, property taxes). And I will set aside about 350 euros a month for more irregular expenses (medical co-pays, car repair, etc...).
I have liquidated quite a few investments in the US already. But I still have to push the trigger on liquidating my Roth IRA (already in cash) and my HSA (also in cash).
My lifestyle is going to change dramatically. I will be leaving a 2500 sqft house in the US for a 1-bedroom, ~400 sqft condo, which I will be purchasing in the spring (and which costs about the same as the house). Real estate is expensive where I am going and I don't need much room anyway. Actually I am looking forward to having a smaller place with much less maintenance. I already have a (much larger) vacation condo in the area. But I think that I would prefer renting it out than living in it for now (I might change my mind later).
My new target monthly budget, after purchasing the smaller condo, is also going to be drastically reduced. It will be around 2,300 euros a month, all in (trying to keep my withdrawal rate where it was before the divorce).
I reached out to some people who live in the area to have an idea about my expected bills:
monthly recurring bills should be about 1,400 euros (food, health insurance, electric, water, internet, phone, car insurance, gasoline, HOA fees, property taxes). And I will set aside about 350 euros a month for more irregular expenses (medical co-pays, car repair, etc...).
I have liquidated quite a few investments in the US already. But I still have to push the trigger on liquidating my Roth IRA (already in cash) and my HSA (also in cash).
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