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Are you wondering how to bank as an American in France? Moving to France is exciting, but banking can get confusing if you’re unprepared. Here’s a simple 3-step process to banking in France as an American : Step 1: Keep a U.S. Bank That Accepts Foreign Addresses A big problem many U.S. expats face is that U.S. banks won’t let you update your account with a French address. However, there are a few exceptions: Chase   will allow you to keep your checking and savings accounts, as well as your credit cards, with remote access to your account through their online portal. Note, this must be set up before moving to France. State Department Federal Credit Union   is a banking solution built for overseas Americans that’s available if you become a member of the American Citizens Abroad   association. (approx. $70/year) Step 2: Pick An Online Multi-Curency Account Before Moving to France Wise : Easy to set up in the U.S., no visa or French address required. However, you’ll usually get a Belgian IBAN, which can be problematic for certain French financial institutions. Revolut : Works like a French bank account with a French IBAN, but you’ll need your visa and proof of address. If you already have those before leaving, you can open it early. Both Wise  and Revolut  are great for converting dollars to euros at competitive rates, especially for smaller amounts. You only need one ! Choose the one that matches your situation so you don’t overcomplicate things. Bonus:  Wise and Revolut are also great for sending money to friends or moving smaller amounts of money between accounts quickly  — sometimes instantly. Traditional French banks, on the other hand, often take 3–5 business days  to process transfers. Step 3: After You’re Settled in France Once you have your French address, we recommend opening a traditional French bank account. This makes it easier to: Pay rent, utilities, and insurance, as some of your expenses may not accept online banks Take out a loan for a property or car purchase Withdraw cash locally Additional proof that you’ve settled in France when you apply for a French visa or visa renewal When choosing a French bank, two things should be at the top of your list : Proximity : pick a branch close to where you live. In France, banking is very regional and you’ll likely visit your local branch more often than you would in the U.S. Experience with Americans : find bankers who are used to working with U.S. clients. They’ll better understand cross-border issues and the unique needs of expats as there are many bank products that you will want to avoid. Stay away from PFICs (Passive Foreign Investment Companies)   and don’t get caught in the assurance vie  trap! Common banks to look at: BNP Paribas Crédit Agricole Société Générale Credit Mutuelle Banque Populaire   Quick Recap Stage Action Key Point Before Your Move Pick one  online bank: Wise or  Revolut, depending on visa/address. Don’t overcomplicate — one is enough. Both are good for currency conversion. Once Settled Open a local French bank account . Prioritize proximity and bankers familiar with U.S. expats and cross-border needs. Keep it simple Use Wise/Revolut for fast transfers; add a French bank for daily life. Balance speed + local access. Thinking of moving to France? Dunhill Financial is here to help U.S. expats living in Europe with their finances, offering investment strategies designed for European residents. We also work with a team of cross-border experts to offer a full suite of services, including financial, tax, and estate planning. Don't hesitate to reach out to Dunhill and schedule a free consultation with one of our cross-border financial advisors  today. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2025 Dunhill Financial. All rights reserved.

Are you an American living in France with an assurance vie  investment account? Few financial pitfalls are as costly for Americans as Passive Foreign Investment Companies (or “ PFICs ”) and the “ assurance vie trap”. What look like normal French investments often trigger harsh U.S. tax rules. Without careful planning they can result in punishing tax bills, complex reporting, and years of frustration.  These issues usually arise when opening a French bank account.  Well-meaning French bankers may suggest products like the assurance vie , unaware of how problematic they are for U.S. taxpayers. For Americans who are thinking of moving to France, understanding the basics of expat banking is an important first step. What is a PFIC? “ Passive Foreign Investment Company” is a designation coined by the IRS which was originally created to discourage offshore tax shelters. However, In practice, they unfortunately apply to many everyday foreign investments accounts. The IRS defines a PFIC as generally any non-U.S. investment fund, including: Foreign mutual funds Foreign ETFs Funds packaged inside local bank products Some foreign insurance products The issue for American investors is that the financial impact can be severe: Punitive taxation : Gains can be taxed at the highest U.S. rate, plus interest for every year the investment was held. This could result in a tax liability of as much as 100% of your profits . Complex reporting : Each PFIC requires its own IRS Form 8621 every year. This form is notorious for its complexity, and requires a qualified tax advisor to complete it correctly. As a result, for most Americans, PFICs are best avoided . The Assurance Vie Trap In France, the assurance vie  is the go-to investment product. Despite the name (“life assurance”), it functions more like a flexible investment account with tax advantages for French residents: Lower taxes on gains after seven years Favorable inheritance treatment, including up to €152,500 tax-free per beneficiary But for U.S. citizens, it can be costly . While the account itself is not the problem, the funds inside an assurance vie  are almost always considered PFICs. This can mean U.S.  tax penalties  on gains and costly Annual IRS filings.  Further exacerbating the problem, French banks don’t issue U.S. tax forms like 1099s. This combination makes what is a tax-efficient product for the French a costly nightmare for Americans.  How to Avoid the Pitfalls It’s important to note that this problem also extends to all other French investment accounts such as PEA ( plan d’épargne actions ) or comptes titres . If you are an American who wants to invest while living in France, it’s best to make sure your investment solutions are compliant with tax authorities in both France and the US. With the right strategy, Americans in France can still invest confidently.  Key approaches include: Approach Why It Works Invest through the U.S. Keeping assets in U.S. accounts (retirement or brokerage) avoids PFIC rules. Avoid foreign funds European mutual funds and ETFs are usually PFICs. Stick to U.S. securities U.S.-listed stocks, bonds, or ETFs are generally safe. Work with cross-border experts Advisors who understand both U.S. and French rules can guide you to compliant solutions. Segregate accounts A non-U.S. spouse can hold French investments without triggering U.S. tax rules. Final Thoughts PFIC rules make even simple investments complicated for Americans living in France, and the assurance vie is one of the most common and costly mistakes. Before committing to any local investment product, Americans expats should seek advice from a Dunhill Financial cross-border specialist   who understands both sides of the tax code and can offer fully compliant US-French investment solutions. A little preparation upfront can prevent years of frustration later, and give you the peace of mind you want for your expat life in France. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2025 Dunhill Financial. All rights reserved.

For years, investing as an American abroad has meant accepting two painful costs: complex and layered fees and variable currency exchange rates. This has meant that US expats paid a premium for the privilege of investing their own money. That era is over. A partnership between the low-cost investment platform DF-Direct   and the global money transfer service Wise  will address both of these costs, creating the most affordable way for US expats to build wealth. First, DF-Direct Slashes Your Investment Costs DF-Direct is a direct alternative to the traditional investment model. It is a technology-driven platform that automates professional portfolio management, which means the costs to investors are significantly lower than traditional platforms. DF-Direct features one single, low advisory fee with no account minimums or surprise costs. The result is a smarter, more affordable way to access a professional-grade, U.S.-compliant investment portfolio. Second, Wise Eliminates Hidden Transfer Fees When sending money to the U.S. through a bank, the bank typically receives 3-5%, which results in a poor exchange rate. It’s a massive hidden cost. The Wise integration inside DF-Direct has been created to end this problem. Transfers are completed at  the real exchange rate without the bank's hidden markup. The only cost is a small fee which is disclosed upfront.  Two Great Services. One Low-Cost Platform When investing and transferring money are both addressed by platforms designed to keep costs low, the difference is immediate.  Getting started with DF-Direct is simple: Open a DF-Direct account. Fund it with Wise at the real exchange rate. The  low-cost investment portfolio is built automatically. Stop overpaying. It's time to build wealth the efficient, affordable way. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2025 Dunhill Financial. All rights reserved.

You’ve likely been dreaming of the move to Italy for a while—the long lunches, the incredible history, and the slower pace of life. But before you get lost in visions of sipping an Aperol spritz in a Roman piazza, it's time to talk about the part of your move that’s a little less glamorous: your money. Think of your financial journey not as a simple move, but as a strategy you should use . It's about shifting your mindset from the world you know to a new reality, where two tax systems and your own hidden biases can either work in your favour or create unexpected challenges. The Dual Tax Dance: A Nuanced View - US expats in Italy The first thing to understand is that as an American, you don't get to simply walk away from Uncle Sam. The U.S. is one of the only countries in the world that taxes its citizens on their income no matter where they live. So, you'll be a tax resident in Italy, but you'll still have to file a U.S. tax return every year. This "dual tax dance" sounds intimidating, but there are mechanisms designed to reduce the risk of being taxed twice on the same income . The Foreign Earned Income Exclusion (FEIE) lets you exclude a significant portion of your foreign income from U.S. taxes (for 2025, that's up to $130,000). If you make more than that, or have other types of income, the Foreign Tax Credit  allows you to use taxes paid to Italy as a dollar-for-dollar credit against your U.S. tax bill.  Vincenzo and his team and the onclinetaxman.com  do a great job explaining FEIE vs. Foreign Tax Credit in this article . On the Italian side, the rules are simpler. If you live in Italy for more than 183 days in a calendar year, you’re considered a tax resident and will be taxed on your worldwide income. That means income from your side hustle, investments, or rental property back in the States is all on the table. But here’s the sneaky part: the “ phantom residency.” Italian tax residency isn't just about the number of days you spend in the country. If you set up roots by buying a house, opening a bank account, or enrolling your kids in school, you may be considered an Italian tax resident from day one, regardless of the 183-day rule. This is why many expats consider tax implications as part of their pre-move planning. The Psychology of Your Money: Don't Let Biases Trip You Up Moving to Italy is an emotional decision, and emotions can mess with our financial judgment. We all have cognitive biases that can influence our choices, and for an expat, these can be especially dangerous. For example, anchoring bias  might make you fixate on one piece of information, like a surprisingly cheap apartment you saw online in a small town. This "anchor" can trick you into thinking Italy is universally cheaper, causing you to overlook other high costs like utilities or expensive Italian gas.  According to our friends at Mitos Relocation , the cost of living in Italy varies widely by region, with the South coming in roughly 30 to 40 percent cheaper than the North. Read their full review here . The “where to” relocate plays an important role in the living costs, and this is also true in Italy. Working with a relocation planner who provides structured guidance and coordination may help anticipate costs and avoid common challenges. Another common pitfall is home bias , where you feel most comfortable keeping your investments in U.S. markets. T his can create unexpected challenges . Many U.S. financial products, like certain mutual funds, can be taxed punitively in Italy. They could be reclassified and taxed as ordinary income, which may significantly reduce your after-tax returns.   This is where a real financial pivot happens. It's not just about running the numbers, but about a shift in your mindset. For many expats, adapting to a new financial environment involves not just numbers, but also a shift in mindset.   Before you make the leap, ask yourself these questions: Where do I plan to retire, the U.S. or Italy? What type of investments do I currently have? What investment approaches might fit my circumstances once I move? Is my existing investment portfolio compliant with both Italian/EU and U.S. regulations?    Is my portfolio paying for my living expenses? Am I going to work for an American or European company?  Will my employer offer a private pension plan?  Answering these questions honestly is the first step toward a successful and financially sound relocation. Keep Reading: Taxes, Homes, and Financial Planning Understanding the dual tax system and your own money mindset is just the beginning. The next step is exploring the practical side of expat life in Italy. If your dream includes a home of your own, Buying Your Dream Home in Italy — From “Maybe” to “Mine!” walks you through the buying process, costs, and common pitfalls. For those thinking ahead to retirement and long-term wealth, The Pillars of Financial Planning dives into taxes, investments, and reporting rules every U.S. expat needs to know. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2025 Dunhill Financial. All rights reserved.

Moving to Italy as a U.S. retiree means Italy gets a say in your worldwide income. Yes, that includes your U.S. retirement accounts! How Italy Taxes Your U.S. Retirement Income Traditional IRAs & 401(k)s:  Think of distributions from these like regular income in Italy. They'll be taxed at Italy's progressive rates, which can climb pretty high. Good news: the U.S.-Italy tax treaty helps prevent double taxation, but you'll still need to report and pay Italian taxes. The Roth IRA Trap:  This is where many Americans stumble! While your Roth withdrawals are tax-free in the U.S., Italy might not see it that way. Don't assume. In some cases, Italy may not recognize the Roth structure, which can result in taxation of withdrawals despite U.S. contributions being after-tax . Some taxpayers explore options such as Roth conversions or withdrawals before residency, but the right approach depends on individual circumstances. U.S. Social Security:  Yep, Italy considers these taxable too. But here's a silver lining: the U.S. and Italy have a "Totalization Agreement" to prevent dual Social Security taxation and help you qualify for benefits if you've worked in both countries. Just be aware of the "Windfall Elimination Provision" (WEP) – it can reduce your U.S. Social Security if you also get an Italian pension. Oh, and Medicare benefits? They're not covered by this agreement. A Sweet Deal for Retirees? Italy actually has a fantastic tax incentive for new retirees! If you move to a town with less than 20,000 residents in certain southern regions, you could enjoy a flat 7% tax on all foreign-sourced income (including pensions, Social Security, and IRAs) for up to 10 years. Just make sure you haven't been an Italian tax resident for the past five years. Investing & Wealth Management: Avoid the PFIC Pitfall! Investing as a U.S. citizen in Italy requires a strategy. The U.S. has rules to prevent tax deferral on offshore investments, and the big one to watch out for is the Passive Foreign Investment Company (PFIC)  rule. The PFIC Problem:  Here’s the shocker: that popular Italian mutual fund or ETF you're eyeing? It's highly likely to be classified as a PFIC by the U.S. That means complex (and costly!) IRS Form 8621 filings every year, and potentially punitive tax rules. The IRS doesn't mess around with unfiled 8621s, so penalties can linger for years. Our advice? Some U.S. investors choose U.S.-domiciled funds or individual stocks to reduce PFIC-related filings, but the best approach depends on individual circumstances . Richard Taylor at Plan First Wealth   sat down with our Brian Dunhill to talk about everything PFICs. This episode This episode takes a deep dive into PFIC rules and what they mean for U.S. expats. Reporting, Reporting, Reporting!  Living abroad means more paperwork. FBAR (FinCEN Form 114):  If your combined foreign financial accounts (bank, investment, pension) exceed $10,000 at any point, you'll need to file this. FATCA:  Foreign banks report your account info directly to the IRS. No hiding! Form 8938:  You might also need to file this if your foreign assets hit certain thresholds (e.g., $200,000 for single filers). Italian Wealth Taxes:  Italy adds its own taxes on foreign-held assets: IVAFE:  A 0.2% wealth tax on financial assets held outside Italy. IVIE:  A 0.76% wealth tax on foreign real estate. Why Careful Planning Makes All the Difference As you can see, planning your move to Italy involves more than just picking out your perfect villa. It requires careful financial strategy to avoid costly surprises. This is a general overview, and your specific situation will have its own nuances. That's where a financial advisor specializing in Americans abroad comes in handy. A financial advisor experienced with Americans abroad can help you navigate these rules. Keep Reading: Taxes, Homes, and Financial Planning Careful planning is what allows your Italian dream to last. If you’re still early in the journey, The Financial Pivot is a great place to start — covering residency rules, tax basics, and the psychology of money. If homeownership is part of your plan, Buying Your Dream Home in Italy — From “Maybe” to “Mine!” walks through the legal steps, costs, and ongoing obligations that come with owning property abroad. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2025 Dunhill Financial. All rights reserved.

So, you're an American dreaming of owning a piece of Italy? Good news! Thanks to agreements between our two countries, you pretty much have the same rights as an Italian when it comes to buying property. Just a quick heads-up: owning property doesn't automatically mean you get residency or a visa. That's a whole other adventure! The Step-by-Step Buying Process The path to owning your Italian dream home has a few key steps. First, you'll need your Codice Fiscale , which is Italy's tax ID number. You can't do anything official without it! Next, you'll sign a preliminary contract, called a compromesso . Think of this as your serious commitment to buy, and you'll put down a deposit, usually 10-20% of the price. The final step is signing the rogito , the final deed. This happens in front of a notary, who's like a state-appointed official making sure everything is legal and proper. While the notary is essential, it is recommended to do your homework and ask for advice from real estate layers. Why? Because the notary isn't working for you specifically, and having your own legal eagle in your corner is recommended to ensure you understand your obligations and rights. The Italian Real Estate Lawyers   can not only can help you with the immigration paperwork if you are applying for a Visa or Italian citizenship, but can be your ally in the complicated process of buying real estate in Italy from abroad. This is a short video from their popular podcast Italian Citizenship Assistance  on the basics for buying a property in Italy for Americans.  The Real Costs of Buying Property in Italy Now, let's talk about the initial costs. When you buy, you'll have one-time fees like notary fees (1-3% of the property value), real estate agent commissions (usually 1-5% for both buyer and seller), and transaction taxes. Key Stage Costs & Fees Preliminary Contract (Compromesso) Deposit (10-20%), Real Estate Agent Commission (1-5% for both parties) Final Deed (Rogito) Notary Fees (1-3%), Transaction Taxes (e.g., registration tax, cadastral tax) Avoiding Common Pitfalls as a Foreign Buyer Once you own your home, the annual property taxes are a bit different from what you might be used to in the U.S. Italy has a municipal property tax (IMU) and a waste tax (TARI) that you pay every year. Here's a crucial point, and it can be a real surprise for foreign owners: you won't get a centralized tax bill in the mail for these! It's entirely up to you, the property owner, to figure out what you owe, fill out the special F24 tax form, and pay it on time. This is a big cultural and systemic difference, and it’s important for foreign owners to understand these responsibilities to avoid penalties . Make sure this is on your checklist! Tax Type Description IMU Municipal property tax on second homes and luxury properties. TARI Waste tax for local garbage collection. Once your moving checklist is complete and you're ready to begin your home search in Italy, companies such as Valente Italian Properties  offer a detailed guide providing a clear overview of their approach and how Jacopo and his team can assist throughout the process. Keep Reading: Taxes, Homes, and Financial Planning Finding and buying your dream home is a major milestone — but it’s only one piece of the puzzle. To make the move truly sustainable, you’ll also need to plan for taxes, investments, and retirement. The Financial Pivot explains how to prepare your mindset and avoid early money mistakes. The Pillars of Financial Planning then goes deeper into how Italy taxes U.S. retirement income, the Roth IRA trap, PFICs, and more. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2025 Dunhill Financial. All rights reserved.

Originally published: Dec 19, 2022 | Updated: July 31, 2025 Understanding UK Pensions as a US Expat If you're a US citizen employed by a UK firm, chances are you've been auto-enrolled into a workplace pension scheme. This is part of the UK’s auto-enrolment policy, which mandates eligible employees be placed into a defined contribution (DC) pension plan. Contributions are made into a personal pension pot, which can be invested across a variety of funds—how broad your options are depends on your pension provider. Minimum Auto-Enrolment Contributions (as of 2025): Employee: 5% (including tax relief) Employer: 3% Note: Contribution splits may vary, so confirm with your HR or benefits administrator. Key Considerations for Americans Saving in UK Pensions US Citizens and UK Pensions The US-UK Tax Treaty provides favorable treatment for Americans in UK pension schemes. Pension growth inside a UK-registered scheme is not subject to current US taxation, and Passive Foreign Investment Company (PFIC) rules do not apply within these plans. This makes UK pensions one of the few tax-efficient vehicles available to Americans abroad. For more, see: Dunhill Financial’s PFIC Reporting Explained. Lifetime Allowance — Abolished in 2024 The Lifetime Allowance (LTA) —which previously capped the amount you could accumulate in UK pensions tax-free at £1,073,100—was abolished as of April 6, 2024. This means there is no longer a cap on how much you can accumulate in your UK pensions. However, income tax will still apply when you begin drawing your pension. *While the LTA has been abolished, some transitional protections and reporting obligations may still apply for those with large pension pots. Speak to a qualified financial advisor or tax professional for guidance. Pension Contribution Allowances (2025/26) Annual Allowance:  £60,000 per tax year (or 100% of your UK-earned income, whichever is lower) Contributions above this amount may be subject to the Annual Allowance Charge. Carry Forward Rule If you’ve not used your full annual pension contribution allowance in the previous three tax years, you can carry forward the unused allowance into the current tax year—provided: You were a member of a UK-registered pension scheme in each of those years. Your total contribution does not exceed your current year’s earned income. This can be especially useful for higher earners or those who want to make a lump sum contribution in a single year. How Does the Carry Forward Rule Work? The following table shows an example of how much allowance could be carried forward: Tax Year Annual Allowance Total Contribution Unused Allowance 2021/22 £40,000 £30,000 £10,000 2022/23 £40,000 £30,000 £10,000 2023/24 £60,000 £30,000 £30,000 2024/25 £60,000 £60,000 £0 2025/26 £60,000 £60,000 £0 In the 2025/26 tax year, the individual could carry forward £50,000 of unused allowance (from 2021/22 through 2023/24).Combined with the £60,000 current annual allowance, they could contribute up to £110,000 tax-efficiently —provided their income in 2025/26 is at least £110,000. Tax Relief on Contributions Private and workplace pensions in the UK benefit from generous tax reliefs: Relief at Source:  20% tax relief is added to your contributions automatically (e.g., you contribute £80, the government adds £20). Net Pay Arrangements:  Contributions are taken from gross salary, reducing taxable income; no additional relief is given at the source. If you are a higher-rate (40%) or additional-rate (45%) taxpayer, you can reclaim the difference via: Self-Assessment Contacting HMRC directly Employer contributions are not eligible for personal tax relief, as they are made pre-tax. Accessing Your UK Pension Current access age:  55 Rising to:  57 in April 2028 There are multiple withdrawal strategies available at retirement, each with unique tax implications in both the UK and US. We’ll cover these in a separate, dedicated article. US Expats: Strategic Priorities Checklist Before ramping up contributions or transferring pensions, we suggest working through the following checklist: Emergency Fund Ensure 3–6 months of expenses are held in an easy-access account before committing more to long-term retirement investments. Specific Savings Goals Budget for near-term needs—e.g., home purchase or education—before locking funds into pensions. Pre-Retirement Investment Objective Since pension funds are inaccessible before age 55 (57 from 2028), use ISAs or general investment accounts for pre-retirement financial goals Increase Contributions When Appropriate Once short-term needs are addressed, consider increasing contributions for long-term tax-advantaged growth. Pension investments grow tax-free and can compound significantly over time. The earlier you start, the better. Consolidate Old Pensions If you have several dormant pension schemes from past UK employers, consider consolidating them into one plan. This simplifies oversight and may reduce fees. Consider a SIPP If you’ve accumulated £50,000+ across pensions, you might consider transferring to a Self-Invested Personal Pension (SIPP) for: -Greater control over investments -Potentially lower fees -Access to US-compliant funds (with careful planning) You can continue contributing to your workplace scheme while periodically transferring excess funds into a SIPP. Final Thoughts UK pensions can be a powerful tool for US expats looking to build long-term, tax-efficient retirement savings—especially in light of recent rule changes such as the abolition of the Lifetime Allowance. However, navigating the interaction between UK and US tax systems requires expert advice. If you’re considering large contributions, consolidations, or transfers, speak with a financial adviser experienced in both US and UK systems. Ready to invest smarter? DF-Direct  is Dunhill Financial’s low-cost, no-minimum investment platform, built specifically for American expats. Opening an account with DF-Direct is quick and straightforward. The platform guides you step by step, ensuring that your investments are aligned with your financial situation and risk appetite. With just a few minutes of setup, you’ll be on your way to a smarter, more efficient investing experience. Join our referral program Have friends looking for smarter investing? Get $50 when you refer them to DF Direct! Discover financial insights on our YouTube channel Dive into expert advice and practical tips for financial planning and expat life on our YouTube channel. DF-Direct Presents features insightful discussions with Brian Dunhill and expert guests, it’s your ultimate resource for making smart financial decisions—wherever life takes you. If you want join our webinars live, check out our latest events. Have more questions about how DF-Direct works? From account setup to portfolio management and compliance, our FAQ section covers everything you need to know. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2025 Dunhill Financial. All rights reserved.

Researching and planning will ensure your golden years are truly golden. With the rising cost of living, mounting health care expenses, and the relentless creep of inflation, retirement in the U.S. is becoming a costly affair. For many Americans, particularly those aged 35-55, the golden years might not seem so golden. But what if there was another way? For many, the idea of retiring abroad has transformed from a whimsical daydream into a viable financial strategy. Why Retire Abroad? Lower Cost of Living: Countries like Vietnam, Mexico, Portugal, and Thailand are often lauded for their affordable lifestyles. For instance, living in Ho Chi Minh City costs on average 170% less than New York City, with rents being 538% cheaper. This stark difference means retirees can enjoy a comfortable lifestyle without stretching their pensions or saving. Affordable Health Care: One of the significant pain points for retirees in the U.S. is the exorbitant health care costs. The disparity between the U.S. and other high-income countries is alarming, with the average American spending $5,000 more on health care. Many countries, particularly those in Europe or Asia, provide high-quality health care at a fraction of the U.S. cost. Experiencing a New Culture: Beyond the financial incentives, retirement abroad offers an opportunity for cultural immersion, new experiences, and perhaps even picking up a new language. Favourable Climates : Many popular retirement destinations offer warm, pleasant climates year-round, which can be particularly appealing for those looking to escape colder U.S. states. Points to Ponder While retiring abroad has its allure, it's not a decision to be taken lightly. Here are some considerations: Research, Research, Research: Understanding the visa regulations, taxation policies, and other legalities is essential. Some countries offer specific visa programs for retirees, making the transition smoother. Think About Health Care: While health care might be cheaper, it's essential to evaluate the quality, accessibility, and whether you're comfortable with the available medical facilities. Assess the Cultural Fit: While it might sound exciting to live in a new culture, the reality can sometimes be challenging. Consider taking extended trips before making the move to gauge if the destination aligns with your lifestyle and preferences. Stay Connected: Living abroad can sometimes lead to feelings of isolation, especially if family and friends are in the U.S. Ensure there are robust communication avenues and perhaps even communities of expatriates to connect with. Financial Implications: Understand currency exchange rates, banking systems, and how your retirement income will be affected. It's also wise to have an exit strategy in place should you wish to return to the U.S. It’s Your Retirement, Plan It Retirement should be a time of relaxation, exploration, and fulfilment. For those investors between the ages of 35-55, considering all options – including the intriguing possibility of retiring abroad – can provide both financial relief and a new zest for life. However, as with all significant decisions, thorough research, preparation, and reflection are key. After all, the goal is to ensure that the golden years are truly golden, wherever in the world they might be spent. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

Many Americans living abroad either aren’t aware that they're eligible to vote in US federal, state, and local elections, or don’t know how to. As expats have to file US taxes though, they also have the right to vote, and expat votes have the potential to make a difference, particularly in close contests. Although the registration process and requirements can seem convoluted at times, it’s important to effectively exercise your right to vote and play an active part in molding the future of your nation, particularly as, despite living abroad, laws made in the US still affect you. In this article, you’ll learn about: • Who can vote from abroad? • Determining your voting residence • Voting from abroad procedure • Who can vote from abroad • Does voting from abroad affect your US taxes? Who can vote from abroad? United States citizens who currently reside outside the country and who satisfy specific qualifying requirements can register to vote. These requirements are that you have to be at least 18 years old, and you need to register in the US state where you last resided. Determining your voting residence In most cases, the state in which you most recently lived or the state with which you have the strongest links is considered your US voting residence . To guarantee that your vote will be counted, make sure that you familiarize yourself with the voter registration requirements and absentee ballot application deadlines in your state. Even if you are only interested in voting in federal elections, you still need a voting home where you’re registered to vote by absentee ballot. This dwelling may still be considered genuine even if: ·You no longer have any links to that state, including ownership of any property there. · It needs to be clarified whether or not you intend to return to that condition. · Your primary address is no longer valid as a residential address in the United States There are some Americans citizens living abroad who have never resided in the US, such as the children of US citizens who were born abroad. They may also be able to vote if their American parents last lived in one of 36 US states . Voting from abroad procedure The voting procedure consists of two steps: Annually, you must provide your local election authorities with a completed Federal Post Card Application (FPCA). This allows them to: · Verify that you are qualified to vote · Add your name to a list to be sent absentee ballots You will then receive an absentee ballot in blank either online or in the mail. You need to fill out the ballot and send it back in time for it to arrive before the date set by your state. To vote absentee in a federal election, if you have yet to receive your blank ballot at least 30 days before the election, you should utilize a federal write-in absentee ballot. How to vote from abroad 1 - Find out where you're registered to vote As mentioned, the state where you most recently lived is normally considered your voting residence . For example, this may be the place where you were born and raised, where you attended school, or where you own property. Next, research the rules and deadlines that govern voter registration and requests for absentee ballots in your state, since they can differ from state to state. In addition, the Federal Voting Assistance Program (FVAP) provides information on state-specific voting restrictions. 2 - Become a registered voter and submit a request to vote absentee After identifying the location where you are eligible to vote and researching the rules and deadlines, the next step is to sign up for voter registration and ask for an absentee ballot. This may be done either via the FVAP website, online or by mail, or through the embassy or consulate of the United States in your residency. If you have previously registered to vote but need to update your information, or if you have moved since then, you should request a new Federal Post Card Application (FCPA). 3 - Obtain a copy of your ballot After your request for an absentee ballot has been approved, the state where you live will send you a ballot in one of three different ways: by mail, by fax, or by email, according to the rules in the state where you’re registered. Read the instructions on the ballot thoroughly and adhere to them to the letter to guarantee that your vote will be counted. 4 - Submit your vote After you have finished marking your ballot, you have to submit it. Some states let you submit it electronically, otherwise, you can either mail it back to the address on the ballot, or deliver it to your nearest US embassy. If you can’t submit it electronically, you should allow plenty of time for either the postal service or your Embassy to return the ballot to the US, to ensure that your vote is counted. 5 - Follow up After you have handed in your ballot, you should follow up with the election authorities in the state where you’re registered to confirm that your ballot has been received and that your vote counted. In addition, you may be able to check whether your ballot was received and counted using the tools provided on the FVAP website. Does voting affect your US taxes? Your US federal tax filing status will not be impacted in any way if you vote from abroad as an expat. US individuals residing outside the country are still required to comply with US tax regulations, which include declaring their income from anywhere in the world and submitting annual tax returns. In addition, several states in the United States have particular regulations regulating the collection of state income taxes from residents of those states who are residing outside the country. It is of course up to you to understand and comply with these regulations. The Foreign Account Tax Compliance Act (FATCA) and other requirements compel US residents outside the country to declare any foreign bank accounts and assets they have, too. Useful links and organizations Federal Voting Assistance Program - https://www.fvap.gov/citizen-voter American Citizens Abroad - https://www.americansabroad.org/information/voting-and-representation/ Vote From Abroad - https://www.votefromabroad.org/ US Vote Foundation - https://www.usvotefoundation.org/vote-from-abroad-overseas-voting Overseas Vote Foundation - https://www.overseasvotefoundation.org/vote/home.htm Democrats Abroad - https://www.democratsabroad.org/voting Republicans Overseas - https://republicansoverseas.com/#register If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“Our tax code is so long it makes War and Peace seem breezy.” - Steven LaTourette One of the most common financial questions expats ask is: how does the US tax foreign savings and retirement accounts? It is an important consideration, as the answer informs everything from whether to open a checking account overseas to long-term retirement planning strategies. In this article, we’re going to recap and clarify the US tax rules relating specifically to overseas savings and retirement accounts for expats. In this article, you’ll learn about: • Reporting foreign savings accounts • Reporting foreign retirement accounts • Taxation of foreign retirement distributions • Should expats save in the US or abroad? Reporting foreign savings accounts First off, just having a savings account abroad doesn’t open you up to any new US tax liability. However, it may need to be reported under FBAR and FATCA rules . To recap, FBAR reporting is a requirement for any American (including expats) who has over $10,000 in total combined max balances in foreign financial accounts that they have signatory authority over at any time during a given year. FATCA reporting is a separate requirement for Americans who have financial assets registered abroad with a total value of over $200,000 at the end of the year, or $300,000 at any one time (thresholds are doubled if you doing a joint filing) While there are subtle differences in exactly which types of accounts qualify for each, foreign savings account balances qualify for both FBAR and FATCA reporting if the total of the combined balances of all of your non-US financial accounts exceeds the minimum reporting thresholds. FBARs are filed on FinCEN Form 114, while FATCA reporting means filing IRS Form 8938. Reporting foreign retirement accounts US reporting of foreign retirement accounts varies depending on the type of account. Most foreign retirement accounts qualify under FBAR and FATCA reporting rules if they are individual (rather than national social security) accounts, and depending whether your total combined qualifying foreign account balances exceed the respective reporting thresholds. Some types of foreign retirement accounts trigger further reporting requirements too. Notably, investing in foreign pooled funds (such as mutual funds or ETFs), which the IRS classifies as Passive Foreign Investment Companies (PFICs), mean additional complex reporting. It’s worth seeking advice before investing in this type of retirement account, as they can trigger additional taxation, too. Some foreign retirement funds, such as Australian Superannuation funds, may be considered to be foreign trusts, also triggering additional reporting. Even if you only have standard employer pension account, your employer’s pension contributions may be taxable. Meanwhile, foreign state social security pension contributions aren’t reportable to the US. Taxation of foreign retirement distributions In general, all Americans must report their worldwide income and pay US federal income tax on it. This includes pension income, keeping in mind qualified pension plans such as a 401(k) and IRAs may have certain US tax benefits. While many types of foreign pension distributions enjoy a similar tax exempt or reduced tax status to US qualified pension plans in a foreign country, they aren’t generally considered as qualified retirement plans by the IRS and so don’t typically enjoy the same favorable tax treatment in the US. - Nathalie Goldstein EA, MD at MyExpatTaxes Some US tax treaties recognize and address this issue, notably the Double Taxation Agreements (DTAs)s the US has with the UK and Canada, however the majority of DTAs don’t, leaving most foreign pension distributions liable to normal US income tax for Americans living abroad. As a result, expats should consult an expat-specialist financial planner to help them address this important issue and minimize their future US tax liability when saving for retirement. If you live in a country where a tax treaty does address this issue, you will have to file Form 8833 with your federal tax return to claim the tax treaty benefit. Keep in mind, the tax treaties are not straightforward for Americans, especially concerning pension income distributions. While the majority specify residence based taxation of pension income distributions, this benefit is not exempt from the Savings Clause of each treaty, meaning as a US Citizen, you cannot use it. Should expats save in the US or abroad? Unfortunately, there isn’t a single, simple, universal answer, as it depends on many factors, not least your financial planning goals and where in the world you live and plan to live in the future. Alongside the reporting and tax rules (and details of the DTA with the US) of the country where you live, the other significant factor is whether you plan to return and live in the US after you retire. DTAs are significant, and some countries have a big advantage in this respect for savers. For example, if you live in the UK, thanks to the relatively generous DTA that the US has with these countries, you will receive the same tax-free benefits whether you live or save in the US or in the country where you live. Belgium and the Netherlands on the other hand are examples of countries where it’s normally better to save in the US, as you won’t get the same tax deferral or distribution benefits otherwise, while if you live in Spain or Germany, you won’t get these benefits at all! Some expats in fact, such as those who work remotely, choose where to live based on where they can benefit most in terms of minimizing taxes and retirement saving, both while they’re working, and then again perhaps moving country when they retire. As an example, while France has higher income tax rates than the US, thanks to a clause in the US-France tax treaty that US Citizens are eligible to use, it allows US pension income to only be taxed in the US, so that Americans who retire in France with pension income from the US will pay lower tax rates compared to if they lived in some other European countries. Decisions relating to long-term saving and planning for retirement should always be made after seeking advice from your financial advisor. This is especially true for expats, due to the more complex nature of cross-border financial planning. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

"A person doesn't know how much he has to be thankful for until he has to pay taxes on it." - Anonymous The US tax system is different compared to most countries. This has been the case since the nineteenth century, however in today’s globally-connected digital age, the difference is felt more keenly, and particularly by expats. In this article, we’ll explore exactly how America’s tax system differs from other countries. • What is CBT? • Why does the US have CBT? • What systems do other countries have? (with examples) • What does CBT mean for expats • The intersection between US and foreign taxation • Other tax differences between the US and other countries What is CBT? The US tax system is fundamentally different compared to most countries because the US taxes citizenship . This type of tax system is known as citizenship-based taxation, or CBT, and it means that all US citizens(as well as Green Card holders) have to file US taxes on their global income, whether they are resident in the US or abroad. The US doesn’t just tax US citizens though, it also taxes resident non-citizens (known as resident aliens), and income earned in the US by non-resident non-citizens (known as non-resident aliens), so covering all bases. The only other country in the world that currently has CBT is Eritrea, in East Africa. Why does the US have CBT? The origins of CBT in the US date back to the Civil War, when many northern landowners left the country, heading to either Canada or Europe to avoid the fighting. This presented a serious problem for the US government though, as landowners were the primary source of the taxes that funded the northern war effort, so if landowners were no longer resident in the US and so no longer liable to pay US federal taxes, the government would potentially be starved of funds. The solution was struck upon to tax US citizens, including non-residents, to keep the taxes flowing, and CBT was born. It could therefore be said that CBT played an important role in securing the eventual Union victory. After the war, when the landowners returned, the system was never revoked. What systems do other countries have? Most foreign countries have either a residence-based (RBT) or territorial-based (TBT) tax system, or a combination of both. A residence-based tax system means that the country taxes just those people who reside in the country. Every country has its own definition of qualification for tax residency, but typically if either your main home is in the country, or your main place of work or source of income is in the country, or you spend more than a certain amount of days each year in the country, then you are considered a resident for tax purposes there. Some countries with RBT tax residents on their worldwide income, others on just their income generated in the country. A territorial-based tax system means just taxing income generated in the country, whether the recipient of the income is resident in the country or not. The majority of countries have residence based tax systems. Countries with territorial systems include Costa Rica, Panama, Paraguay, Malaysia and Singapore. What does CBT mean for expats? If you only ever live in the US, you wouldn’t necessarily know that the US has a citizenship-based tax system, unless you have offshore income. American expats however are directly affected by CBT, as it means that they have to file US taxes on their income earned abroad as well as any income they receive in the US. Until recently, most expats didn’t know about this antiquated requirement, and it didn’t matter, as the IRS had no way of knowing about the finances of Americans living abroad and so enforcing CBT for Americans living abroad. In the 21st century however, through a combination of information sources, the US government can access American citizens’ financial details globally, and so enforce CBT for expats. The information sources include credit card expenditure (if the card issuer is a US company), and bank balances of nearly all banks globally (including foreign banks), as well as foreign tax information due to information exchange agreements and information exchange clauses in tax treaties with foreign governments. The intersection between US and foreign taxation If an American lives in a country with residence-based taxation (including most developed countries), then they will have to pay taxes in their country of residence as well as US taxes. The US has signed tax treaties with around 60 other countries, but rather than exempting expats from filing US taxes, these treaties state that when expats file their US taxes, these treaties state that when US citizen expats file their US taxes, they must still report their world-wide income but then may claim a credit for income taxes paid to the foreign country to alleviate double taxation. “Tax treaties serve an important purpose for US taxation since they dictate sourcing and which country has the first right of taxation on income. They also provide for treaty resourcing income in order to utilize foreign tax credits. One key example is retirement/pension distributions. Under most US tax treaties, the country of residence at the time of distribution has the first right of taxation on pension distributions, unless otherwise stated in the treaty.” - Shannon Meyer CPA, Aspyr Group Expats who live in countries which don’t have a tax treaty with the US can also claim foreign tax credits . Tax treaties can be useful for some expats though, as some tax treaties retain the tax benefits of US retirement plans abroad, for example (and vice versa). So while expats always have to file US taxes, when they file they can claim US tax credits to avoid double taxation. There is another provision called the Foreign Earned Income Exclusion which can also alleviate double taxation, and which is sometimes more beneficial, so always consult a US expat tax professional to ensure you’re filing from abroad in your best interest. An American living and working for a French company in France will have their income taxes deducted at source, so they may not have to file a French income tax return, if employment is their only source of income. They will however have to file a US tax return to report their French employment income to the IRS. When they file Form 1040, they can also file Form 1116 to claim the Foreign Tax Credit, which will give them US tax credits to avoid double taxation. They may also have to report any foreign-registered financial accounts and assets that they may have. Other tax differences between the US and other countries Aside from CBT, US taxation has some other notable differences compared to most foreign countries. First, the US has relatively low personal income tax rates compared with most European countries (or more specifically, higher thresholds, resulting in lower tax bills). While in most countries, income tax rates increase for higher income amounts (including the US), some foreign countries have a flat tax, meaning the same personal income tax rate is applied to all income. Examples of countries with a flat rate of income tax include Bolivia, Belize, Romania, Mongolia, Estonia, and Georgia. Many foreign countries have additional taxes that the US doesn’t, such as wealth taxes in France and Spain for example, and solidarity taxes in Germany. Some countries have no income taxes meanwhile, such as the Bahamas, Bermuda, the UAE, and the Cayman Islands. Wrapping up Penalties for not filing taxes are almost always stringent in all countries, so it’s best not to act based on hope or assumptions. Every country has its own tax rules, and while the US CBT system is different, you shouldn’t make any assumptions or rely on online research about other countries’ tax systems as a substitute for seeking trustworthy expert advice. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“Today, it takes more brains and effort to make out the income-tax form than it does to make the income.” - Alfred E. Neuman International Tax Treaties, Double Tax Agreements, or DTAs, also referred to as Bilateral Tax Treaties, are intended to help expats avoid double taxation (i.e. being taxed on the same income by two different countries). As Americans living abroad are often liable to both US taxes as US citizens as well as foreign taxes as residents of a foreign country, double taxation is often an issue. However, as you’ll see, the DTAs the US has signed don’t often help expats avoid double taxation after all. In this article, we’ll explain why, as well as when tax treaties can help, how to claim tax treaty benefits if you need to, and talk about social security and estate and gift tax treaties, too. In this section, you’ll learn about: • Does the US have tax treaties? • Do tax treaties benefit Americans living abroad? • When can tax treaties benefit expats? • How can expats claim tax treaty benefits? • How to file Form 8833 • What about social security tax agreements? • What about estate and gift taxes? Does the US have tax treaties? The US has signed tax treaties with numerous countries across the world, from Armenia to Vietnam. Each treaty contains a different set of rules regarding reduced rates and exemptions. Over 60 countries have signed a tax treaty with the US, and each different treaty covers a range of different scenarios and taxes, from corporation taxes to estate taxes. Many foreign governments want to attract American investors, and to make it easier, foreign countries will often include provisions in tax treaties that reduce withholding taxes on dividends, interest and royalties. Do tax treaties benefit Americans living abroad? Tax treaties can help Americans living abroad, but unfortunately only a few expats actually benefit from them. In most cases, the tax treaties that the US has signed include a Savings Clause that allows them to apply US taxation on Americans living abroad as if the treaty didn’t exist. Instead, most treaties allow Americans living abroad to claim the Foreign Tax Credit when they file their US tax return to avoid double taxation. It’s also worth noting that most US tax treaties contain a provision that allows the two countries to share and exchange tax information. When can tax treaties benefit expats? While rare, tax treaties can benefit expats living abroad. For example, there are some occupations that qualify for exemptions in many US tax treaties, most often for students, teachers, or researchers. Teachers and researchers are usually exempt from taxes for two to three years, while students and trainees often get four to five years under tax treaty benefits. After these periods of time are finished, the US considers you a resident of the foreign country. Other professions that can benefit from DTA provisions are professional athletes and sportsmen who are abroad training or competing, and entertainers who are performing overseas, depending on each treaty. Some tax treaties also have provisions covering the double taxation of dividends, or retirement income, or prevent withholding taxes for independent contractors (including freelancers). To provide an example, Article 17 of the US/UK tax treaty allows contributions to a qualifying UK pension plan to be tax-deferred like a standard US 401k. Distributions also receive exemptions, while UK state pensions are only allowed to be taxed by the country where their recipient is a resident. The way IRAs are treated in DTAs is covered in more detail in a separate guide. The first ever tax treaty is thought to be an agreement signed between Great Britain and Switzerland on August 18, 1872 to prevent the double taxation of death estate taxes. The first US tax income tax treaty was signed with France in 1932. There are now over 3000 bilateral international tax treaties in place around the world. How can expats claim tax treaty benefits? Expats can claim tax treaty benefits by filing IRS Form 8833. So if you’re an expat living in a country that has a tax treaty with the US that has a provision that you could benefit from, you should attach this form to your annual American tax return. How to file Form 8833 Filing Form 8833 involves writing a brief description explaining the treaty provision that you want applied to your tax return. An example of when this may be necessary is if you were a resident in one country but carried out work in others, including the US, that may affect your ability to claim foreign tax credits. The statement should include information about your country of tax residence, your travel dates and purpose of travel (if relevant), the treaty provision you are invoking, and the types and amount of income that you believe is exempt from taxes, according to the tax treaty. What about social security tax agreements? Americans living abroad who are self-employed or who work for a US-based employer are still liable to pay US social security taxes. Many other countries require residents to pay social security tax too, which can lead to double social security tax liability for Americans. While double social security taxation isn’t covered in DTAs, the US has signed a separate set of tax treaties with 30 other countries to cover it, known as Totalization Agreements . If you live in a country that has a Totalization Agreement with the US, you will only pay social security taxes to one country, normally dependent on how long you intend to live abroad for. So if you are living abroad for less than typically either 3 or 5 years (depending on the treaty), you can continue making social security contributions to the US, and not in your country of residence. If you’re there (or intend to stay there) for more than 5 years though, you will contribute in your new country of residence. Totalization Agreements also stipulate that contributions made while you’re abroad to either country can be applied to your social security entitlement in either country, depending where you eventually retire. This means that you usually don’t need to get the full number of credits in the country where you retire to qualify to receive social security benefits in retirement. What about estate and gift taxes? While estate and gift taxes aren’t covered in DTAs either, again the US has signed a separate set of international estate and gift tax treaties with 15 other countries to avoid double taxation. These countries are Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland, and the UK. Each treaty is different, with some covering just estate taxes, and others covering gift taxes too. In conclusion, the majority of Americans living abroad don’t need to use tax treaty provisions, as they can avoid double taxation by claiming either the Foreign Earned Income Exclusion or the Foreign Tax Credit. But there are still plenty of situations where a tax treaty may be useful, so it’s always worth asking your expat tax advisor. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.