Moving From Germany to the U.S.: What Changes Inside the Portfolio
By Daniel Baumgartner & Petra Peters
A family in Munich has accepted an offer in New York, signed a lease in northern New Jersey, and the moving date is on the calendar. Their investments haven't moved at all. For the spouse who follows the portfolio, that's often when the uncertainty starts, because it isn't yet clear what the move does to those accounts or whom to ask about it.
At that point the household owns what many families in this position own: a German Depot (a securities account at a German bank), a bank account in euros, some combination of company and private pension products, and often a U.S. account left over from an earlier stay in the States.
While your investments may remain in place on moving day, four aspects of the portfolio deserve particular attention before and after a move.
Why a Move Reaches the Portfolio at All
A portfolio is built around a household, and a move changes the household while the securities stay put. Where the accounts can be held and who is permitted to hold them depend on where the family lives, and so does the currency the bills arrive in.
A move can also bring the same household within both U.S. and German tax considerations in the same year, among them the U.S. reporting and fund-classification rules many families first meet as FBAR, FATCA, and PFIC. The precise tax consequences depend on the family's circumstances and should be determined by your CPA and German tax advisor (Steuerberater).
Our article on why your U.S. CPA and German Steuerberater should talk before you move covers that conversation; this article discusses what happens to the portfolio.
What Changes Inside the Portfolio
1. Where the Accounts Can Be Held
Some German institutions restrict or decline accounts for clients who become U.S. residents, and some U.S. custodians (the institutions that hold the accounts) apply their own conditions to accounts opened from abroad.
In our experience, this is easier to settle before the moving date than after it. We don't hold client assets. We review where accounts can be held as part of the investment strategy; the financial institution you decide to work with is your choice, and the account mechanics stay with the custodian.
2. The Currencies You Expect to Spend In
Rent and school tuition start arriving in dollars while a good part of the portfolio, and often a pension, stays in euros. The currencies in which clients expect to spend are one factor in portfolio construction and liquidity planning.
The move has its own cash calendar in both currencies, from deposits and shipping to the months when some families carry two households at once, and we review the cash portion of the portfolio against that calendar.
3. Where a Fund Is Domiciled
A fund's domicile is the country where it's legally based. Two funds can hold similar securities and still sit differently for a household that now files in the United States, and how those rules apply to a particular family is a question for the CPA.
Once the relevant tax considerations have been identified by the client's tax advisors, fund domicile becomes one of the factors we consider in investment selection, alongside cost and structure.
4. Retirement Positions and the Timing of Sales
The timing of a sale can be as important as the investment decision itself when a change in tax residency is involved. Many households arriving from Germany hold some version of the same set: a company pension, one or more private pension products, and sometimes a U.S. retirement account from earlier years in the U.S. These positions may be viewed differently on each side of the border, which is a question for the two tax advisors.
Our contribution is the portfolio view. We look at what each position does inside the overall mix and how it feeds future cash needs, along with what a change to one would mean for the rest. Where a sale may be affected by the move, we obtain the relevant tax guidance from the client's advisors and incorporate those considerations into our investment analysis before executing.
Which Questions Belong to Which Professional
By now, many families have one list of questions and three or four professionals to put them to.
Knowing which question goes to whom is often a challenge.
- The Steuerberater, who is listed in Germany's official register of tax advisors, is the one to ask what the move means on the German side, and when.
- The CPA can tell you what the family's U.S. filing position becomes and what reporting follows from it.
- The custodian answers questions about what can be held, and on what conditions, and also handles the account mechanics.
- From the asset manager come the answers on what the portfolio should hold, how cash is arranged against the family's spending, and when changes are made. Those decisions are guided by each client’s investment objectives, risk tolerance, liquidity requirements, and time horizon.
With those four roles identified, you can take your own list and address each item to the person who can answer it.
Where Terra Nova Fits
Terra Nova Asset Management is an independent, partner-owned investment advisory firm serving U.S. and European clients since 1998.
We manage the investments and work with clients' attorneys and tax professionals when those issues have portfolio implications; we don't replace those advisors. Over those years we've managed portfolios for families in both markets, and moves in both directions are familiar ground.
Is a move from Germany on your calendar? We invite you to an initial conversation. Daniel Baumgartner can be reached at our Sparta, New Jersey office at (855) 248-6630 or baumgartner@terranovausa.com. Petra Peters can be reached in New York at (212) 355-1234 or ppeters@terranovausa.com.
Frequently Asked Questions
Can I keep my German Depot after I move to the United States?
It depends on the bank. Some German institutions restrict or decline accounts for clients who live in the U.S., so ask before the moving date. Your asset manager can review where accounts can be held as part of the investment strategy, while the account mechanics stay with the custodian, the institution that holds the account.
What happens to my euro investments when I move to the U.S.?
Nothing changes automatically on the moving date. The currencies a family expects to spend in are one factor in portfolio construction and liquidity planning, alongside objectives, risk tolerance, and time horizon. After a move, the cash portion of the portfolio is reviewed against the family's actual spending calendar in both currencies.
Should I sell my funds before moving from Germany to the U.S.?
Not as a rule. Once your CPA and Steuerberater have identified the relevant tax considerations, fund domicile (where a fund is legally based) becomes one of the factors an asset manager weighs in investment selection, alongside cost and structure. For cross-border families, any change is then made within the client's written investment objectives.
Do you work with German-speaking and European investors?
Yes. Terra Nova Asset Management manages portfolios for U.S. and European clients, including German-speaking investors. Our experience in both U.S. and European markets is particularly relevant for clients whose assets, spending needs, or family circumstances span jurisdictions.
About Daniel
Daniel Baumgartner is a founding partner of Terra Nova Asset Management LLC. Drawing on his background in finance and international business from NYU, he manages personalized investment portfolios and builds long-term client relationships focused on disciplined investment management and individual objectives.
About Petra
Petra Peters, founding partner and CEO of Terra Nova Asset Management LLC, has decades of international banking and asset management experience. With deep experience in U.S. and European markets, she designs and manages specialized portfolios for private and institutional clients.