Why Your U.S. CPA and German Steuerberater Should Talk Before You Move
By Daniel Baumgartner & Petra Peters
A position opens in Frankfurt, or a retirement starts dividing itself between Vero Beach and Hamburg, and a family decides to move. The practical questions arrive almost immediately: schools, shipping, a lease, an appointment at the consulate. What families often overlook is how the move impacts the investments they already own.
By that point, most German-American households hold some version of the same set of accounts: a U.S. brokerage account and an IRA, a German Depot, and a pension from each country. They also have two tax advisors. A CPA prepares the American return, and a Steuerberater handles the German one. Both are competent inside their own system, and in our experience, the two may not have had reason to speak to each other before the move.
The following article outlines how a portfolio shifts when residency changes, along with the reasons your two tax advisors and portfolio manager should coordinate before you move rather than afterward.
Why Two Capable advisors Can Still Leave a Portfolio Unexamined
Each advisor was engaged for one country, and neither was asked to consider how the other country treats the same accounts. Competence is not the problem, but who has looked at the portfolio as a whole?
A move can bring the same household within both U.S. and German tax considerations in the same year. The precise tax consequences depend on the family’s circumstances and should be determined by the CPA and Steuerberater.
Where the two systems meet, in practice, is the portfolio. An account that looks settled from one side of the Atlantic can look different from the other, and the same is true of a fund or a sale.
What Changes in a Portfolio When Residency Changes
A change of residency affects four parts of a portfolio in particular: where the accounts can be held, what those accounts hold, the currencies the family spends, and the timing of any changes.
Where the Accounts Can Be Held
Custody is often the slowest item to resolve, which is why it belongs at the front of the list. Some U.S. custodians restrict or close accounts once a client becomes a non-resident, and some German banks decline U.S. persons. Settle this question before the move rather than after it.
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.
Which Funds Fit the Family That Owns Them
Fund domicile is an investment-selection variable. Two funds can hold identical securities and still leave a cross-border household with different results after tax. How those rules apply to a particular family, including the American regime known as PFIC, is a question for the CPA and the Steuerberater, and we direct it there.
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.
The Currency the Family Expects to Spend In
The currencies in which our clients expect to spend are one factor in portfolio construction and liquidity planning. A move carries costs and cash needs in two currencies at once, often for longer than a household budget is designed for, so the liquidity portion is reviewed against that calendar.
Retirement Accounts and the Timing of Sales
An IRA or a 401(k) and a German pension product may be viewed differently across the border, and a sale executed before the residency date may fall under different rules than the same sale executed after it.
Before we make changes the move may affect, we ask both advisors for their input. The investment decision itself remains ours, made within the client’s written investment objectives, and the tax answer is not ours to supply.
One Conversation Before the Move
The suggestion is a simple one: a single meeting or call with the CPA, the Steuerberater, and the person managing the portfolio, with both spouses present.
Each professional arrives with something the others don’t have. The CPA explains how the family’s U.S. filing position changes. When German residency begins, and what that means for the accounts, is the Steuerberater’s part of the conversation.
From us comes a portfolio report with cost basis, realized gains, and a holdings list showing each fund’s domicile, so that everyone is working from the same facts. Account statements themselves come from the custodian.
A short agenda is enough. Three questions are particularly useful:
- Where will each account live after the move, and can the current custodian keep it?
- Which holdings should be reviewed before the residency date?
- Which decisions have to precede the move, and which can follow it?
The structure of our participation is clear: we obtain the relevant tax guidance from the client’s advisors and incorporate those considerations into our investment analysis. There is no schedule that suits every household and no rule about how far ahead this conversation belongs. The change in circumstances is what prompts 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 do not replace those advisors.
If a move between the United States and Germany is somewhere on your calendar, consider getting in touch for an initial conversation.
Daniel Baumgartner can be reached at our Sparta, New Jersey office at (855) 248-6630 or baumgartner@terranovausa.com. Petra Peters is in New York at (212) 355-1234 or ppeters@terranovausa.com.
Frequently Asked Questions
Can I keep my U.S. brokerage account if I move to Germany?
It depends on your custodian’s policy for non-resident clients. Some restrict trading or close the account once you register an address abroad, and some German banks decline U.S. persons. Confirm your custodian’s position before the residency date. Your asset manager can review where accounts can be held as part of the investment strategy; the account mechanics stay with the custodian.
What is a PFIC, and why does it come up when Americans move to Germany?
PFIC stands for passive foreign investment company, a U.S. term for certain funds domiciled outside the United States. How the rules apply to your situation is a question for your CPA. On the investment side, fund domicile is part of fund selection for cross-border families, weighed alongside cost and structure.
What should I review in my investments before moving between the U.S. and Germany?
There is no universal list. The factors that usually matter are:
- Where each account can be held after the move
- Fund domicile
- The currency you expect to spend in
- Retirement accounts on each side
- The timing of any sales
Discuss these with both tax advisors and your portfolio manager before the residency date.
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.