# If your spouse has different citizenship what's your experience with investment taxes



## exclamation (Mar 9, 2019)

This is a very general question, as I just started thinking about it.
Let's say one is EU, another one is an USA citizen.
Would it make big difference who owns the brokerage account if we live in some EU country? 

Feel free to pick any scenario. Thanks


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## Bevdeforges (Nov 16, 2007)

As a US citizen you will always be subject to US income taxes and the restrictions of FATCA regarding foreign financial assets. The reporting requirements for PFICs (which basically seem to include any and all forms of "mutual fund" or "assurance vie") can get incredibly hairy and time consuming. (Expensive, if you engage a tax preparer for your US returns.)

If the non-US partner has exclusive ownership/signature authority over the investments and no US tax obligation (i.e. has properly surrendered any Green Card they may have held while living in the US), then they should be subject only to the tax rules of their country of residence. This can complicate inheritance considerations - or division of property in the event of a divorce. 

As far as income taxes are concerned, some EU countries tax each resident individually, while others (like France, where I live) tax married couples as a "household unit" - which can affect the amount of taxes you'll pay, regardless of whose name is on the account.


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## JustLurking (Mar 25, 2015)

exclamation said:


> Let's say one is EU, another one is an USA citizen.
> Would it make big difference who owns the brokerage account if we live in some EU country?


Based on what little information you've given, I'd say that the best case is for the EU citizen to own the brokerage account and do all of the investing for the pair of you. The working assumptions are that you plan to use mutual funds or other 'collectives' to invest, that the US citizen files their US tax as 'married filing separately', and that this is an EU based brokerage account rather than a US based one.

The reason is the ugly intersection of the US's citizenship-based taxation, its abominable PFIC tax rules, and an EU regulation known as PRIIPs (catchy, eh?!). If the US citizen owns the account, they will face horrific US taxes for holding EU domiciled -- in fact _any_ non-US domiciled -- funds and ETFs, but as an EU resident they will find it hard to impossible to invest through US domiciled funds or ETFs due to PRIIPs. The US citizen will have to contend with both local tax law and US tax law. Perhaps also US state tax law, to add a third layer of complexity.

In contrast, the EU citizen can invest freely in EU domiciled funds or ETFs, all readily available to EU residents, and also remain entirely isolated from US taxes. They will only have to contend with local tax law.

Other observations. There is no unlimited marital exemption against US estate taxes when they pass to a non-US citizen spouse. This also argues for keeping assets in the hands of the non-US citizen. US gift taxes can also be sticky where the giver is a US citizen, and the recipient not. Check for the presence (or absence) of both an income tax treaty and an estate tax treaty between the US and your country of residence/domicile.

The one case where the reverse may be true is where there is an intention to directly hold US stocks or other 'US situs' assets. Here, the US allows a really miserly $60k in estate tax exemption on these assets where the deceased is not domiciled in one of the few (fifteen or so) countries with a US estate tax treaty and the recipient is not a US citizen spouse. A US citizen gets $11mm or so currently, so that could argue for the US citizen holding these assets. As above though, lack of unlimited marital exemption can get in the way here.


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