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Background:

My wife and I are in our high-twenties currently living in UK. We don't have a mortgage, we're renting our flat. The only debt we have is the standard UK student loans, which is deducted from our salaries automatically as a %. We have no debt beside this.

We're currently researching the concept of FIRE (financial independence, retire early) which involves investing extra savings to retire earlier. At the moment we're contributing 15% of our income to our workplace pensions (with further plans to increase it), but we've still managed to accumulate a non-emergency sum of £10K and €5K which we would like to invest (most likely S&P 500 since it's a long term investment), with all future extra savings to follow.

Question:

The catch is we're unsure that we want to settle in the UK and are considering moving to another country in Europe within the next few years (Scandinavia, Netherlands, etc.). This is the same reason why we haven't bought a house. All brokerages seem to be tied to a particular country: you can only buy assets while being a resident of that country. Once you change the country, it becomes a problem of transferring your assets there: paying taxes or selling the stocks and re-buying them in the new country - but this may incur losses if selling too soon/on a low. This is my understanding, at least. What's worse is since we're still trying to find "our place", we might have the same problem in a few years once we decide to move countries again.

What are our effective options here? Ideally there would be a broker which would operate in Europe in general, so it would be easier to transfer assets from country to country. We're looking for options with the least resistance ideally: I'm reluctant to transfer the funds to another country because from my understanding, this would often require a proof of residence in said country + numerous visits several times per year to manage the finances/related bank account. If it would be possible to manage finances overseas then I'd be happy with this option.

Is it viable to keep the assets in their original countries of purchase, rather than transferring them to current country of residence? This means no longer buying more of that asset and simply letting it be after we've moved out of the country. This effectively yields a portfolio of investments in different countries. How hard would it be to manage such a portfolio? Would dividend collection be unnecessary complicated?

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All brokerages seem to be tied to a particular country: you can only buy assets while being a resident of that country

  • There are banks and brokers with "international" branches that are specialized on international customers.
    What I've seen in this respect is that the broker and thus the accounts are in one country, customer can be whereever (including opening/closing the account). Broker/bank provides local ways to deposit/withdraw money (e.g. US broker providing SEPA account for deposits in Europe that are then transferred to the US account).
    It may depend on local legislation whether/how this is possible.

  • There are also banks/brokers that are present in a wide variety of countries. It may be worth while checking with them what they can offer in your situation (either easily moving the accounts to your new country of residence or serving international customers)

  • Opening an account in another country where you are not physically present/resident may turn out to be something totally different from keeping an account after moving somewhere else.

Things I'd look for/checklist

  • Which ways does the broker provide to access (deposit/withdraw money)? Feasible from which other countries? Fees?

  • Fees/procedure for transfering the brokerage account internationally?

  • Amost all countries (except the USA) have income tax via residency or similar concepts. Also, captical gains taxes are common. Domestic brokers may automatically take care of the proper withholdings and supply suitable documentation for income tax.

    • For non-domestic brokerage accounts, you'll probably have to do this yourself for your income tax declaration. It may also cause income declaration to become obligatory instead of volountary, and that may have other consequences (e.g. in Germany, volountary income tax declarations have much longer deadlines than obligatory ones)
    • You'll probably also have to hand in declarations that you are not (no longer) resident in the country where the brokerage account is, or do a tax declaration there to get back overpaid taxes.

Is it viable to keep the assets in their original countries of purchase, rather than transferring them to current country of residence?

Sure.

This means no longer buying more of that asset and simply letting it be after we've moved out of the country.

  • Not necessarily: as long as you have online access, you can go on trading.

How hard would it be to manage such a portfolio?

  • Somewhat more difficult than having multiple domestic brokerage accounts: you'll have to deal with brokerage owner tax burocracy (and if only to declare that you are not resident where the brokerage account is) in several places.
  • However, if you eiter are or have been resident in the respective countries, you may already know sufficiently well how their tax system works to understand what to do as a non-resident.
  • Having multiple brokerage accounts in general has of course trade-offs:
    • Fee structure: number of transactions may play a role in fees, also total portfolio value may play a role.
    • Hassle: more difficult to have a precise overview, need to check multiple accounts etc.
    • You'll either have more cash sitting around in total, or have to move cash, in your case even internationally (time, fee).
    • Of course, having multiple brokerage accounts is a way of spreading risk in terms of brokerage firm. Having them internationally may spread risk in terms of legislation and currency.
    • If you move back, you're already set up.

 Would dividend collection be unnecessary complicated?

  • I don't think dividend collection would be very complicated, but withdrawing dividends to a bank account in another country may be expensive.
  • Having your portfolio split across different brokers may make tax declaration more difficult ans/or you may be subject to higher tax withholdings.
    Example: in Germany, realized losses from shares can be set off against realized gains from the sale of shares (but not against any other type of income, not even against dividends from shares). So if you sell at a loss from a foreign brokerage account and sell at a gain in a German brokerage account, the German broker will withhold capital gains tax for the gains. You'll have to wait until income tax declaration to get that sorted out.
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My first thought would be to have an account in Amsterdam or Antwerp.

The whole financial regime in the UK is the most controlling and consumer-hostile in the world and has some of the highest taxes in the world. In general, you would be wise to get your money out of the UK at the earliest opportunity. The broker-only-accepts-uk-residents thing is purely a figment of the UK's incredibly tight and overbearing control over every penny. With the exception of a few communist dictatorships, no other country, not even the United States, obstructs and tries to control foreign investors the way the UK does.

In terms of where you want to go, any of the Germanic countries (Netherlands, Germany, Zurich/Switzerland, Austria) have easy going, friendly financial services that put relatively few restrictions on you. Since Amsterdam is close to the UK, it is a natural place to establish a bank and/or brokerage account. You can change your citizenship whenever you want and you will not be forced to sell any holdings in Dutch accounts.

  • Is the idea to establish a bank/brokerage in these cities as a means of residency and then using that account to buy investments from that country's brokers? Wouldn't opening an account in either Amsterdam or Antwerp require physical access? – Arthur Dec 6 '18 at 10:09

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