I am planning to move to Europe

As an American, you may be considering a move to Europe for work, love, or simply a change of pace. But before you start packing your bags, it’s important to understand the potential tax implications of such a move.

While the United States has a tax treaty with many European countries, there are still some important differences to be aware of.

Of course, every situation is different, so it’s important to consult with a tax professional before making any decisions.

1. You may need to pay taxes in both countries

If you move to Europe and become a resident there, you may still be required to pay taxes in the United States. This is because the United States taxes its citizens on their worldwide income, no matter where they live.

2. You may need to pay estate taxes

Another thing to keep in mind is that, if you own property in the United States, you may be subject to estate taxes when you die. This is because, although the United States has a tax treaty with many European countries, it does not have one with all of them.

3. Your tax rate may be higher

In some cases, your tax rate may be higher if you move to Europe. This is because, in the United States, there is a graduated tax system, which means that the more you earn, the higher your tax rate will be.

However, in many European countries, there is a flat tax rate, which means that everyone pays the same percentage of their income in taxes, regardless of how much they earn. So, if you move to a country with a flat tax rate and your income increases, your tax bill will also go up.

4. You may need to file a foreign Tax Return

If you move to Europe and become a resident there, you may need to file a foreign tax return. This is because, in some cases, the United States requires its citizens to report their worldwide income on their tax return, even if they live in another country.

5. You may need to pay Capital Gains taxes

If you own investments in the United States, you may need to pay capital gains taxes when you sell them. This is because, in the United States, capital gains are taxed at a lower rate than ordinary income. However, in many European countries, capital gains are taxed at the same rate as ordinary income. So, if you move to a country with a higher capital gains tax rate and sell your investments, you may end up paying more in taxes.

6. You may need to pay Self-Employment taxes

If you are self-employed, you may need to pay self-employment taxes in both the United States and Europe. This is because, in the United States, self-employment taxes are imposed on the income of self-employed individuals. However, in many European countries, self-employment taxes are not imposed. So, if you move to a country where self-employment taxes are not imposed and you are self-employed, you may not have to pay them.

7. You may need to pay property taxes

If you own property in the United States, you may need to pay property taxes. This is because, in the United States, property taxes are imposed on the value of real property, such as land and buildings. However, in many European countries, property taxes are not imposed. So, if you move to a country where property taxes are not imposed and you own property, you may not have to pay them.

Americans Overseas

We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother. When we heard about this for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fined or pick up other problems?), and panic (what should I do?).

It is (unfortunately) true that there is an additional American tax levy. But there’s no information from the local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.

That’s why we started this initiative to help people from all over the world by providing proper information to avoid unnecessary panic and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with your tax obligations.

If you have any questions about the US tax obligation can contact Americans Overseas. 

Contact us for more information