Relocating to Europe is a defining milestone—whether drawn by the cultural richness of Italy, the coastal ease of Portugal, the energy of Spain, or the sophistication of France. For US citizens, however, life abroad introduces a layer of financial complexity that makes proactive, cross-border planning essential rather than optional.

Unlike most nationals, Americans remain subject to worldwide US taxation regardless of where they live. The intersection of US rules with European tax systems, reporting regimes, and residency frameworks means that successful relocation is as much a financial exercise as a lifestyle one. Below are the five most important financial planning considerations for US citizens relocating to the EU.

1. US Tax Obligations and Double Taxation Treaties

Relocating overseas does not sever ties with the Internal Revenue Service. US citizens must continue filing annual federal tax returns reporting global income, alongside international disclosures such as FBAR filings for foreign accounts exceeding $10,000 in aggregate and FATCA Form 8938 for higher-value assets.

Where European countries differ meaningfully is in how their domestic tax systems interact with bilateral tax treaties with the United States. Portugal’s Non-Habitual Resident (NHR) regime has historically provided preferential treatment for certain categories of foreign income, particularly pensions, though this old regime is no longer active (replaced by the Scientific Research and Innovation Tax Incentive) and recent changes make careful review essential. Spain taxes residents on worldwide income at progressive rates that can approach 47%, but the US–Spain treaty provides relief for specific income streams, including US Social Security.

Italy offers several special tax regimes aimed at foreign nationals, including a 7% tax for retirees, and an elective €200,000 flat tax on foreign income (will likely be increasing in 2026 to €300,000), while France stands out for retirees: under the US–France tax treaty, most US pensions are taxed in the United States rather than locally, despite France’s progressive domestic income tax system.

The most important variable is timing. Early planning—ideally 12 to 24 months before a move—allows for strategic use of treaty benefits, foreign tax credits, and income-timing decisions that can materially affect long-term outcomes.

2. Local Tax Residency, Income, and Wealth Rules

Once tax residency is established—typically after spending more than 183 days per year in a country—local tax regimes apply in full. These rules vary widely across Europe and can significantly reshape a household’s tax exposure.

Portugal has traditionally appealed to Americans due to the absence of a general wealth tax and the availability of special regimes for new residents, though local income may still be taxed at rates approaching 48%. Spain applies a wealth tax on worldwide assets, generally ranging from 0.2% to 3.5% depending on region and asset levels, while taxing pensions and employment income progressively. France applies its Impôt sur la Fortune Immobilière (IFI) only to real estate assets exceeding €1.3 million, exempting financial assets—a structure that can favor globally diversified investors.

Italy does not impose a classic wealth tax but levies annual taxes on foreign financial assets and applies progressive income tax unless an alternative regime is elected. Rental income, pensions, and investment income are all treated differently across jurisdictions, underscoring the importance of modeling multiple scenarios before establishing residency.

3. Currency Exposure and Cross-Border Banking Transitions

While US citizens often continue earning or investing in US dollars, daily living expenses in Europe are incurred locally. Over time, currency fluctuations can meaningfully affect purchasing power and cash-flow predictability, particularly for retirees drawing fixed income.

Equally important is banking access. Once European residency is established, many US brokerages will restrict services or close accounts altogether. EU regulatory frameworks, including MiFID II, further complicate access to certain US-based investment products. Portugal-based residents, in particular, often encounter limitations with US financial institutions once their address changes.

Opening appropriate local bank accounts early, reviewing custodial relationships, and understanding transfer costs and administrative friction are critical steps. Failing to plan for these transitions can disrupt liquidity and investment access at precisely the wrong moment.

4. Investment Structure and Reporting Compliance

EU residency triggers additional reporting obligations alongside ongoing US requirements, creating a dual-compliance environment. Spain’s Modelo 720, for example, requires disclosure of foreign assets exceeding €50,000, with severe penalties for non-compliance. These obligations exist in parallel with US filings such as FBAR and FATCA.

Investment structures should also be reviewed carefully. Certain non-US investment products can be classified as Passive Foreign Investment Companies (PFICs) under US tax law, resulting in punitive taxation and complex annual filings if held in taxable accounts. Many Americans benefit from restructuring portfolios before or shortly after relocation to maintain compliance and administrative simplicity.

Italy’s annual taxes on foreign assets and differing treatments of investment income across Europe further reinforce the need for coordinated oversight between tax and investment strategy.

5. Estate Planning, Insurance, and Residency Considerations

Relocating to Europe often requires revisiting foundational planning documents. Inheritance and succession rules vary widely: Portugal currently imposes no inheritance tax, while France can apply significant taxes on inheritances outside the direct family line and follows forced-heirship principles that may override US estate intentions.

Health insurance is another cornerstone of relocation planning. While European healthcare systems are among the strongest globally, private coverage is often a prerequisite for residence permits and long-stay visas. Each country’s residency framework—whether Portugal, Italy, or Spain—imposes specific insurance standards that must be met.

Families should also streamline retirement accounts, brokerage relationships, and beneficiary designations before moving to reduce long-term administrative and compliance risks.

About Liberty Atlantic

Liberty Atlantic is a boutique, cross-border wealth management firm dedicated to helping US citizens navigate the financial realities of living abroad. With deep expertise in both US and European tax systems and a fiduciary, human-centric approach to planning, Liberty Atlantic helps clients align their wealth, lifestyle, and long-term goals across borders—so financial freedom is not constrained by geography.