USA → Europe · Tax
Moving from the US to Europe: the tax guide for Americans
The United States taxes its citizens and green card holders wherever they live. When you move to Europe you start paying tax in your new country, and you keep filing a US tax return every year. Thanks to the foreign tax credit and the foreign earned income exclusion, most Americans in Europe owe little or no extra US tax. The paperwork is what catches people out.
What stays the same after you move
- You still file Form 1040 if your income is above the filing threshold (for a single person, roughly the $16,100 standard deduction in 2026).
- Deadlines: Americans living abroad get an automatic two-month extension to 15 June, and can extend further to 15 October. Any tax due still carries interest from 15 April.
- Your new country taxes you as a resident, usually on your worldwide income, under its own rules. See our net salary calculator for 19 countries.
Two ways to avoid paying tax twice
| Foreign earned income exclusion (FEIE) | Foreign tax credit (FTC) | |
|---|---|---|
| How it works | Excludes up to $132,900 of foreign salary (2026) from US tax | Credits the income tax you paid in Europe against your US tax |
| Who qualifies | Bona fide residence abroad, or 330 full days outside the US in 12 months | Anyone who paid foreign income tax |
| Best for | Low-tax countries, or salaries under the limit | Most of Europe, where income tax is higher than in the US |
| Unused amounts | Lost | Can be carried forward for up to 10 years |
| Forms | Form 2555 | Form 1116 |
In high-tax countries such as Germany, France, Belgium or Denmark, European income tax is usually higher than your US tax on the same salary, so the foreign tax credit wipes out the US bill and leaves excess credits for later. The exclusion also lets you exclude some housing costs above a base amount. You cannot use both on the same income, and switching between them has limits, so it is worth getting it right in your first year.
Reporting your foreign accounts
- FBAR (FinCEN Form 114): if the combined balance of your non-US accounts was over $10,000 at any time in the year, you report every account online. Due 15 April, with an automatic extension to 15 October. Penalties for missing it can be severe.
- FATCA (Form 8938): filed with your tax return if your foreign financial assets are above $200,000 at the end of the year or $300,000 at any time (single, living abroad; double for married couples filing jointly).
- Banks will ask you. Because of FATCA, European banks report US clients to the IRS. Some smaller banks and brokers refuse US citizens altogether, so keep a US account open when you move.
Investing: the PFIC trap
To the IRS, most non-US funds and ETFs, including the popular European UCITS ETFs, are passive foreign investment companies (PFICs). Gains can be taxed at the highest rate plus an interest charge, and each fund needs Form 8621 every year. Many Americans in Europe keep investing through a US brokerage account in US-listed ETFs, or buy individual shares. Check that your broker still allows it once you have a European address, and how your new country taxes US funds. Our ETF calculator shows the European side.
Retirement accounts
- You can usually keep your 401(k) and IRA. Contributions to an IRA need US-taxable earned income, which you may not have if you use the exclusion.
- Your new country may not recognise a Roth IRA as tax-free, and could tax gains or withdrawals. The UK treaty is one of the few that protects it.
- European workplace pensions may not be tax-deferred for US purposes unless a treaty says so.
Social Security
The US has totalization agreements with most of the European countries we cover, including Germany, France, the UK, Ireland, the Netherlands, Italy, Spain, Portugal, Belgium, Austria, Switzerland and the Nordic countries. They make sure you pay social security in one country only, and let you combine work years to qualify for a pension. If your US employer sends you abroad for up to five years, you can often stay in US Social Security with a certificate of coverage. Self-employed Americans abroad owe 15.3% US self-employment tax unless an agreement applies.
Leaving your US state
Moving abroad does not automatically end state tax residency. States such as California, Virginia, New Mexico and South Carolina can keep treating you as a resident if you keep a home, a driver's licence or other strong ties. Before you go, file a final part-year return and cut ties where you can.
Tax breaks for newcomers in Europe
Several countries offer lower taxes to people who move there for work, and Americans qualify like anyone else: the Dutch 30% ruling, Spain's Beckham law, Italy's impatriati regime, Portugal's IFICI, Greece's 50% exemption and Denmark's researcher scheme. Lower European tax can mean you pay some US tax again, because your foreign tax credit shrinks. Run both sides before you choose.
A checklist before you move
- Decide with a cross-border tax adviser whether the exclusion or the credit suits you.
- Keep at least one US bank and brokerage account, with a US mailing address if allowed.
- Note every foreign account you open for the FBAR.
- Avoid buying European funds or ETFs until you understand the PFIC rules.
- Get a certificate of coverage if you are seconded by a US employer.
- File a part-year return for your state and break residency ties.
Compare your US pay with 19 European countries →
Sources
This guide is general information based on the tax rules we could verify for 2026, not tax or financial advice. Rules change and personal situations differ, so check with the tax authority or a qualified adviser before you act. Spotted a mistake? Email [email protected].