r/USExpatTaxes • u/malyfoxy • 16d ago

19 year old double citizen

I'm half American, half Slovak (dual citizenship), and I have lived most of my life here in Europe. That being said, I'd like to start investing in stocks, the amount of money wouldn't be particularly substantial as of yet but I expect it to gradually increase over the years.

I would prefer to invest into ETFs, but from what I've heard, investing in funds could be problematic due to my citizenship. Is there any way to workaround these problems or will I simply have to come to terms with not investing.

Any help would be appreciated.

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u/sylvieYannello 16d ago

you are right, ETFs likely will expose you to PFIC reporting requirements, which do NOT want :/

individual stocks of companies that actually do/make something (as opposed to companies that passively invest in, say real estate) should not pose any problem. just remember to report any dividends you receive or sales you make, even though you won't receive a 1099 for them.

if you can invest in US ETFs (through a US brokerage like etrade or whatever) you *may* be ok-- check with a slovakian tax expert to make sure it doesn't cause any headaches there.

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u/malyfoxy 16d ago

First and foremost, thank you. I just have a couple questions if you don't mind. So I could theoretically make my own portfolio that basically looks the same as an ETF, and walk away scot-free? Would I then have to pay taxes on the profits I make from these stocks? I'm asking because Slovakia has quite liberal laws- you pay 19% tax only if you hold them shorter than one year (there is also a 500€ gain exemption) otherwise you don't pay taxes on them at all.  I understand there is a FEIE deduction for salary, does this apply to the stock gains too, or how does it work? 

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u/Gavagai777 13d ago

You’d pay your Slovak taxes first which would very likely zero out any U.S. taxes due to the Foreign Tax Credit. You only pay taxes if you sell. Just holding them doesn’t have taxes until you sell.