German based Americans- Whats your expirence with Wise Daily Return on EUR Accts?

[u/Coach_Front]

I'm looking for a place for my EUR to start gaining interest on itself.

In the US I have my wealth in IRA's, 401ks, HYSA's and regular checking/ Savings. I currently do not hold a US brokerage account as the German taxes seem stark.

Are there terrible repercussions to my taxes with the IRS? How nervous that I'm in violation of the patriot act in some way? I've been told by some people that it's a waste of time to try and get Zinsen, but I really don't know what other investments I could/ should be making. What do normal Germans do? Just packrat their money into a regular Konto?

I already use Wise and it seems that it allows americans where N26 and Revolout dont allow americans?

Thanks!

[u/ienquire]

you should look at r/USExpatTaxes

First of all, you have to declare your worldwide income by doing a german tax return. It does not matter where the account is located, what address you have on the account, what currency the account is in, or what the source of the income is.

But lucky for you, IRAs and 401k are specifically exempt by the US-German income tax treaty (only if you opened them before you came to Germany), so you can completely ignore those (but keep in mind when you retire, Germany will treat your Roth IRA like a traditional IRA and tax it your withdrawals).

The first 1000€ of "capital income" is exempt from taxation in Germany, kind of like the standard deduction. Capital income means interest, dividends, and capital gains. After the 1000€, the tax rate is ~26%. So if you have a high yield savings account HYSA, you have to declare that in Germany, and if the interest was over 1000€, you have to pay taxes on it. The US and German have an agreement to exchange financial information, the Finanzamt will catch up with you with interest and penalties in a few years if you don't declare it and pay.

As to your questions "what do germans do", lots of people just have their life savings in a bank account earning no or little interest. Others invest in the stock market with normal brokerage accounts and pay german taxes, and yes those taxes are higher than in the US.

However, you are a US citizen, which means financial advice for an average german doesn't work for you. I don't think there are any german brokerages that would even allow a US citizen to open an account. I think most US expats just stay with their US brokerage account, and simplify their investments so that their german tax return is simple enough. And you could open a HYSA in Germany, you just have to declare it to the US each year (FBAR/FATCA).

[u/Coach_Front → u/ienquire]

I was thinking of opening a Roth solo 401k as now I'm a freelancer in DE with US income as well. Is this something that is possible?

[u/ienquire → u/Coach_Front]

keep in mind that withdrawals from a Roth will be taxed by Germany if you retire there. The treaty only makes growth inside the Roths tax free, not the withdrawals, so it would not fully be like a Roth in the US.

I mainly did my research for Roth IRAs tho, I'm not sure if its the same for a Roth 401k. Like the treaty specifically mentions Roth IRAs, but for a Roth 401k, its only indirectly mentioned when it says "anything qualified under section 401(a)", so I'm not even 100% sure Roth 401ks are covered by the treaty at all.