Your US brokerage account abroad: why it gets frozen and what to do

Plenty of Americans move overseas, update their address, and a few weeks later get a polite letter saying their brokerage account is now "restricted". It isn't a US law doing this. It's your broker's own policy, and you have more options than the letter suggests.

The short version

• No US law makes a broker close your account because you moved abroad. Restrictions come from each firm's reading of foreign rules and its own risk appetite.
• The usual result is "sell-only" or "no new purchases", sometimes a forced transfer, sometimes no new accounts for foreign residents.
• EU residents get hit hardest because of the EU's key information document rule for retail investment products, which most US funds don't meet [3].
• Don't swap US funds for local funds without checking the tax. Foreign mutual funds and ETFs are usually PFICs for a US citizen, with punishing tax and an extra form, Form 8621 [1].
• Your US brokerage account doesn't go on the FBAR or Form 8938, but foreign funds do [2].

Why brokers restrict accounts of customers abroad

A US broker is licensed to deal with customers in the US. Once your address of record is in Germany or Japan, the firm has to ask whether it's now doing business in that country, whose securities laws often require a local license to solicit or serve residents. Most firms don't want to hold licenses in dozens of countries for a handful of retail customers, so they write blanket policies by country of residence.

The EU adds a specific twist. Since January 1, 2018, the PRIIPs Regulation has required anyone who sells or advises on packaged retail investment products, investment funds included, to hand the investor a key information document (KID) of no more than three pages before the deal is made [3]. US mutual funds and ETFs are written for the SEC, not Brussels, and almost none publish an EU-format KID. Many brokers conclude they can't let EU residents buy them. That's why Americans in Paris or Lisbon often find they can hold their old index funds but can't add to them.

The UK and other countries have their own versions. And some firms simply flag any foreign IP address or foreign phone number and ask questions later.

What restrictions look like

Policies differ by broker, by country and even by account type. These are the patterns expats report most often:

A forced sale is the expensive one. Selling a fund you've held for twenty years can mean a big capital gain in one tax year, plus the 3.8% net investment income tax if your modified adjusted gross income is over USD 200,000 single or USD 250,000 married filing jointly [4]. The foreign earned income exclusion doesn't shelter investment income, so this is real money.

Which kinds of firms still work with expats

We don't name brokers, and policies change too often for a list to stay accurate anyway. What we can tell you is where to look and what to ask.

• Large discount brokers with international divisions. Some run a separate arm for non-US residents with country-by-country rules. US citizens abroad are sometimes accepted where foreign nationals aren't, or the reverse.
• Brokers that market to international clients. Some are built to serve customers in many countries and hold the licenses to do it, often with more trading access but different fee structures.
• Registered investment advisers that specialize in Americans abroad. They hold your assets at a custodian and handle the cross-border paperwork. The fee is the tradeoff.
• Your employer's plan provider. A 401(k) usually stays put while you live abroad, because the plan, not you, is the customer.

Questions to ask before you move money:

1. Do you accept US citizens resident in my country, for taxable accounts and for IRAs?
2. Can I buy US-listed ETFs and mutual funds, or only individual stocks?
3. What happens if I move to another country later?
4. Will you send US tax forms (1099s) and treat me as a US person?
5. Can I log in and receive security codes from abroad?

Get the answer in writing, or at least in a secure message you can screenshot.

How to keep what you have

If you've not moved yet, this part is the most useful. Get your house in order before you go:

1. Read your broker's policy for your destination country now, while you still have a US address.
2. Consolidate and simplify. One or two accounts at firms that accept your new country are easier to defend than six.
3. Rebalance before the move if you expect to be sell-only for a while. A broad, low-turnover portfolio is easier to leave alone.
4. Keep a US mailing address and phone number, but be honest. Brokers ask for your residential address, and giving a US address you don't live at can breach your account agreement and, in some countries, local rules. If the firm finds out, it can restrict the account anyway, at a worse moment.
5. Set up two-factor authentication that works abroad, ideally an authenticator app rather than text messages to a number you might lose.

If you get a restriction letter, don't panic-sell. Sell-only doesn't mean you lose anything. You can usually hold the investments for years, let them grow, and transfer them in kind to another broker that accepts you, which avoids triggering a sale.

The PFIC trap: why "just buy local funds" can backfire

The obvious fix seems to be investing through a bank or broker in your new country. For a US citizen, local mutual funds and ETFs are usually a tax headache.

A foreign corporation is a passive foreign investment company (PFIC) if 75% or more of its gross income is passive, or at least 50% of its assets produce passive income [1]. Most foreign funds pass that test easily. Under the default rules, gains on a sale and large distributions are spread back over your holding period, taxed at the highest ordinary rates and charged interest [1]. There are elections (QEF or mark-to-market) that soften this, but many foreign funds don't provide the statements a QEF needs.

You generally file a separate Form 8621 for each PFIC [1]. There's a de minimis exception for the annual report: if your PFIC stock is worth USD 25,000 or less at year end (USD 50,000 on a joint return) and you had no excess distribution or gain, you can skip Part I for that fund (Instructions for Form 8621, revision of December 2025) [1].

Foreign funds also count as foreign financial assets. They go on your FBAR if your foreign accounts top USD 10,000 at any time, and on Form 8938 once you pass the thresholds for people living abroad: more than USD 200,000 at year end or USD 300,000 at any time if single, and USD 400,000 or USD 600,000 if married filing jointly [2]. A US mutual fund that invests in foreign stocks is not reportable on either form [2].

Many Americans abroad end up with a split approach: US funds held at a US-based firm that accepts them, a local bank account for daily life, and local investments only where they're clearly not PFICs, such as individual stocks or a host-country pension a US expat tax preparer has looked at.

What your host country thinks

Moving abroad doesn't take your account out of the US tax system, but it puts it into a second one. Your new country will usually tax your dividends, interest and gains as a resident, and many require you to declare accounts held abroad, much like the US does with the FBAR. The foreign tax credit generally keeps you from paying twice on the same income, but timing, rates and treatment of US funds differ a lot.

To give a sense of scale, a EUR 20,000 dividend and gain year is about USD 22,300. USD conversions use the Federal Reserve H.10 rate of 1.1163 USD per EUR from October 30, 2026. Your host country will want its share of that in its own currency, which means exchange rates matter on both returns.

A US expat tax preparer (or a lawyer) can check your situation in both countries before you sell, move or reinvest.

Sources

1. Instructions for Form 8621 (12/2025), IRS
2. Comparison of Form 8938 and FBAR requirements, IRS
3. Key information about investment products (PRIIPs Regulation summary), EUR-Lex
4. Topic no. 559, Net investment income tax, IRS

Keep reading

• Keeping a US bank account and US address
• FBAR: reporting your foreign bank accounts
• Foreign earned income exclusion vs foreign tax credit
• Managing US affairs from abroad: powers of attorney and notaries