Feel Confident About Your Decision to Move Abroad and Avoid Double Taxation | Move to Europe with Brian Dunhill

Is it possible for American expats to build reliable, diversified financial portfolios when moving to Europe? Yes, but Americans living abroad, particularly in Europe, need to know how to navigate complex tax rules, currency considerations, and international regulations to avoid being caught off guard by sudden economic or policy changes. This episodes of We’re The Brits in America helps US citizens avoid and/or mitigate double taxation when relocating to France and other European countries by reviewing the potential pitfalls.

Richard Taylor – dual UK/US citizen and Chartered Financial Planner – is joined by Brian Dunhill – Founder of Dunhill Financial – to explore the financial benefits of moving to Europe for Americans, and how to protect financial assets from double taxation and unclear tax laws. Financial preparation allows expats to enjoy the food, culture, and lifestyle of their new home without unnecessary stress.

In this episode of We’re The Brits In America, Richard and Brian take a detailed look at:

How living in countries like France can result in lower taxes than in many US states.

The impact of currency fluctuations on investment portfolios and strategies to mitigate these risks.

The importance of pre-arrival financial planning to avoid tax pitfalls, and how advisory services can help navigate cross-border investments.

The pitfalls associated with Passive Foreign Investment Companies (PFICs) and the significant tax reporting challenges they pose.

 

More about We’re The Brits In America:

With the right financial advice, landmines that threaten expat wealth can be avoided. Often encountered by U.S.-connected expats, these financial landmines are more numerous, more hazardous, and less understood than almost anywhere else in the world. As a result, non-cross border professionals, wealth advisors, and even international advisors are often unaware of them. But don’t worry, We’re The Brits In America has you covered.

We’re The Brits In America is dedicated to helping ambitious U.S.-connected expats and immigrants navigate those challenges — and thrive. Whether you’ve moved to the U.S. for opportunity, or are an American seeking adventure and growth abroad, our job is to equip you with the tools and insights you need to succeed.

If you’re enjoying the show, please consider leaving a 5 star rating and review to help the mission, which is to help expats and immigrants thrive in America. Visit planfirstwealth.com to learn more about our services and connect with Richard Taylor on LinkedIn.

We’re the Brits in America is affiliated with Plan First Wealth LLC, an SEC-registered investment advisor. The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Plan First Wealth.

Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Plan First Wealth does not provide any tax and/or legal advice and strongly recommends that listeners seek their own advice in these areas.

About Richard

Richard Taylor is a British expat, dual citizen (UK & US). Originally from Bolton, he now lives in Greenwich, CT, where Plan First Wealth has its head office.

As the firm’s leader, Richard launched Taylor & Taylor, now Plan First Wealth, and continues to fuel the firm’s growth. Richard is a Chartered Financial Planner (UK – CII) in addition to holding the IMC (CFA UK) and Series 65 (US – FINRA).

Connect with Richard on LinkedIn

TRANSCRIPT:

Richard Taylor, Founder of Plan First Wealth:
[00:01:14 – 00:01:59]
Welcome to our Ask An Expert show where I invite a fellow professional in the US Expat Cross Border Space to come in and talk to me about the issues we think Americans who are considering moving to Europe need to be aware of if they are going to thrive there. My guest today is Brian Dunhill. Brian is a founder at Dunhill Financial, a cross border financial planning and wealth management firm based in London. And he’s a financial planner dedicated to assisting Americans living abroad. Brian is an American living in London. And full disclosure, our firms do have a formal relationship. So Brian has plenty of experience, both personal and professional, to share with us on all the things Americans should be considering, thinking about, and aware of if they are considering embarking on a European adventure of their own. So without further ado, let’s get into this. Hi Brian. Welcome to move to Europe.

Brian Dunhill:
[00:01:59 – 00:02:02]
Thanks so much for having me, Richard. Always great to see you.

Richard Taylor, Founder of Plan First Wealth:
[00:02:03 – 00:02:05]
Always great to see you too.

Brian Dunhill:
[00:02:05 – 00:02:12]
You know, it’s fun. I feel like we’re like just opposite twins. You know, you’re the Brit that’s in America, I’m the American that’s in Britain.

Richard Taylor, Founder of Plan First Wealth:
[00:02:12 – 00:02:16]
I’ve literally just had that conversation with someone. I call you my counterpart in London.

Brian Dunhill:
[00:02:17 – 00:02:21]
Well, we’re just mirror images, right? You just can pull off the beard better than I can.

Richard Taylor, Founder of Plan First Wealth:
[00:02:21 – 00:02:25]
Well, some people don’t call this a beard, but. But I’ve grown quite accustomed to it.

Brian Dunhill:
[00:02:25 – 00:02:26]
Now, where do we want to start?

Richard Taylor, Founder of Plan First Wealth:
[00:02:26 – 00:02:30]
Richard, tell everyone. Anyone who isn’t familiar with you, please introduce yourself.

Brian Dunhill:
[00:02:30 – 00:03:24]
Essentially I’m an American over here in London. I’ve lived over in Europe as well over in Belgium and we have clients all through Europe and all through the uk. Most of our team are made up of Americans and cross border individuals that understand all the hardships that we have when we’re dealing with cross border issues. And we have two main companies. One Dunhill Financial which helps with all financial planning needs. But we know some people just need to get started. They don’t need a full financial plan, they just need a place to put their money away on a regular basis as an American expat. And we also have DF Direct that can do so as a robo advisor. So we’re trying to get anybody at any income level started to build their financial plan so that financial literacy increases and more people can get their retirements and all their dreams as soon as possible, you know.

Richard Taylor, Founder of Plan First Wealth:
[00:03:24 – 00:03:34]
So we’re here to talk about Europe in particular because I think there’s a tremendous opportunity for Americans to come to Europe and change the quality of their lives. A certain sort of American Europe is so appealing.

Brian Dunhill:
[00:03:34 – 00:04:03]
We were just talking before about our article that, that just hit Forbes the other day and it was wine, food and great double taxation agreements. The reason to move to France, right. The wine’s simple, it’s outstanding in France. Doesn’t matter if we’re talking France, Italy, Spain, same thing, food, same thing as you’re saying. But for a lot of individuals, they’ll actually pay less tax by living in France than they might if they lived in the United States.

Richard Taylor, Founder of Plan First Wealth:
[00:04:04 – 00:04:26]
The citizenship based taxation thing, the headline is double tax. That’s what gets everyone upset and they think I’m going to pay double tax. But in Europe you’re not. There’s a myriad other difficulties and challenges that come from citizenship based taxation that left unaddressed can be incredibly costly as well. Non compliance pfix stuff that we’re going to talk about like it’s real.

Brian Dunhill:
[00:04:26 – 00:05:00]
Oh absolutely. And that’s, that’s why the planning ahead of time before you get over to Europe is so integral. But some of that planning also comes with the problems that come about from being in the states. You’re in Connecticut, highly taxed state, so you’re paying federal tax plus state tax. But say somebody moves to France and takes a step out into a state like Florida, Texas, any of the zero tax states, now all of a sudden they’re paying less tax when they’re resident in France than they would be if they were still resident in Connecticut.

Richard Taylor, Founder of Plan First Wealth:
[00:05:00 – 00:05:01]
Wait, why? How?

Brian Dunhill:
[00:05:01 – 00:05:39]
Essentially, France has one of the best double taxation agreements of any other country in the world with America. And the double taxation agreement states that if somebody lives in France but all of their income comes from the states, they’re only going to pay U.S. taxes. So if they can avoid state income tax, you’re only paying US Federal income tax. Let’s say your typical retiree is getting maybe US investments, US IRAs, Social Security, maybe a pension from an old company. Those will only be taxed in America. You’ll report in France, but you won’t owe anything in France.

Richard Taylor, Founder of Plan First Wealth:
[00:05:39 – 00:05:41]
There’s no excess catch up.

Brian Dunhill:
[00:05:41 – 00:05:59]
The majority of our retired clients in France are paying less tax than they did when they were in California, New York, Connecticut, any of these states. And on top of that, the cost of living is lower, the food is better, the wine is better. And you know what? If you want a good pizza, if you’re in the south of France, you know what you do?

Richard Taylor, Founder of Plan First Wealth:
[00:05:59 – 00:06:00]
You hop over to Italy.

Brian Dunhill:
[00:06:00 – 00:06:01]
You drive to Italy.

Richard Taylor, Founder of Plan First Wealth:
[00:06:02 – 00:06:51]
What a way of life. Pretty good life. What a way of life. I tell you, as a Brit living in America, I truly understand the value of that. As a Brit living in Britain, I took it for granted. I thought it was. I thought everywhere had the wealth of culture and experiences on our doorstep that we had. And it took moving for me to realize I, America’s a wonderful place. But, you know, going from Manchester, where I lived, to Paris or Madrid or Rome, where I got engaged is not quite the same as going from Greenwich, where I now live, to Cincinnati or Des Moines. No, no disrespect to Des Moines or, not that I’ve been to Cincinnati or Des Moines, but I imagine I can imagine what I’m going to find there because it’s, it’s, it’s one country. And America is vast and it’s amazing, but it’s not quite the same. And it’s expensive.

Brian Dunhill:
[00:06:52 – 00:07:24]
It’s gotten very expensive. It has shifted in big ways. That’s where I just expect, especially with the movements in the dollar of the last couple of months. This opportunity to jump in and come back to Europe, cement a good value in your dollars, be able to deal in a currency that’s not been inflated as much as the US Dollar is a great way to deal with some of the hardships of retirement planning, I. E. Getting a fourth pillar on there instead of just three pillars.

Richard Taylor, Founder of Plan First Wealth:
[00:07:25 – 00:07:41]
Hey, listen. Right, So I was going to ask you about someone’s in America, thinking about Europe, how do they get here? But before I do, and also where should they be looking at before I do? I’ve seen you writing about this, this currency thing and I know the devaluation of the dollar is in the news, but just expand on that. What your, what you’re referring to there.

Brian Dunhill:
[00:07:41 – 00:10:08]
Essentially we won’t get too political, but whether you like or dislike Donald Trump, we know one of his biggest aims is to emulate Ronald Reagan or Richard Nixon. Right. And that is devaluing the US Dollar. Richard Nixon devalued the US dollar by going off the gold standard. Ronald Reagan formed the G5 and essentially that devalued the dollar. So essentially, since we went off the gold standard till today, we’ve always had 10 to 15 years of dollar growth to 10 to 15 years of dollar weakness. That’s the simplicity of the chronological order. And we’re just coming out of 15 years of $ growth. So now essentially the easiest way to expand an economy is by devaluing your currency because all of your exports can go out at better prices. That’s the simplicity of what the Trump administration’s trying to put together. Now in the near term, everybody knows that. They know the initiative is called or is being dubbed the Mar a Lago Accords. Whether that’s an official application and it’s in process, whether the tariffs are part of that, well, we’ll have to find out later on. But this is definitely going on and people are flocking towards shifting dollars out, which has brought down the dollar significantly. So if we go based on historic trends, we would expect a 10 to 15 year cycle. In this path, it doesn’t have to be guaranteed, but where we want to look at things is when we’re building a portfolio, I want my safe money to be in the currency that I’m going to be buying my baguettes or my bread. So if I’m Richard Taylor and I’m buying my kids bread in US dollars, I want to have my safe money in US dollars. I can speculate a little bit on foreign bonds, but if I’m over here in the UK and I’m having to use my emergency fund in British Pounds, I should be buying those short term and midterm bonds in British Pounds to make sure I’m secured in British Pounds. This is one of the number one things that we’re seeing in, in people’s portfolios that are moving abroad that they need to start planning for that long term currency changeover. It’s been Wonderful to have huge allocations to to US dollars for the last 10, 15 years. That shift could be really happening at this point in time.

Richard Taylor, Founder of Plan First Wealth:
[00:10:09 – 00:10:17]
Correct me if I’m wrong here, but my assumption is I bet most Americans outside of America keep their assets in the US in dollars.

Brian Dunhill:
[00:10:17 – 00:11:21]
Absolutely. Because it’s easier. It’s a bigger marketplace, it’s a bigger debt marketplace and it has been king for 15 years. It shouldn’t be this disjointed at this point in time because Powell, the head of the Federal Reserve has been forced to keep rates a little bit higher because of the fear of inflation coming about from the tariffs. Everybody else, Australia, New Zealand, Canada, Europe, the UK have all started decreasing interest rates. That differential is really the equation that people should be putting money in dollars. But that’s where this fear trade has gone over to other currencies. We got an inflation reading that was lower than expected this last week at 2.3%. With that being lower, hopefully that means that Powell can lower rates and normalize them across the board of all the central banks. If that happens, that could be the precursor to the next wave of dollar weakness. When an administration really wants to push down their currency, it’s easier to push it down than it is to push it up.

Richard Taylor, Founder of Plan First Wealth:
[00:11:21 – 00:11:27]
And all your assets are in dollars and that dollar weakens, that’s going to hurt. That can undo your investment gains.

Brian Dunhill:
[00:11:27 – 00:12:03]
Absolutely. When we think of what the dollar’s done this year so far, it’s gone down 7%. So if you have say a one year CD that’s paying you 4% but you’ve lost 7% on the currency, you’re down 3% on your safe money. Yeah, the important words there is safe money. So yeah, it’s not to say that we don’t, that we want to have all of our fixed income exposure in euros or such, but our safe money, that rainy day fund, that six months worth of savings that we all have to tell people to have as financial planners should naturally be in the currency that we’re spending it in because otherwise we’re speculating.

Richard Taylor, Founder of Plan First Wealth:
[00:12:03 – 00:12:41]
You know, all my cross border conversations, they tend to focus on tax because of all the obvious landmines there. And there’s a lot of the, a lot about investments, Pfix and stuff which we may or may not talk about today. We talk about Pfix a lot, but this one is also, this is like, this is like the silent killer. No one talks about this anywhere nearly as much currency. You know, we talk about not predicting investment markets, but currency is impossible it is a high level. Themes like this are different but like day to day trying to predict currency is a fool, more so than usual. Complete fool’s errand. But this, this can have really serious implications.

Brian Dunhill:
[00:12:41 – 00:12:52]
Oh absolutely. I mean two weeks ago we were looking at huge movements in 30 year yen bonds. Now we’ve had 30 years our entire careers.

Richard Taylor, Founder of Plan First Wealth:
[00:12:52 – 00:12:57]
Richard, I’m a bit younger than you, I think. I’ve not been quite out of this for 30 years.

Brian Dunhill:
[00:12:57 – 00:13:29]
Yeah, yeah. But we were looking at it in high school and such. So essentially just Japan’s been a one way trade for a good long time. And all of a sudden even Japan, we’re looking at raises in interest rates. So that comes back to the number one rule in financial planning. We need some diversification. Our safe money should be in our local currency. But when it comes to the rest of our currencies, the rest of our fixed income, we need some diversification because it’s unpredictable in those types of ways.

Richard Taylor, Founder of Plan First Wealth:
[00:13:29 – 00:13:42]
Brian until I don’t know, mid Feb, maybe early February, diversification was bringing a dirty word that it was all about. I want Mag 7 US large cap US dollars. That’s all, that’s all anyone wanted.

Brian Dunhill:
[00:13:43 – 00:13:43]
People.

Richard Taylor, Founder of Plan First Wealth:
[00:13:44 – 00:13:54]
The difference in our conversations from mid mid January to mid February was incredible. The, the way we as people whipsaw back. Yeah. Is it is wild.

Brian Dunhill:
[00:13:55 – 00:16:12]
Even when we were having that those conversations where people were saying we want to be overweighted to the US we were expressing our fears that essentially the majority of the market was being made up by 7 stocks or now 10 stocks as they call them, the Batmans instead of the Magnificent seven. And I think that’s an important conversation to have right there because it’s not that the American markets have really outperformed in the last 10 years. It’s one sector as dirty dominated world growth and that sector happens to be predominantly in the United States. When we look at the Mag 7, two of their CEOs are Indian. Two of them, their biggest market is in India. Are those Indian companies or are those U.S. companies? The U.S. they happen to be headquartered in the U.S. right. 60% of the Mag 7’s revenue comes from outside of the United States. Are these US companies or are they just headquartered in the United States? We easily can make those arguments about Swiss companies. Is Nestle really a Swiss company? Are we really getting exposure to the Swiss franc or are they just global companies? Unilever in the Netherlands, HSBC here in the uk where their revenue comes from becomes to me more interesting than where they’re Headquartered. That’s where the bond side is really significantly important because it affects your exact financial plan in the near term. The stock side of the portfolio is fascinating from the vantage point of which sectors do we want to be in instead of just the s and P500, you know, do we want to have more exposure to tech or other aspects? This last year we’ve been heavier in health care stocks because essentially it was the first year that a sector was supposed to have higher earnings than the tech sector but was at a lower valuation risk to return. Which do you want to be in cheaper? It’s how do we build a portfolio so that we go back to that keyword that we’re diversified. Right.

Richard Taylor, Founder of Plan First Wealth:
[00:16:12 – 00:16:22]
Just pulling this back to like specifics of being an American looking out to Europe. If someone was thinking about moving to Europe, if you set your mind on France or Spain or wherever, is there always a way in?

Brian Dunhill:
[00:16:22 – 00:17:07]
Well, those immigration questions, there’s typically great ways to be able to get into each of these different countries. France is extremely welcoming and we’ve got a great immigration lawyer that anybody that needs an introduction, we can send you right, right down their way. But the things that you want to think about before you get over to a country like that is first of all, look at their double taxation agreement to correspond it with your personal plan. I’m talking about it being great for retiree. For somebody like Richard with a business, there might be some contrasts that are going to be a little bit different. For somebody that’s on an employment contract, it is a socialistic state. It might be a little bit more expensive in certain ways. So you want to look at your personal situation.

Richard Taylor, Founder of Plan First Wealth:
[00:17:08 – 00:17:26]
So would you say Ryan, in an ideal situation, in a perfect world, rather than having your heart set in a country and then trying to make your situation work, would it be better if like you’re open? You know, Europe is many different countries, many different regimes. Depending on your situation, you could try and pick the right one to suit your circumstances.

Brian Dunhill:
[00:17:27 – 00:17:45]
This is a philosophical type of question, Richard, so I’m going to give you a philosophical type of answer. Financial security to me is knowing exactly where you want to go and trying to figure out how to make it work financially instead of moving to someplace just because the financials are better.

Richard Taylor, Founder of Plan First Wealth:
[00:17:46 – 00:17:48]
You mean not letting the tail wag the dog, basically?

Brian Dunhill:
[00:17:48 – 00:17:50]
Exactly. Yeah, exactly.

Richard Taylor, Founder of Plan First Wealth:
[00:17:50 – 00:17:51]
Yeah, I agree with you, by the way.

Brian Dunhill:
[00:17:51 – 00:17:56]
Yeah, I’m not going to move to Monaco just because I can get in a lower tax bracket and there’s no estate tax.

Richard Taylor, Founder of Plan First Wealth:
[00:17:57 – 00:17:59]
Does Monaco work for an American though?

Brian Dunhill:
[00:17:59 – 00:18:03]
Well, the princess seems to have moved there, so, you know, she’s figured something out.

Richard Taylor, Founder of Plan First Wealth:
[00:18:03 – 00:18:07]
But an American in Monaco is still getting taxed in the U.S. right?

Brian Dunhill:
[00:18:07 – 00:19:06]
And yes, but there’s some maneuvers and some, some different, some different tweaks, which I don’t, I don’t think that’s you, that’s the point that you’re trying to get to on this podcast. That, that all being said, I typically really start with that double taxation agreement. How is it going to affect my current situation? The second thing is going to be are the list of professionals that I’m working with now competent to work in those jurisdictions. A lot of financial advisors back in the States, wonderful at being able to get somebody right to the point of retirement and being ready for going over to Europe, but they might not have the competency of what to do once they get over to Europe. In other words, they might not have access to European bonds, they might not have knowledge of the double taxation treaty, they might not be able to speak that local language to be able to understand what, what those local rules are all the way down to the nuances of how the local Social Security system might work.

Richard Taylor, Founder of Plan First Wealth:
[00:19:07 – 00:20:26]
Brian, let me just bring this to life for people. We are a cross border firm. Plan first. Wealth is a cross border firm. All our clients are dual citizens, green card holders. So we know cross border. And yet when we have clients, Brits who we specialize in right now, return to the UK or elsewhere, we’ve got, what do we have? A client in Portugal, we will pass them over to Brian and Dunhill Financial because we know way more about cross border stuff specifically for Brits than 99.9% of firms over here. Because of that, we recognize that there’s so much stuff we don’t know when a client lands in the UK or elsewhere in Europe. And that’s when we feel it’s in the best interest of bringing in a firm like you, who understands all these nuances, who can, who can do what you said about matching bond investments into euros and getting that balance right. So even we recognize that. But, and it’s frustrating to me how few other people truly recognize that, how despite ourselves and a few others making a lot of noise about this and the gfpi, which you and I are members of, making a lot of noise, the awareness amongst other professionals is still quite low and people just think, oh, you know, I can carry on managing this, not realizing that they’re doing their client a disservice. They’re leaving all, we call them landmines. Leaving all these landmines that could have been avoided altogether.

Brian Dunhill:
[00:20:26 – 00:21:27]
Here’s the funny thing. I think it’s the clients just as much as the financial advisors. The number of clients that have said to me, I’ve had this financial advisor for 20 years, they’ve been amazing to me. And I’ll look at their statements, they’ll be from Edward Jones or one of your good solid firms. And you look at the statement and you’re thinking to yourself, yeah, they did a great job for you for 20, 30 years to get you to that place. Can they, can they help you in France? And they say, I really don’t want to get rid of my financial advisor. They’ve been there with me for 20, 30 years. And we say, okay, let’s have a three way call, we’ll walk them through exactly how we do things, et cetera, et cetera. Most of the time those financial advisors say to those clients, hey, we’ll grab a beer when you’re here in town in the States. But you really need somebody that can actually help on these cross border things. We have no idea how to do these types of things. So a lot of times it’s that great relationship and you have clients that way that they’ll move back here to the UK and they don’t want to.

Richard Taylor, Founder of Plan First Wealth:
[00:21:27 – 00:22:07]
Leave you, they don’t want to leave us. And I’m grateful for that. And it’s gratifying to hear that. Actually, do you know what, we experience that less, I think, because our clients are expats who come here and, and very often they’ll be at another firm for 10, 20 years and we’ll have one conversation with them totally and we’ll be like, there’ll be an informational reporting mess, there’ll be Pfix everywhere. We pick this up in half an hour. But it’s one thing if your client moves to France. And thinking I don’t have the wherewithal to advise this client in France is another thing thinking, oh this Brit’s come over from the uk, now they’re in America, I can help them. And not realizing that it’s the same, it’s a different side of the same coin.

Brian Dunhill:
[00:22:07 – 00:24:07]
We’re finding more and more of those occasions where it’s the client that gets in the way than the other advisor trying to pitch them. They’re trying to say find somebody like, you know, here in the UK find somebody like Richard, or in America find somebody like Brian. And I tend to think that that will continue as more and more of this information comes out as more and more currency differentials start to impact situations. Which is exactly why we’re talking about it now. You know, our topic for our quarterly investment newsletter is currencies, Currencies, currencies, Stealing the real estate mantra of location, location, location. That’s what’s going to move the markets in the next couple of months, in the next couple of years, and it’s going to impact expats that much more. When it comes to the investment universe, that’s easy. The financial planning universe. It’s the pre planning that’s so important. You know, you were just talking about, people get over to the US then they end up with PFICs. If they were to talk to you before they got to the US you would have been able to say, these are the things that you need to get rid of before you get on that airplane. And it’s the same way if somebody’s going to come over to France. Well, they’re not going to end up with a PFIC issue, but they’re going to end up potentially with issues when it comes to gift taxes and estate taxes. This is the case in lots of countries in Europe, but not all of them. A handful of European countries have gotten rid of their estate taxes. You know, Portugal, Austria, etc. Italy only has a 4% estate tax. I don’t know about you, but if they take 4% of my estate, I’m not going to mine. That’s. It’s not worth planning too much over 4%. Keep it. Exactly, exactly. You guys do a lot for us. You know, go ahead, have it. But when it comes to some countries, like France and Belgium, it can get in excess of 60%.

Richard Taylor, Founder of Plan First Wealth:
[00:24:07 – 00:24:07]
Wow.

Brian Dunhill:
[00:24:08 – 00:24:28]
And when they’re taking more than half, that’s when you want to really think about planning. So in the States, when you’re, you know, for, for yourself, Richard, you want to reduce your estate, you can gift down to your kids. Basically, you can just reduce your estate tax. Exemption, exemption. Whenever you’re gifting over that $18,000 threshold.

Richard Taylor, Founder of Plan First Wealth:
[00:24:28 – 00:24:29]
Right.

Brian Dunhill:
[00:24:30 – 00:24:35]
France, it’s a little different. You can only gift your kids €150,000 every 10 years.

Richard Taylor, Founder of Plan First Wealth:
[00:24:36 – 00:24:36]
Whoa.

Brian Dunhill:
[00:24:37 – 00:24:59]
So if you have a client that’s going to move to France and they’re retired, they have more money than what they need to plan financially. Guess what we’re going to really concentrate on before they get on that plane to France. Do you want to gift any money to kids, family, friends, charity, anything else before we get to France?

Richard Taylor, Founder of Plan First Wealth:
[00:24:59 – 00:25:06]
And you gotta be careful with trusts as well. Right. Because someone Might say, oh, do it into a trust. Well, yeah, well then you gotta, then we get, you gotta be really careful with trusts.

Brian Dunhill:
[00:25:07 – 00:26:01]
And outside of America, Jonathan says that the French don’t trust a trust. You know, which is, which is nice little tagline. He’s, he’s always got the little taglines in there. Trusts can end up being taxed as regular income. So when I was saying you could end up in a lower tax bracket in France than you were if you were in Connecticut, you could end up being in a higher tax bracket by doing that in a trust. A trust is a beautiful instrument for somebody in the States. You know, a Brit moves to America, hey, you want a trust, you want to avoid that probate, you move to France and all of a sudden, first of all, you don’t need the trust. It’s not helping you in any way, shape or form. But second of all, if the French Fisk finds it, they’re going to expect that to be paid out and determined as potentially earned income. And that’s extremely costly.

Richard Taylor, Founder of Plan First Wealth:
[00:26:01 – 00:26:42]
You gotta be super careful with trusts. And I think I find Brits get into a falsehood security, think, oh, we got trust in the uk. A trust is a trust, it’s a trust, but it’s not a trust. About Pfix, quickly, because then we can talk about DF Direct as well. So we’ve alluded to it a few times. Here we have you and I have an entire podcast episode on Pfix. So people could go back and check that out. But essentially we’re talking about non US collective investments. So mutual funds, ETFs, what we call unit trusts in the UK. OICs. Yeah, you’ve moved to Europe, you want to save in Europe in euros or pounds and you naturally think you’ll buy ETFs. That is a problem. Why is that a problem, Brian?

Brian Dunhill:
[00:26:43 – 00:27:00]
Absolutely. So anytime. And this goes back to, if we go way back in the day, Lincoln brought about rules on citizens based taxation. So all of our problems come about from Lincoln. Then essentially Nixon brought about these problems with Pfix.

Richard Taylor, Founder of Plan First Wealth:
[00:27:00 – 00:27:07]
Wait, wait, we just need to go back a second. There was that because they were scared of people fleeing the the Union and not contributing to the war effort.

Brian Dunhill:
[00:27:07 – 00:27:37]
Exactly. So they’d either flee to Canada or back to the uk and basically the government said, yeah, you can go over there, but then you have to pay for the war. So either fighting it or pay for it. Lincoln brought in citizens based taxation. Nixon brought in the PFIC rules because people were sending all their money to the Cayman Islands, putting it under a company, a shell company, and then saying, my money’s safe over there. It has nothing to do with America. And then Reagan brought in the FBARs.

Richard Taylor, Founder of Plan First Wealth:
[00:27:37 – 00:27:38]
I didn’t know that.

Brian Dunhill:
[00:27:38 – 00:29:08]
So we have three prominent Republicans that put in these nice big rules that essentially keep our hands tied as Americans that are going abroad now, essentially the F bar, it’s just annoying because it’s $10,000. The PFIC becomes really restricting because that rule that I think both of us would agree an American should not be putting all their money into a shell company in the Cayman Islands and saying, I don’t make any money in America because then the rest of us have to pay a little bit more. It actually got wrapped into other collective investments, all the ones you listed in France. The most popular one is a pension ET parent. So a pension wrapper, essentially the UCITS or the ETFs, exchange traded funds all get wrapped into that. The problem with these is the us they’re probably not going to notice it until you go sell it. And then it becomes a rock and a hard place of how you get taxed on it. So you will get taxed well over 50%, sometimes 60, 70, 80%. And that’s not even the most annoying part. It’s going to be the time that you spend with your accountant and it’s not going to be fun time with your accountant. You and I, we know plenty of great accountants that we’ll spend time with, but they’re going to be bashing their head against the wall saying, why do you have this? It’s only going to hurt you. From a tax vantage point and a reporting vantage point.

Richard Taylor, Founder of Plan First Wealth:
[00:29:10 – 00:29:28]
Don’t the IRS predict it takes something stupid like 20 to 30 hours per form? And it’s one form per PFIC. So S&P 500 tracker, that’s one form. FTSE All World Xus, that’s another form form. And people might have 10 more or more PFICs in a portfolio.

Brian Dunhill:
[00:29:28 – 00:29:37]
I think it’s 20 to 30 shots of whiskey on top of that 20 to 30 hours. It, it’s painful, it’s not easy, it’s not expensive.

Richard Taylor, Founder of Plan First Wealth:
[00:29:38 – 00:29:46]
Before you even get into tax. Just, just the, the cost to pay your accountant to do this every single year is going to be a lot. Plus the tax is going to be punitive. You just don’t have.

Brian Dunhill:
[00:29:47 – 00:30:49]
I never thought that I’d be spending part of my career pitching. Do you know how great it is to receive a 1099? Because then you can file your taxes in an easy way. Not receiving that on a foreign investment just means that you’re having to manually put that all together with your tax professional and it’s going to be incomplete. They’re going to have to make a lot of guesstimates. So guess what, you’re red flagged for every single audit because you have an imperfect form. We always suggest to stay away from Pfix and we found one Exception. In my 15 year career. I found one exception that I will make to that which is if you’re living in a country like France, you can buy a cash filled assurance vis so life insurance policy that’s like a variable annuity for up to €150,000 if you have less than six months to live. That’s the only time I found an exception.

Richard Taylor, Founder of Plan First Wealth:
[00:30:50 – 00:30:52]
Okay, that’s pretty specific.

Brian Dunhill:
[00:30:52 – 00:31:30]
Well, the reason why it’s specific is because the death benefits are actually worth more than the additional reporting that you’ll have. But notice we’re telling you not to invest it, we’re telling you to keep it in cash so that it’s as clear as day on how to do the accounting just in case you live more than that six months. And we’re not wanting to do it long term. So it’s not every single person should be buying an assignment which typically is what any non American should be doing in France. But that’s the only exception I’ve ever seen globally that I would say somebody should or could buy a Pfic.

Richard Taylor, Founder of Plan First Wealth:
[00:31:34 – 00:31:55]
So the challenge here is there’s hundreds of thousands, I don’t know, millions. How many Americans are in Europe who are living here in these currencies and want to invest here. To our point earlier, don’t want it in dollars in the US for a variety of reasons, one of which might be the currency weakens. What are their, what are their options? What are their solutions? What can they do without breaching these PFIC rules?

Brian Dunhill:
[00:31:55 – 00:32:13]
So, so the first thing is they should be mindful of, of which platforms they’re investing on. Most of the platforms there’s a lot of great broker dealers in the United States that are just $centric. I mentioned Edward Jones earlier. I love it when I see an Edward Jones statement because it’s always going to be extremely conservative, extremely boring.

Richard Taylor, Founder of Plan First Wealth:
[00:32:13 – 00:32:14]
Right.

Brian Dunhill:
[00:32:14 – 00:33:49]
No high flying investments on there. But that also means no foreign currencies. They’re not going to have access to foreign bonds. So you can go direct platforms that you’re going to have access to these foreign securities or you can be buying collective investments in the States the give access to those foreign currencies. Not every broker dealer is going to have access to that. And even the ones that do have access to it, some have better pricing than others. So that’s where I’m not going to start naming names because I don’t want to get hate mail from some of those companies. But some companies, if you buy a GBP bond, a UK bond or a European bond, you’re going to get a much worse price than you would on other platforms. And that’s important to note in doing so. So it’s being able to get the access points, it’s being able to exchange currencies sometimes in the portfolios if you’re needing a monthly income stream. I have my money in the US but I live in France. How do I get it from the US to France at the best rate, going directly through your bank account doesn’t matter if it’s an American bank or a French bank, they’re probably going to charge 3, 3.5%. Some of the broker dealers will actually convert for you at a very, very low cost. Otherwise it’s building a mechanism between those two that’s going to do it at a much better price than the banks. But you need to have an action plan of how you’re going to get your dollars into euros or how you’re going to get your dollars into pounds and get it at a good rate.

Richard Taylor, Founder of Plan First Wealth:
[00:33:49 – 00:34:20]
Yeah. So it’s not just the investment piece, is it? There is so much more to this. Tax currency investments. That’s it. Right. Tax currency investments. So going back to Pfix. Right. So you avoid them at all costs. If you’re with a regular firm, they just aren’t gonna have the capabilities to do this in a way that is appropriate for you and your needs. A firm like Dunhill, you’re built for this, you have access to the platforms, this is what you do. Where does DF Direct come in?

Brian Dunhill:
[00:34:21 – 00:35:16]
So DF Direct is essentially our robo advisor. So from, from the vantage point in the UK it’s the equivalent of nutmeg. In the US it’s the equivalent of betterment. But it’s designed for Americans that are cross border. This is a great way that somebody can use any amount, it’s no minimum. So you could send in $50 a month and you can get into our mixed portfolio that meets your risk profile and you can get it growing. So it’s really designed for those emerging affluent. They’re just starting out in their first job. They need to put away a couple hundred bucks a month. Most financial advisors, it would cost too much for them to for the client to get value out of them. We’re building and designing a portfolio that works for them here in the uk, in Europe that they can access at any price point.

Richard Taylor, Founder of Plan First Wealth:
[00:35:16 – 00:35:41]
This is massive, right people? Because Dunhill Financial wealth management firm Plan First wealth wealth management firm. We work with people who have got hundreds of thousands if not millions of dollars to invest. And that is obviously not everyone. But everyone starts somewhere and oftentimes that somewhere starts with regular and small savings. That’s easy for me to do here in the US I use betterments, I use acorns, I use a lot of other stuff as well.

Brian Dunhill:
[00:35:41 – 00:35:42]
It’s easy.

Richard Taylor, Founder of Plan First Wealth:
[00:35:42 – 00:36:16]
You mentioned nutmeg. In the uk if you’re an American in Europe or elsewhere, betterment’s not an option because you don’t have a US address or you’re not a US person. And then you have the dollar problem and no domestic solution is going to work for you because of the PFIC problem. And that’s it. Until, until DF Direct, that was it. Unless you had several hundred thousand to approach you guys and work a one on one client relationship. And there was nothing in that space in between. And I think a lot of people either didn’t invest or fell victim to the PFIC problem and now they have DF Direct. I think it’s massive.

Brian Dunhill:
[00:36:16 – 00:36:36]
Absolutely. And it’s the children that are growing up into this system that if they’re sitting on huge cash balances because they could never get going, we’re only going to bring down the number of people that have financial plans instead of bringing it up. I’m devastated that only 7% of Americans actually have a proper financial plan.

Richard Taylor, Founder of Plan First Wealth:
[00:36:36 – 00:36:37]
7%.

Brian Dunhill:
[00:36:37 – 00:36:38]
Yeah, 7%.

Richard Taylor, Founder of Plan First Wealth:
[00:36:38 – 00:36:39]
That’s what in the U.S. that’s in.

Brian Dunhill:
[00:36:39 – 00:36:55]
The U.S. i don’t think the UK is even that high. So it’s anything we can do to be to get that from 7% to 8%. And doesn’t matter how many phone calls I take or you take Richard, we have to do much more to be able to get that to the next level.

Richard Taylor, Founder of Plan First Wealth:
[00:36:55 – 00:37:18]
Here’s something interesting for you as we wrap up here. Something I found though since I started doing the podcast, I’ll have people reach out to me who listen to the podcast, who I know have heard me talk about Pfix, who have Pfix, but they haven’t realized that when I’m sight talking to you or James and I’m referring to even when I’m super specific about What I’m referring to, they haven’t quite put two and two together. Realize, oh, yeah, that’s, that’s what that is.

Brian Dunhill:
[00:37:18 – 00:37:49]
It’s an ostrich in the sand. Okay, I’ve heard of this, I understand this, but I don’t necessarily want to deal with it just yet. And it only gets worse at that point in time because it accumulates. Yeah, I mean, I, I, the last time we were talking, the markets happened to be down just a little bit. And I, I remember we were saying this is a great opportunity for people to get out of their Pfix because the tax hit is not going to be as severe when the markets are down. But as the markets grow over the course of time, the problem grows. The more you put it off, the worse it gets.

Richard Taylor, Founder of Plan First Wealth:
[00:37:49 – 00:38:02]
Yeah, never goes away. So listen, I got you on to talk about moving to Europe and we ended up Pfix. This is, this is the, this is, it’s gonna be on a gravestone here from you and me, Brian. Right. So, Brian, where can people find you?

Brian Dunhill:
[00:38:02 – 00:38:28]
Okay. Dunhillfinancial.com is our, is our website. Info onhill financial is the best way to reach our entire team. Our Robo Advisor is www.df-direct.com. any questions? Info on Hill Financial. We’ve got a whole team that will be able to help you put that together. Check out our YouTube channel. We’re going to have Richard coming and joining us on there because we want to reciprocate and have some fun.

Richard Taylor, Founder of Plan First Wealth:
[00:38:29 – 00:38:33]
Excellent. I look forward to it. All right, Brian, thank you for coming on the podcast again.

Brian Dunhill:
[00:38:33 – 00:38:36]
Thank you so much for having me. Richard, always great to see you.

Richard Taylor, Founder of Plan First Wealth:
[00:38:36 – 00:38:38]
All right, mate, I’ll see you soon. Bye. Bye.