U.S. ETFs vs European ETFs for American Expats in France: Tax, PRIIPs & PFIC Explained

Why Are U.S. ETFs Blocked for Americans Living in Europe?

Due to the PRIIPs Regulation, most U.S.-domiciled ETFs do not provide the required EU Key Information Document. As a result, European brokers cannot legally offer them to retail investors residing in the EU.

This restriction applies even if you are a U.S. citizen. It is based on where you live, not your nationality.

Therefore, Americans residing in France often find themselves unable to purchase U.S.-listed ETFs through French or EU-based brokerage accounts.

Are European ETFs Taxable as PFICs for U.S. Citizens?

Yes, in most cases.

European-domiciled ETFs are generally treated as Passive Foreign Investment Companies under U.S. tax law.

PFIC taxation can result in:

Higher effective tax rates
Interest charges on deferred gains
Extensive annual IRS reporting
Increased accounting fees

This is one of the most common and costly mistakes made by U.S. expats investing through European platforms. Hexa Invest can help solve those problems. Do not hesitate to schedule a free consultation with one of our experts.

What Is the Best ETF Strategy for U.S. Expats in France?

There is no one-size-fits-all answer.

Some investors retain U.S.-based brokerage accounts to maintain access to U.S. ETFs. Others explore alternative structuring methods to avoid PFIC exposure while remaining compliant with EU regulations.

The key is designing an investment strategy that respects both:

EU financial regulation (PRIIPs)
U.S. tax law (PFIC rules and worldwide taxation)

Hexa Invest thoughts

For Americans living in France or elsewhere in Europe, the choice between U.S. ETFs and European ETFs is not merely a question of cost or performance.

It is a structural regulatory issue combined with a cross-border tax issue.

Investing without understanding PRIIPs and PFIC rules can quietly erode returns through compliance costs and inefficient taxation.

Before selecting ETFs as an American expat, ensure that your brokerage access, tax exposure, and long-term reporting obligations are fully aligned.

In cross-border investing, structure matters as much as selection.