I am an American citizen who will move to Germany in June; I'll live there for at least a year, but probably more. Around that same time, I will be lucky to receive a financial gift from my parents, which I intend to invest. The gift falls within limits of my German gift tax exemption, which we discussed on another thread. I am currently researching how to invest the money to shield it from relatively high German taxes. I intend to buy and hold long-term in a sensible, low-maintenance portfolio; I work full-time and don't need the income. I just want to park the money somewhere and let it grow with low fees, minimal headaches, and of course minimal taxes. Considerations and questions:
1) According to @Starshollow, I should stick to U.S.-based funds; otherwise my tax return in U.S. will be difficult. German 2018 laws make U.S. funds go down smoothly on the German side. However a lot of U.S. investment industry, including Vanguard (which currently manages my IRA), does not want to work with American expats. I do maintain a U.S. mailing address ("virtual mailbox" in Brooklyn) and a NYC phone number, so maybe they won't even know that I am in Germany? Risk of PFIC for US nationals https://www.americansabroad.org/mutual-fund-restrictions/
Vanguard - Special notice to non-U.S. investors
Expat Want to Invest in Vanguard
2) How will using a broker or platform based in U.S. versus Germany affect my buy options and tax headaches?
3) I understand that German dividend taxes are higher than in the U.S.; also I don't need the income in near term. So funds that generate maximum growth along with minimal or low dividends would be better, right? What would such funds be, that would work with American expats? (When I do cash out, maybe I'll be back in the U.S.)
4) According to sources highlighted by @PandaMunich ... BMF-Monatsbericht
... I understand that the German advance tax on "fictive profits" is smaller for non-German open-ended real estate funds (exempting 80% of the profit), versus stock-based funds (exempting 30% of the profit). Does that sound right? If so, are there U.S.-based open-ended real estate funds that also are high growth and no/low dividends ... that also work with American expats?! And is it crazy to put this whole nest egg in one sector, just to avoid German advance taxes?
I also read here that there are German "tax traps" in open-ended real estate funds and that they should be avoided; also I should avoid "synthetic products" (not sure what that means): https://mindthegaphub.com/investment-income-taxes-germany/
5) Given all of the above, where should I put the money? : )