US Expats in Europe: What to Review Before the October Tax Deadline

October is an important month for many Americans living outside the US. 

If you are a calendar year taxpayer living abroad and requested the additional extension, the deadline to submit your 2025 US federal income tax return is 15 October 2026. The extension gives you additional time to file, but it does not provide the same extension for paying tax owed, so outstanding liabilities can continue to attract interest and potentially penalties. 

For Americans living in Europe, however, the deadline is useful for another reason. It creates a natural opportunity to look beyond the tax return and review whether the various pieces of your financial life in the US and Europe still fit together. 

Before getting into the details, one important clarification. Arisaig Wealth Management provides regulated financial planning and investment advice, but we are not tax advisers. The information below is general information rather than individual tax advice. For questions about your personal US or local European tax position, you should speak with an appropriately qualified tax professional. 

First, make sure the extension actually applies to you 

Americans living abroad generally receive an automatic two-month extension from the standard April filing deadline to June. To extend the deadline further to 15 October, the IRS requires the formal submission requested to have been filed by the June deadline. 

If you did this, September is a good time to check that you have everything required rather than treating 15 October as the day to begin looking for it. 

That means bringing together income information from both sides of the Atlantic, including salary, interest, dividends, rental income, investment gains and any other relevant sources. 

US citizens and  US connected people abroad are generally required to report on their worldwide income and worldwide assets, even when they are living and paying tax in another country. 

The international element is what can make something apparently straightforward become complicated quite quickly. 

Check your foreign accounts as well as your tax return 

One of the most important differences for Americans living abroad is the additional reporting that can come with having financial accounts outside the US. 

The FBAR, or Report of Foreign Bank and Financial Accounts, generally applies when the combined value of relevant foreign financial accounts exceeded $10,000 at any point during the calendar year. This is an aggregate threshold, not $10,000 per account. 

The normal FBAR deadline is 15 April, but there is an automatic extension to 15 October if it was not filed by that date. No separate extension request is required. 

There is also separate tax reporting under FATCA. It can get complex depending on whether you report under the FEIE (foreign earned income exemption) or the FTC (foreign tax credit). This is separate from the FBAR and the thresholds are different.  

All the acronyms and abbreviations can make one glaze over but it is important to understand your obligations and the timing of these reporting requirements.   

Review European investments through a US lens 

This is where life as an American investor in Europe can become particularly challenging. 

An investment that is perfectly ordinary for a European investor may create additional US tax or reporting consequences for an American citizen or US connected person. 

One example is the US Passive Foreign Investment Company, or PFIC, regime. The IRS requires that individuals with  investments in managed funds,  mutual funds, ETFs, and other investment structures must report on these annually. 

This does not mean every European investment is unsuitable for every American, careful research and selection is essential to avoid potential punitive taxing on those assets by the IRS.  It means US connected investors need to be particularly careful about making investment decisions based solely on what is popular, tax efficient or convenient in their European country of residence  

There are two systems to consider, and sometimes more if you have lived in several countries. 

Before purchasing, selling or restructuring an investment, understand both the local and US implications and obtain appropriately regulated tax and investment advice where required. 

Do your pensions still fit together? 

Tax season is also a useful point to look at pensions. 

Many Americans living in Europe have accumulated a collection of assets over their careers: an old 401(k), a traditional or Roth IRA, perhaps an investment portfolio in the US, and then employer or private pension arrangements in one or more European countries. 

Individually, each may be perfectly sensible. 

The problem can arise when nobody is looking at them together. 

Where do you expect to retire? In which currency will you eventually need income? Are US assets still being actively managed? Does your European pension form part of your retirement projections? How will withdrawals from the different arrangements interact with the rules where you expect to live? And then there are multiple currencies to manage. 

Arisaig works with US licensed professionals alongside our EU regulated advisers to help US connected clients consider assets within one wider financial plan. 

The answer is not automatically to move or consolidate everything. In many cases leaving an asset where it is may make sense. The important thing is that this should be a deliberate decision rather than something that happens simply because an old account has been forgotten. 

Do not let tax compliance become the financial plan 

This is perhaps the most important point. 

For US expats, it is easy for financial planning to become dominated by what you cannot do, which form needs completing next, and which rules apply in which country. 

Compliance matters. It is an absolute requirement but it is not the objective. 

Your objective might be retiring comfortably, buying a home, achieving financial independence, supporting your children, travelling more, or simply having greater certainty about your future. 

Your investments and pensions are tools to help you achieve those objectives and should align to those goals 

That is why the October deadline can be a useful annual trigger. Once the immediate tax reporting is under control, take another look at the bigger picture. Are your US and European assets working together? Are you diversified appropriately? Does your investment risk still reflect your goals and timeframe? Has moving country changed where you expect your future to be? 

Investment values can rise and fall, and the appropriate strategy will depend on your individual circumstances, objectives and risk profile. The aim is not to restructure your finances simply because another tax deadline has arrived. It is to make sure that the structure you already have remains appropriate. 

If you are a US connected international professional living in Europe and would like to review how your US and European pensions, investments and wider financial plans fit together, speak with us at Arisaig Wealth Management. We can work alongside your US and local tax professionals to help ensure the investment side of your financial plan remains aligned with your objectives, wherever your future takes you.