How does Portugal (or EU countries) treat Roth IRA and 401Ks for tax purposes
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How do the EU countries treat US Roth investments? Do they count it as income that will be taxed, or is it considered tax free?
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Hi @KAKIFRY_DP Thanks for your question!
We’ve checked in with Ted Baumann, our Global Diversification Expert, to get an answer to your question. This was his response,
This is a tricky one. The answer in a nutshell is that it depends on the country.
The only countries in Europe that offer Roth-like retirement accounts are the UK, with its Lifetime ISA, and Germany’s Riester Rente and Rürup Rente. Both countries have tax treaties with the US that appear to treat Roth IRAS the same way they treat their own, as tax free. But the details are murky, and it’s essential to consult an accountant in any country where you plan to settle.
Other countries, including those that have tax treaties with the US treat their Roth IRA’s in their own specific ways. Portugal, for example, Does not specifically mention transfers from Roth accounts in its own tax laws, but a reading of its tax code that I came across recently implies that distributions of principle would be treated as withdrawal of savings or capital rather than as income. But withdrawal of gains from investments in a Roth could be considered taxable. The article suggested that if it’s possible to characterize your Roth disbursement to yourself as purely from capital, you could probably avoid paying tax.
Unfortunately this is one of those topics where there is little clarity, and again, it’s critical to engage a tax accountant in any country where you plan to settle.
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So, it says 2 replies but I don't see anything. HOW do is see the replies tot he question?
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Hi @KAKIFRY_DP, these replies should be visible to you now.
Millie, IL Community Moderator
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Thank you. Sounds like they make it complicated, and will require keeping track of investments and gains from those. Still probably worth continuing conversions overall though.