Why Americans in Europe Can't Buy US ETFs (And the Workaround That Does)

When Austin Davidsen moved to Germany in 2018, he opened a brokerage account and started investing the same way he always had: buying broad market US ETFs. A few months later, that stopped being an option. Not because he did anything wrong. Because a regulation most Americans have never heard of had just gone into effect, and it was about to change what he could and couldn't buy for years.

This week's episode with Austin and financial advisor Blair Hoover breaks down exactly what happened, why it only affects Americans, and what Austin eventually did to keep investing anyway. Here are the concepts worth understanding, whether you're already living abroad or just starting to plan a move.

The problem: MiFID II blocks US ETFs for anyone in the EU

MiFID II, the EU's Markets in Financial Instruments Directive, requires brokers to give retail investors a Key Investor Document (KID) before selling certain products, including ETFs. That document has to include a projection of future returns.

US regulations work differently: American fund providers like Vanguard aren't allowed to publish return projections on their US-domiciled funds. That means US ETFs can't produce the document the EU requires, and EU brokers are legally barred from selling them to anyone living in the EU, regardless of citizenship.

This part of the story affects every EU resident equally. The real complication starts with what happens next.

It's not your custodian's fault

A common misconception: people assume Schwab, Interactive Brokers, or whichever custodian holds their account is the one imposing the restriction. It isn't. Custodians are simply complying with EU regulation once a client's address changes. The rule originates in Brussels, not in a US brokerage's compliance department.

Why this problem is uniquely American

Here's the part that surprises most people: a non-American living in the EU doesn't have this problem. They can simply buy an EU-domiciled UCITS ETF and move on with their life.

Americans can't take the same shortcut, because of citizenship-based taxation. The US taxes its citizens no matter where they live, which means an EU-domiciled fund that's perfectly fine for a European neighbor can trigger PFIC (Passive Foreign Investment Company) tax treatment for an American, along with the extra compliance cost that comes with it. Two regulatory systems, built independently, collide specifically on US citizens and green card holders. That's the mismatch at the center of this episode.

The "professional investor" exemption (and why it's harder than it sounds)

There is a narrow path around the retail investor restriction: qualifying as a professional investor instead. Doing so requires meeting two of three criteria:

• A minimum of $500,000 in investable assets
• Professional experience working in the financial industry
• A high enough trading volume, roughly 15 trades per quarter, to count as an active trader

Even meeting the criteria doesn't guarantee smooth approval. Arielle Tucker shared her own experience trying this with Interactive Brokers while living in Germany: she checked every box on paper and still ran into friction getting the status actually granted. Knowing the exemption exists and successfully using it are two different things.

What actually worked: the cash-secured put workaround

For years, Austin sat mostly in cash, unsure what to do next. He tried a few stopgaps, including investing in Berkshire Hathaway (which behaves a bit like a diversified ETF) and real estate, but neither replaced the growth he was missing in the US market.

The eventual fix came from a subtle distinction in the regulation itself: MiFID II restricts what a broker can sell, not what an investor can acquire or own. Using an options strategy called a cash-secured put, Austin was able to end up owning shares of a US ETF without technically buying them directly through a broker. The broker sells the options contract, not the ETF, and if the contract executes, the shares are assigned to the buyer.

In practice, that meant securing enough cash to cover 100 shares at a chosen strike price, selling a cash-secured put with an expiration date, and collecting a premium in the process. It's a strategy built for share acquisition, not speculation, which makes it a very different use of options than most of the content available online assumes.

The bigger takeaway: know before you move, not after

Austin's biggest regret wasn't the years of options research. It was not doing that research years earlier. Had he learned this mechanism when he first moved to Germany instead of years later, he estimates he'd be in a meaningfully different financial position today, simply from staying invested through market growth he otherwise missed.

That's the exact gap Arielle wrote The Expat Money Playbook to close, with Blair contributing as an advisory expert on the book's investing chapters. Those chapters cover the Berkshire Hathaway approach as a stopgap and the mechanics behind strategies like the one Austin eventually used, in plain English, before you're standing in the middle of the problem.

Every country has its own version of this mismatch: different regulations, different tax treatment, different account restrictions. You don't need to map out every scenario before you move. You need to know which questions to ask before the information gap turns into years.

Resources mentioned in this episode

• OptionsEducation.org Acquire Stock Strategies, a non-biased, fact-based breakdown of specific options strategies
• SMB Capital on YouTube, the channel Austin found most useful for learning the mechanics