Moving to Germany: Expat Taxes, Visas, and Money Tips

Arielle Tucker: Welcome to Passport to Wealth. I'm your host, Arielle Tucker, certified financial planner and fellow USXPAC. On this show, we bring together cross-border experts and global Americans to help you make confident decisions about your life, your money, and your next move abroad. Let's get started.

Hey, welcome back to Passport to Wealth. Today's guest is Jordan Vlastuin, a cross-border financial planner based in Germany, who specializes in helping globally mobile individuals navigate life and finances abroad. Originally from the US and now living in Germany, Jordan brings both professional expertise and personal experience to the expat journey. His work focuses on supporting

individuals and families as they prepare for and adapt to life overseas, helping them think through not just the financial side of moving abroad, but the practical and lifestyle considerations that come with building a life in a new country. With a deep understanding of cross-border planning and the realities of expat life, Jordan helps people make more intentional and form decisions before and after they relocate. Jordan is also a founding member of the Passport to Wealth Advisory Circle, and you can see his full profile in the show notes and on our website if you'd like to learn more about his work. Jordan, welcome back to Passport to Wealth.

Jordan Vlastuin: Thanks for having me, Arielle. I'm always happy to be on the show with you.

AT: So let's catch everyone up. You're still living in Germany. Let's back up. What originally led you to move abroad?

JV: I think I'm probably one of the few people that was motivated by financial planning to move abroad. You know, when I look

back at my career, so I originally moved abroad in 2017. And before that, I was working at a more traditional financial planning firm. And it was, honestly, it was really, really great experience. But when you're in those firms, a lot of the focus is on maximizing as much wealth as we can and tell about age 65 and then we unlock it and then go live our life after that. And I was looking for something a little bit different because it kind of, in my mindset, I'm really thinking about how can we maximize our wealth, live our full journey today while maintaining that financial security. And what kind of came down to in my mindset is I need to do this. And so I actually left my job, took a short sabbatical and then during that time, I found an opportunity to

start traveling the world. So it was a nice compliment to one another where I was able to travel the Puerto Rico. I lived in the UK. I went to Germany helping military families and government employees. And from there, I honestly had a really great opportunity to be able to stay in Germany. And I wanted to build my own financial planning firm that really aligns with that mentality. So really focusing on people who are looking to move abroad, take sabbaticals, live their adventures now while maintaining that financial security. So that's really what pushed me to start moving abroad.

AT: And I think when I have conversations with advisors, especially us millennials, can I say elder millennials? I don't know. I think we see this shift, right? People are working really hard for and they, but they don't want to do it till 65. They are getting burned out and they see life in transitions and phases. You have your working years and then your family years and then kind of like your passion years. It's because its kind of what I'm seeing in our practice. I understand that's kind of the shift that your practice has gone. And before we go dive into that tangent, I do want to just ask, how are you able to live in Germany? Because I think a lot of people, they want to move abroad. And it's really important to consider like how do you move abroad? Are you there with a visa through an employer? Are you there in a spousal visa? Did you apply for your own direct visa? What gives you the legal requirement today to be able to sit in Germany?

JV: Yeah. So it wasn't necessarily a linear path. I don't think it ever is to be honest when you, when you move abroad, but when I originally came, I was on a visa through, through my work,

right? And so they, they set me up with everything. That process was quite seamless because if you have a job contract and you move to Germany, honestly, most countries, if you have that contract.

AT: It's super easy.

JV: It's quite, it's quite easy. What happened is my wife and I, we actually ended up flip flopping. So when I wanted to start the business and start expanding this, I knew that my income was going to drop and I wouldn't be eligible for a small business visa or anything. But luckily, my wife, she had a solid contract and then she was able to apply for skilled worker visa in Germany and basically tag me along a spousal visa. And this, the nice thing about the spouse of visa is it gives me a lot more flexibility within the, within the business. There's no necessarily requirements of how much I need to earn. I can go, you know, be unemployed. So you get a lot of flexibility on the spouse of visa, but it puts a lot of pressure on my wife, to be honest, with her career because if she loses that visa, then everything goes back up in the wind.

AT: And I think that's a great point. It is, it's really important to think through and strategize a little bit with what type of visa are you moving to the country on? Is it tied to a particular employer? Is it tied to a certain job type? I know when I moved, I also moved with my employer and my visa was tied to a certain like industry. So I couldn't be in the country and, you know, switch out of fintech and go and be an artist. I had to stay in like a certain industry to continue to have my visa in Germany. The other thing that I just want to really briefly point out, Germany I think is very generous with their spouses where you do have the right to work, but not every country in Europe, you have that same opportunity. So it's something that if you are moving with a spouse that you double check, are there additional language requirements that my spouse needs to meet to get that visa? Are they actually going to be allowed to work? I know where we live now in Switzerland, if you are coming in on like an L visa, for example, your spouse might have, they may have no right to work in the country. They only have a right to be there and basically be your spouse. So just I really want to continue to highlight because there are a lot of opportunities to move with companies abroad. Still need to go and do the next layer of research and think what is the backup plan? If I lose my job, my spouse loses their job, or we want to pursue that passion project.

JV: Yeah, yeah, exactly. And right now, so you know, for us personally, we have the opportunity to basically go to a they call it EU Blue Card. So we're kind of walking through this process to see if we can apply to give us more flexibility. So we're not so tied into this one specific job, this one specific visa for her. So it's a really, really critical piece of this. And like you said, with the planning, if your spouse is not allowed to work there, then we need to be very, very diligent with the overall cash flow income planning that you're going to have in that country.

AT: Absolutely. And I'm curious, the EU Blue Card, could you move outside of Germany with that?

JV: With the job, yes. Right. And so it's an EUI visa. So essentially, she wouldn't have to apply for a whole new visa to go to another country, as long as she has a work contract there.

AT: Okay. Yeah. Great. Awesome opportunity. Okay. Thank you so much for sharing that with us. So you're kind of building a practice around almost like the life that you're building for yourself, right?

JV: Yeah. That's exactly right. I think it's a lot of motivation in seeing the passion because when, and I think the same for you, Arielle, when you started moving abroad and you start to look for financial information, especially as an American and expat, there's not a lot out there. And I see people all the time they go, where do they turn to? They turn to crowdsource Facebook groups, Reddit, Reddit threads. The problem with that is someone says, oh, based on my experience, I did this. And I, I, nothing happened. But not everyone's experience is the same, right?

AT: Personal finance is personal.

JV: Exactly. Exactly. Right. And so that's really what motivated me to start to build the firm is to help bring more and more information. And it's a big, big proponent of the Passport to Wealth community as well because we get so many such a diversity of professionals here that can help support each other up and then really build out this, this community.

AT: And that's part of the reason why we wanted to build it because I think if you, and this is what I found in my own practice, I kind of became the, you know, the expat financial

planner in a couple of communities. And I'm like, no, no, it's way more nuanced than that. Because I truly believe to be an excellent cross-border professional that you have to like have deep tentacles into a certain area of expertise. And maybe that's working with certain type of visa holders or it's working with a certain type of certain countries, building out that network.

Because especially for expats, right? We have to find everyone, right? You need real estate people and lawyers who understand the local laws and the international laws. And oftentimes, transparently, there's just a shortage of these professionals and it takes time, years to build up those networks and really be able to add that to, as value to your clients. And it's something

like sometimes my job is just passing on all of the contracts or clients that I built up. But it took a long time to build those relationships and those professionals oftentimes aren't a waitlist. And so if they know they're coming for me, they're going to get priority versus just finding them on a Facebook or something and getting in line. I think that's really, really important. And it's why I wanted to build the community so we could say, hey, we're, you know, I'm the first person to say,

I don't know anything about moving to Ghana. But let's see if we can find you that person so that we make sure you have the best experience moving and building wealth abroad.

JV: Yeah, exactly. It is a very big mix of experiences and that's why, you know, a lot of people do tend to specialize in one country or maybe a couple of countries. You know, I'm thinking about Germany, for example, right, with the, there's a lot of nuance in the tax code and the tax treaty. But I think one of the most surprising things that I've run into is how localized it is. And when you look at all of the tax offices throughout Germany, you're basically dealing with a county office, right? And then you have to, you or if you have, if you have a tax professional,

have to go to them and basically clarify your whole financial situation and why it fits under a tax treaty. It's not like sending it up to the big federal level where they know what the

tax treaty is. You have to kind of go through the steps, which makes it a lot slower. It's definitely very frustrating. I'm not going to lie about it. But this is, you know, one of the big projects that I'm working on right now is really expanding my network of German tax professionals because the more

localized they are, the better relationships they have with those, those tax offices. And in the US, I'd never like, I'm going to be friends with an IRS officer. I would never, you know,

was never on my mind. But here it's important. So...

AT: Yeah, I think that's an excellent point. And it's so funny that you're talking about that because I find the same thing in my practice, right? Especially around retirement accounts. And I don't, I don't like the retirement account issue comes up all the time for individuals who have, you know, are moving into Germany later in life or are already receiving retirement accounts or even like inherited retirement accounts. It's really interesting to navigate. And so we were working with two clients on inherited IRAs. One was up in Berlin. And then one was like over in Frankfurt. And the positions of the two accountants took were different. And that was, that kind of shocked me. And I find with like, if you're like working in the smaller areas, there's not a lot of US experts. There's not a lot of inherited IRAs or IRAs or Roth IRAs going through the office. And so if the German accountant can really understand how to present that information, you're more likely to get like a more favorable tax decision on those accounts. Then if you are in Munich or Berlin and they basically have seen this a thousand times, they have their position. Everyone knows their position. And it's just kind of like there's not really any negotiation with it. I don't know if that's what you're seeing.

JV: So a lot of my, my focus, I work a lot of people, especially with US government pensions. And this is a constant thing or anything from military VA benefits, government retirees, state pensions, those types of things. You, it's really about making sure that we have a good relationship with a tax professional who can communicate the basically the demands of the treaty to that individual. Because that can make a break whether you, you're not getting taxed on it or you are fully getting taxed on that, which is a huge difference in your financial picture.

AT: And with the, I'm guessing these government pensions are like federal pensions. Are there anything really unique about federal

pensions in Germany versus if you just had a corporate pension?

JV: So with the, with the federal pensions in Germany, they're, they're specifically laid out under the, under the tax treaties, right? So they, they do have a lot of tax-free benefits. If everything goes in line and we can say, and we can get agreement from the tax office that everything is, is tax-free. Typically you get, I call it a ghost tax where they push you up into a higher tax bracket. So any income that you have, the pension goes on the bottom and then any other income goes on the top, right? So they're not necessarily taxing the pension directly, but they're trying to push up.

AT: So they're using that to determine what your marginal tax rates and what's always very interesting about Germany is the,

I think the, the highest rate is 47%. But if you look at the chart, right? The, the marginal rates, they're very squished. So it doesn't take that much money to get up into the highest tax

rates where if you're looking at the federal, the U.S. federal rates, the highest rate right now is 37%, so 10% less. And it takes a lot more money to get up to that 37% than the 47%. So people living in Germany, this is an excellent planning opportunity. If you do have that federal pension, go talk to Jordan about what that would look like from a planning perspective.

JV: Yeah, yeah, exactly. And the other piece that, you know, so a lot of the work that we do, we try to do it on the frontend while there's still, while there's still in the States. Because I think a lot of people neglect this idea of the tax residency. So figuring out, you know, what opportunities might arise? If you're in the States for a couple more months, then you can, you know, maybe I say clear out some of the taxable income on the U.S. side before bringing it into the Germany. Because I see a lot of people, they, they don't start to plan, you know, okay, the pension income, what's the taxation impact going to be? But what if I'm selling some stocks? What if I did it, while I'm tax rid of the U.S., versus if I did it in Germany, likely it's going to be a much higher tax rate in Germany. So like a lot of these preparation steps are massive opportunities for those. So the earlier that you can start to plan, the more strategic we can be about the timing of the move and when to sell things, when to distribute assets, you know, like you, you mentioned inherited accounts as well. And yeah.

AT: And this is one point that I always go back to when I, I do get a lot of referrals from other advisors who are U.S. based. And a lot of times they'll call me after their client has moved to Germany. And I'm always like, "oh why didn't you call me before you moved to Germany?" because you've missed out on really some great planning opportunities because even if you're in a high tax state, again, you're still probably at a lower marginal tax rate, then you will be once you're in Germany. And having that kind of reorientation of your investments and your wealth before you establish taxes is so important. But they just don't realize how complicated it is. They're like, I'm just going to help out. I want to do the right thing by the way that my client, I don't want to lose them. We have a great relationship. But then we've missed all the planning opportunities. And it's like, you haven't really helped anyone. I can take over at this point, but now we're subject to, you know, capital gains tax in Germany,

which is like roughly 26.5%, totally different than what the max rate on the U.S. side. And it's just kind of unfortunate. The miss of hugely, hugely messed planning opportunity.

JV: Yeah, exactly. And I mean, that's probably like the biggest, you know, when I think about the, you know, somebody says, I'm looking at moving abroad. We're looking at a lot of the foundational stuff, making sure that they can up what's the move going to cost, right? I always throw in, I call it a chaos buffer from those early days of moving. Really, you're just kind of,

you're spending so much money in so many areas that you never expected. You're really focusing on setting those foundations. But the biggest thing is when you get to kind of the end of the

foundations is like, what does the roadmap actually look like to make sure that your secure here, you're going to be secure in Germany and that we're not essentially throwing away money, we're not leaking money to a German tax system that we could have avoided, right?

AT: Absolutely. I want to go back a step because you're talking about setting up those foundations. And I want to give you a chance to just kind of expand on getting prepared for that,

the orientation, right, that transition for living in the U.S. And I want to just talk a little bit about like currency risk and setting your foundation from living in dollars and now living

in euros for a lot of people, especially with what we've seen with the currency movement over the last year. So I'll just give you some space to talk about that.

JV: Yeah, I mean, this is the topic of the time is what I'll say right now is the currency risk. Like I said, when we're looking at the foundation, we need to start to include that in there.

When we say one of the big pieces of the puzzle is really saying, okay, where are you at today? What does your lifestyle look like, let's say in Germany? And then how does that impact your future plans, right? And we say retirement or buying a home. What the, from a planning perspective, what we need to do is really focus on building in some projections to say, okay, if we start to see

large currency fluctuations, like we are seeing now, how does that affect your plan, right? If we have short windows, then we, you know, this is when you can talk about anything from converting ahead of time to try and mitigate some of those risk, currency hedging, anything from buying euro denominated bonds to try and even some of this out. But when we're talking about longer term windows, the reality is we need to keep as much invested as we can. The difficulty is, you know, most of our investments are likely going to be in US dollars for most Americans, right? And so we're still subject to that. And so we need to kind of build in some variability and say, okay, if we have this, what do we need to have set aside to give us the stability or where, what are the points where we need to start making some adjustments to the to life in the future, right? And if you're starting to look at taking withdrawals, then we're looking at putting two, three years worth of money in local currency. This is going to give you the most stability in

the buying power and then help you kind of balance this out, right? So the reality is most people will be subject to this currency risk. We're never going to be able to mitigate it fully. But the biggest things that we can do is minimize the volatility in the near term, hopefully in the midterm, but then also we're looking at investing a little bit more internationally to kind of

maintain some of that stability and then making sure that we're not maintaining too much money in cash. And then it just gets in also US dollars so that it gets depleted, right?

AT: I'm also curious how are you considering local homeownerships, so buying a home or your primary home in Germany

into this kind of consideration of hedging?

JV: So usually your home is your largest asset, right? And a lot of times it maintains that maintains whether you come from the US, move it and purchase the house or if you're purchasing international real estate, the buying the home can be a nice

stabilizing factor. But the, you know, my hesitation and my concern always with real estate is such a localized risk, right? So when we're looking at this, it can help a lot because we have a lot more in, you know, we have a lot more in euro denominated through the real estate. But the difficulty is what does the housing market look like in that specific area, right? So if we, it's definitely a massive consideration, but we kind of need to figure out how much risk it is. And I know in Germany, like the home ownership, people really, really love it because it creates a bit more stability. But at the same time, we could be giving up a lot of growth by putting too much into the home. So it's a little bit more of this specific property and kind of balancing this out, but it can be a nice way to kind of, I'll say, kind of secure some assets there.

AT: No, I agree with that. Okay. Any other gotchas or interesting tidbits on Germany that you want to share with our audience before we go to our final question?

JV: Any other gotchas? I mean, I think the, the biggest stuff with Germany is there's, there's quite a few US expats. And the biggest thing I was talking about is the localized ruling, the biggest thing that you can do to kind of set yourself up and give yourself a bit of an edge is to come up with a really good tax advisor to help balance it, right? And then help plan it. The other area is really looking at the qualified accounts that you have. So what types of retirement accounts are available to you?

Because when this money is inside of a retirement account, you don't have to pay capital gains tax in Germany, right? So the distributions, that's a different story. But while it's in there, we're avoiding any capital gains tax, any dividend tax, so these things can be a really, really large boost to your wealth during your time in Germany.

AT: I'm going to add two more things, just because I can't help myself. One, I think German pensions, if you're working at a German employer and you have access to a good German company pensions, not a private pension plan, but you're corporate employer matching program similar to like a 401k or 430b or something like that. That's, I think, an excellent way to save because the treaty is very good and clear about those employer pension plans getting that kind of similar treatment on the US and that German side. I also tell everyone to be very cautious about private pension plans. They're like, they come in, it's like ice cream store, every single flavor you could imagine. They have all these people selling and pushing these products. Some of them make sense. Some of them are just very high commission sales products and get you into a lot of US tax issues. If you're talking to someone who's a colleague or a salesperson about those proceed with caution, talk to your local advisor, get that clarification before you make any financial decisions. What is the one piece of advice that you would give to someone who's kind of preparing for life or just recently moved to Germany?

JV: If you're preparing to move abroad or you're really looking at living in Germany, I think the biggest thing is to go into it with it open mind. And I know Germany is not always the flashiest place on the planet to live on, but it is a really, really nice

place to be. The more open that you are to your experiences there, the better off, especially in the beginning. The better off, the whole time is going to be. You will run into some frustrations. I know in Germany you have the build your own kitchen, right? You know, these things can be very, very frustrating. But if you go into it with a more positive attitude and outlook on, it's going to be a much more enjoyable experience. You will have frustrations. Not every single day is

going to be like the Instagram Reel lifestyle, but you will have a lot of those moments as long as you can kind of continue to navigate and get through the early days and get settled in.

AT: Absolutely. I agree. Give it a year. And if it a year, you hate it. Move. We landed in Berlin. We were there for a year, not even. And I was like, this is not my city. It's not going to be my city. Don't you, it's, you can move. You can always move. And the nice thing about the visas in Germany, they're not generally tied to a specific region.

JV: Yeah, exactly.

AT: So that's another approach if you really hate where you land. And I talk to people about this all the time. You can move. You

have some flexibility. If your job is remote or whatever, you can, you can find you can go to the mountains. You can go to the, you know, the, the north part, right? They all, like Germany is a big enough country where it becomes very regional like you.

JV: Yeah, exactly.

AT: Jordan, thank you so much for joining us on Passport to Wealth. We'll talk to you soon. Thanks for having me. Have a good one.

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