If you are an American oleh, people may encourage you to open an investment account through an Israeli bank. But if you try to do so, as an American citizen, you will need to sign some very specific documentation.
Is the alphabet soup a deterrent: FATCA, FBAR, PFIC?
As a result of FATCA (Foreign Account Tax Compliance Act), foreign financial institutions (including Israeli banks) are required to report to the IRS on assets held by U.S. account holders. Israeli banks will have you sign an IRS Form W-9 and they report to the IRS about your activities.
There’s more: As a U.S. citizen, you need to include the assets in your foreign investment account on your FBAR (Foreign Bank Account Report) if your total foreign assets exceed $10,000 at any point during the year. (Check with your American accountant for specifics; this article is not meant to provide tax advice.)
Be aware that many investment products offered by Israeli banks may be considered by the IRS to be a PFIC (Passive Foreign Investment Company), and, as such, are subject to more difficult tax reporting than regular U.S. investments. While investment advisors in Israeli banks are trained to help Israelis, they may not be aware of the larger picture dual citizens face and may inadvertently sell you an inappropriate investment.
Open an American investment account from Israel
The answer for Americans with dual citizenship is often to maintain their American investment accounts. However, some American firms reject clients who live abroad.
There are firms that do work with Americans living abroad. Profile Investment Services, Ltd., a registered office of a U.S. brokerage firm, has decades of experience helping dual citizens open and maintain U.S. brokerage accounts. We offer securities through Portfolio Resources Group, Inc. and accounts are carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. Call the office 02-624-2788 to see if we can help you.
To learn more about how opening a U.S. brokerage account can help you, download the free toolkit here.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published May 7, 2018. Updated April 2023