Broker · Germany
Trade Republic & US tax for US persons
The ETF Sparplan is the most efficient way to accumulate PFICs ever built. What a US person needs to know before the first Form 8621.
By Danilson Ramos · Founder, Atamatax
Updated September 2026
Check it for your own holding
Could this investment be a PFIC?
Two questions and, if you have it, the ticker or ISIN. The read is immediate, nothing you enter leaves this page, and it names what would settle the rest.
Free, no account, nothing you answer leaves this page. Open the full portfolio scanner
Screened against the fund registry on this page. It is never sent anywhere.
A screen. Whether a fund is a PFIC turns on its own annual income and asset facts under §1297; the read above says how far your answers go and what would settle the rest.
Trade Republic is Germany's largest neobroker, and its signature product — the monthly ETF Sparplan — is exactly the pattern the US PFIC rules punish hardest: repeated purchases of a non-US pooled fund over many years.
Can a US person use Trade Republic?
Trade Republic's terms generally require the account holder not to be a US taxpayer, and onboarding screens for it — confirm current policy with Trade Republic. The US persons who hold accounts in practice acquired US status after opening one, are accidental Americans, or are green-card holders who did not flag their status. The rules below apply to all of them, and to any year the account existed while they were a US person.
Why the Sparplan funds are PFICs
EU PRIIPs rules keep US-domiciled ETFs off the German retail shelf, so the funds in a Trade Republic savings plan are UCITS ETFs domiciled in Ireland, Luxembourg or Germany (iShares, Xtrackers, Amundi, Vanguard's Irish range). For a US taxpayer each is generally a PFIC: one Form 8621 per fund per year, with the §1291 default regime on any gain or excess distribution unless a QEF or mark-to-market election was made in time — which, for most of these funds, it cannot have been.
| Holding at Trade Republic | PFIC? | Typical filing |
|---|---|---|
| ETF Sparplan (ISIN IE, LU, DE…) | Likely | Form 8621 each year, per fund |
| Accumulating (thesaurierend) ETF | Likely | Form 8621; no distributions, but the Vorabpauschale is a German-only tax |
| Distributing (ausschüttend) ETF | Likely | Form 8621; distributions tested under §1291 |
| Individual German or US shares | No | Report the account |
| Uninvested cash | Depends on where it sits | Check whether the statement shows a money-market fund ISIN |
What a savings plan does to the computation
A Sparplan buys the same ETF on a fixed day every month. After five years that is sixty purchase lots in one fund. Under §1291 a gain on sale — or an excess distribution — is allocated ratably across the holding period of each lot, with tax at the highest rate for each prior year and interest on the deferred tax. The work scales with the number of lots and years, not with the size of the position, which is why a modest monthly plan can produce a long computation.
The German side: Vorabpauschale and the credit
Germany taxes an accumulating ETF annually through the Vorabpauschale, a notional minimum return, and taxes distributions and gains under the flat Abgeltungsteuer with partial exemption (Teilfreistellung). None of that maps onto the US computation year by year, so the Foreign Tax Credit on the US side is a timing exercise: the German tax may fall in a year the US return shows no PFIC income, and vice versa.
FBAR and Form 8938
A Trade Republic account is a foreign financial account. It counts toward the $10,000 FBAR aggregate and toward the Form 8938 thresholds, whether or not anything in it is a PFIC. Cash held at Trade Republic's partner banks is likewise a foreign account for FBAR purposes.
- Export the order history for each fund — every Sparplan execution is a lot.
- Export the annual positions overview with year-end values in euros.
- Note the account's maximum balance during the year for the FBAR.
- Keep the German Steuerbescheinigung for the foreign tax credit.
Check your Trade Republic funds before you file
Paste the ISINs or upload the positions export — the free checker flags likely PFICs and estimates the Form 8621 workload from the number of funds and years. This is general information, not individualised tax advice.
From one fund to the whole case
What does your PFIC situation actually require?
Four questions — how many funds, for how long, whether Forms 8621 were ever filed, whether the returns are current — and a route into the preparation that fits, with what it costs. Nothing you answer leaves this page.
Free, no account, nothing you answer leaves this page. Open the full portfolio scanner
A routing read, not a determination. Whether a fund is a PFIC, whether an exception applies and what a prior year needs are established when the holdings are screened; the route above says where that happens and what it costs.
Authorities cited
- IRC §1291 — IRC §1291 — Interest on tax deferral (excess-distribution regime)
- IRC §1297 — IRC §1297 — Definition of a passive foreign investment company
- IRS Form 8621 — About Form 8621 — Information Return by a Shareholder of a PFIC or QEF
- 31 CFR §1010.350 — 31 CFR §1010.350 — FBAR (FinCEN Form 114) filing requirement and $10,000 threshold
- FinCEN Form 114 (FBAR) — Report of Foreign Bank and Financial Accounts (FBAR)
- IRS Form 8938 — About Form 8938 — Statement of Specified Foreign Financial Assets
- IRS Form 1116 — About Form 1116 — Foreign Tax Credit (Individual, Estate, or Trust)
Primary sources (Cornell Legal Information Institute for the US Code and CFR; IRS.gov for forms, procedures, and treaty documents). This page is general information, not individualized tax or legal advice.
Atamatax provides tax preparation support and educational resources. This website does not constitute legal or tax advice.