How to Invest in European Stocks from the United States

American investors can access European companies through U.S.-listed ETFs, ADRs or direct purchases on European exchanges. Each route has different costs, tax consequences and currency risks.

Europe is home to many globally significant companies, including ASML, SAP, Novo Nordisk, LVMH, Nestlé, Siemens, Airbus, Shell, Allianz and TotalEnergies.

For an American investor, European stocks can provide exposure to sectors that are less heavily represented in major U.S. indices. These include luxury goods, industrial automation, pharmaceuticals, insurance, aerospace and international banking.

Investing across the Atlantic is now relatively straightforward. The difficult part is choosing the appropriate vehicle and understanding the associated currency, taxation and trading costs.

Three ways to invest in European stocks

Method	Convenience	Diversification	Main advantage	Principal drawback
U.S.-listed European ETF	High	High	Simple and tax-efficient structure	Limited stock selection
American Depositary Receipt	High	Low	Trades in dollars in the United States	ADR fees and variable liquidity
Direct European share	Moderate	Low	Full access to local markets	FX, commissions and tax complexity

For most beginners, a U.S.-listed ETF is the simplest approach. ADRs are useful for selecting major European companies, while direct trading is generally better suited to investors requiring access to companies without liquid U.S. listings.

1. Use a U.S.-listed European ETF

A U.S.-domiciled exchange-traded fund can provide exposure to hundreds or even thousands of European companies through a single security.

The ETF trades on a U.S. exchange in dollars and can normally be purchased through the same brokerage account used for American stocks. The fund handles foreign custody, corporate actions and portfolio rebalancing.

Broad European ETFs

Two commonly used examples are:

Vanguard FTSE Europe ETF (VGK): tracks a broad portfolio of developed European companies and had an expense ratio of 0.06% as of February 2026.
iShares Core MSCI Europe ETF (IEUR): provides diversified exposure to large-, mid- and small-cap European companies, with an expense ratio of 0.10%.

VGK held approximately 1,230 stocks in mid-2026. Its largest holdings included ASML, HSBC, Roche, Novartis, AstraZeneca, Nestlé, Siemens, Shell, Santander and Allianz.

Sources: Vanguard FTSE Europe ETF, Vanguard VGK investment profile, iShares Core MSCI Europe ETF.

More targeted ETFs

Investors can also choose funds focused on a particular region or sector:

Objective	Example
Eurozone companies	iShares MSCI Eurozone ETF (EZU)
European financial companies	iShares MSCI Europe Financials ETF (EUFN)
European small-cap companies	iShares MSCI Europe Small-Cap ETF (IEUS)
French equities	iShares MSCI France ETF (EWQ)
British equities	iShares MSCI United Kingdom ETF (EWU)
Currency-hedged eurozone exposure	iShares Currency Hedged MSCI Eurozone ETF (HEZU)

A specialised ETF may be useful when an investor has a strong view on European banks, industrial companies or smaller businesses. However, narrower funds can be more volatile and usually charge higher expenses than broad-market products.

Source: iShares European ETF range.

Why U.S.-listed ETFs are usually the simplest choice

A U.S.-domiciled ETF provides a familiar tax and reporting structure. Investors generally receive Form 1099 from their broker, and the fund itself deals with the underlying foreign securities.

This can be significantly simpler than purchasing a European-domiciled ETF. Many foreign funds may be classified as Passive Foreign Investment Companies for U.S. tax purposes, potentially creating additional reporting and taxation under the PFIC rules.

2. Buy American Depositary Receipts

An American Depositary Receipt is a security issued by a U.S. depositary bank representing one or more shares—or a fraction of a share—of a foreign company.

ADRs trade in the United States and are quoted in dollars. This allows an investor to purchase a European company without opening access to its home-country exchange.

The Securities and Exchange Commission notes that ADRs were specifically developed to make foreign-share ownership more practical for American investors.

Sources: SEC guide to ADRs, SEC investor bulletin on ADRs.

Examples of European ADRs

European companies available through U.S.-traded depositary receipts include:

ASML
Novo Nordisk
SAP
AstraZeneca
Unilever
Shell
TotalEnergies
Sanofi
UBS
Barclays
Deutsche Bank
Banco Santander
Nokia
Ericsson

Availability and trading venue should always be confirmed with the investor’s broker. Some ADRs trade on the Nasdaq or New York Stock Exchange, while others trade over the counter.

ADR fees

Depositary banks may charge administration or custody fees. These can be deducted from dividends or charged separately through the brokerage account.

Investors should consult the ADR’s deposit agreement and fee schedule before purchasing. A low apparent trading commission does not necessarily mean the total holding cost is zero.

ADRs do not eliminate currency risk

Although an ADR is priced and traded in dollars, its underlying value is connected to a foreign share priced in euros, pounds, Swiss francs, Danish kroner or another currency.

If a European share remains unchanged in its local market but its currency falls against the dollar, the ADR can decline in dollar terms. Trading in dollars removes the need to conduct a separate currency conversion; it does not remove the economic currency exposure.

3. Buy shares directly on European exchanges

Some U.S. brokers allow clients to trade directly on the London Stock Exchange, Euronext Paris, Deutsche Börse, SIX Swiss Exchange and other European markets.

This route provides access to companies that do not have liquid ADRs and allows investors to purchase the primary listing rather than a depositary receipt.

Brokers offering international access

Fidelity’s international platform allows eligible clients to trade in 25 countries and exchange 16 currencies. Investors can settle transactions in U.S. dollars or in the stock’s local currency.

Interactive Brokers also provides direct access to European exchanges and publishes separate commission schedules for European shares, ETFs and related securities.

Sources: Fidelity international stock trading, Fidelity guide to buying international stocks, Interactive Brokers European commissions.

Broker access, eligible account types and fees can change. Investors should verify current conditions before opening or funding an account.

Understand the trading costs

A direct European transaction may involve:

A brokerage commission
A foreign-exchange fee or spread
Local exchange fees
Stamp duty or financial-transaction taxes
Custody charges
Dividend-processing fees
Tax-reclaim expenses

For example, Fidelity’s published online commission for many eurozone markets is €19 per transaction, while UK trades have a different fee structure. Additional local taxes and foreign-exchange charges may apply.

Source: Fidelity international trading fees.

A direct purchase may therefore be inefficient for a very small position. An investor making regular investments should compare the full transaction cost with the amount being invested.

Trade during local market hours

European exchanges operate several hours ahead of New York. Their most liquid trading period may occur early in the U.S. morning.

Orders submitted outside local market hours may remain pending until the exchange reopens. Liquidity can also be reduced around European holidays.

Limit orders are generally preferable for less actively traded foreign shares because they specify the maximum purchase price or minimum sale price. The SEC warns that market orders guarantee the attempt to execute but do not guarantee the execution price.

Source: Investor.gov guide to order types.

European dividend withholding taxes

European countries generally withhold tax from dividends before the payment reaches an American investor.

The rate varies by country, security and applicable tax treaty. In some cases, the initial domestic withholding rate may exceed the treaty rate, requiring the shareholder to submit documentation or reclaim the excess.

The practical outcome can depend on the broker and custody chain.

Foreign tax credit

A U.S. taxpayer may be able to claim a foreign tax credit for qualifying taxes paid or withheld on foreign-source income. In many cases, the credit is calculated using IRS Form 1116.

The IRS explains that a credit reduces U.S. tax liability, while treating foreign taxes as an itemised deduction only reduces taxable income.

Sources: IRS Publication 514, IRS foreign tax credit guidance.

The available credit may be limited, and not every amount withheld automatically qualifies. Holding-period rules can also apply to dividend-related foreign tax credits.

Retirement accounts require special attention

Holding foreign dividend stocks in an IRA does not necessarily eliminate foreign withholding at source. Because the IRA itself generally does not owe U.S. income tax, the investor may be unable to use a foreign tax credit for taxes withheld inside the account.

The result can vary by country, treaty and security structure. Investors choosing European dividend stocks for a retirement account should investigate the treatment of the specific country before buying.

Avoid the PFIC trap

U.S. taxpayers should exercise particular caution when purchasing European-domiciled mutual funds, ETFs and investment companies.

Many foreign pooled investment vehicles may meet the definition of a Passive Foreign Investment Company. PFIC ownership can trigger:

IRS Form 8621 reporting
Complex annual calculations
Special tax treatment for distributions
Potential interest charges on deferred gains
Additional professional tax-preparation costs

The IRS states that a U.S. person who directly or indirectly owns a PFIC may need to file Form 8621 when receiving certain distributions, disposing of the investment or making permitted tax elections.

Sources: IRS Form 8621 information, IRS Form 8621 instructions.

A European-domiciled ETF should not be assumed to have the same U.S. tax treatment as an ETF registered in the United States. U.S. investors should obtain professional tax advice before buying a foreign fund.

Ordinary shares in an operating European company are not automatically PFICs. However, certain holding companies, investment vehicles and cash-rich businesses could potentially meet the PFIC tests.

Foreign-account reporting

Buying European securities through a brokerage account maintained in the United States generally does not make the U.S. account a foreign financial account.

The situation can differ when an American investor opens an account directly with a foreign broker.

If the combined maximum value of foreign financial accounts exceeds $10,000 at any point during the calendar year, an FBAR filing may be required. Form 8938 may also apply when specified foreign assets exceed the relevant threshold.

Sources: FinCEN FBAR reporting threshold, IRS comparison of Form 8938 and FBAR.

FBAR and Form 8938 are separate requirements. Depending on the circumstances, an investor may need to file one, both or neither.

Currency exposure: risk and diversification

A European investment gives an American investor exposure to both the company and the currency in which its earnings and shares are valued.

For a dollar-based investor:

A stronger euro, pound or Swiss franc can increase dollar returns.
A stronger dollar can reduce returns from European holdings.
Multinational companies may have revenues in many currencies, reducing the relevance of the listing currency alone.

Currency exposure is not always undesirable. It can diversify a portfolio that is otherwise entirely dependent on the U.S. dollar.

Investors who do not want this exposure can consider a currency-hedged ETF. Hedging, however, has costs and may reduce returns when European currencies strengthen against the dollar.

How to research a European company

American investors should not rely only on the company’s U.S. ticker.

Before purchasing, review:

The company’s investor-relations website
Annual and interim reports
Dividend history and withholding treatment
Net debt and credit ratings
The ADR ratio, if applicable
Depositary fees
Average trading volume
The primary European listing
Exchange-rate exposure
U.S. tax classification

Foreign companies with SEC-registered securities generally file information through the SEC’s EDGAR system. The database provides public access to financial statements, risk disclosures and other filings.

Source: Investor.gov guide to researching investments through EDGAR.

A simple approach for different investors

Beginner

A broad, U.S.-listed European ETF may be the most practical starting point. It offers diversification, straightforward dollar trading and familiar U.S. tax reporting.

Dividend investor

A combination of a broad ETF and selected ADRs can provide exposure to European insurers, energy companies, pharmaceuticals and consumer-goods businesses.

Investors must compare the headline dividend yield with foreign withholding tax and ADR fees.

Active stock picker

Direct European trading provides the widest opportunity set. It may be appropriate for investors researching smaller companies or businesses without liquid ADRs.

Transaction size should be large enough to justify commissions and currency-conversion costs.

Currency-conscious investor

A currency-hedged U.S. ETF can reduce short-term fluctuations caused by exchange rates. The investor should still compare expenses and understand how frequently the fund resets its hedges.

Step-by-step checklist

Before investing in European stocks from the United States:

Decide between an ETF, ADR and direct share.
Check whether the security is U.S.- or foreign-domiciled.
Confirm the primary listing and correct ticker.
Compare trading commissions and foreign-exchange costs.
Examine liquidity and the bid-ask spread.
Research dividend withholding.
Determine whether PFIC rules could apply.
Understand FBAR and Form 8938 obligations for foreign accounts.
Use an appropriate order type.
Limit the position to a suitable percentage of the portfolio.
Keep records of dividends, foreign taxes and currency conversions.

Final conclusion

For most American investors, the easiest way to invest in Europe is through a low-cost U.S.-listed European ETF. It provides immediate diversification without requiring direct foreign-exchange transactions or individual ADR analysis.

ADRs offer a convenient route for investors wanting to own specific large European companies. Direct purchases on European exchanges provide the broadest selection but introduce additional commissions, currency handling and reporting considerations.

European equities can improve portfolio diversification and provide exposure to industries that are less prominent in U.S. indices. The benefits should nevertheless be weighed against exchange-rate volatility, foreign withholding taxes, higher transaction costs and more complex tax rules.

This article is for informational purposes only and does not constitute investment, legal or tax advice. U.S. taxpayers should consult a qualified adviser regarding foreign investments and reporting obligations.