1. Understand “Euro Currency Stocks”: When you buy “Euro currency stocks,” you are purchasing shares of companies based in countries that use the Euro as their official currency (e.g., Germany, France, Italy, Spain, Netherlands, Belgium). The value of these shares will be denominated and fluctuate in Euros.
2. Open an International Brokerage Account: As an Indian resident, you cannot directly purchase foreign stocks through a regular Indian demat account. You need to open an account with a brokerage firm that offers access to international markets, specifically European stock exchanges.
- Global Brokers: Reputable international brokers like Interactive Brokers are often used by Indian investors for broad market access, including Europe.
- Indian Brokers with Global Tie-ups: Some Indian brokerage firms have partnerships that allow their clients to invest in international markets. Explore options provided by major Indian financial institutions.
- Check Market Access: Ensure the broker provides trading access to the specific European exchanges (e.g., Euronext Paris, Euronext Amsterdam, Xetra/Frankfurt Stock Exchange, Borsa Italiana) where the companies you’re interested in are listed.
3. Complete Account Opening and KYC (Know Your Customer) Process: The process is similar to opening a domestic brokerage account but with additional international compliance requirements.
- Required Documents: You’ll typically need your PAN card, Aadhaar card, proof of address, and bank statements.
- Online Process: Most international brokers offer an online application process. Be prepared for digital submission of documents and verification, which might take a few days.
4. Adhere to RBI’s Liberalized Remittance Scheme (LRS): The Reserve Bank of India (RBI) sets limits on how much money Indian residents can send abroad for investments and other purposes.
- LRS Limit (as of July 2025): Indian resident individuals are allowed to remit up to USD 250,000 per financial year (April 1 to March 31) for various permissible current or capital account transactions, including overseas investments. All your foreign remittances, including investment amounts and related fees, will be counted towards this annual limit.
5. Understand Tax Collected at Source (TCS) on Foreign Remittances: The Indian government collects TCS on certain foreign remittances under the LRS, effective from April 1, 2025.
- TCS for Investments: For remittances made for “any other purpose” (which includes investments), no TCS is levied up to an aggregate amount of ₹10 lakh per financial year.
- Above ₹10 Lakh: For amounts exceeding ₹10 lakh in a financial year, a TCS of 20% will be applicable on the amount above the ₹10 lakh threshold.
- Example: If you remit ₹15 lakh for investments, the first ₹10 lakh is TCS-free. A 20% TCS will be collected on the remaining ₹5 lakh (i.e., ₹1 lakh).
- Claiming TCS Credit: This TCS is an advance tax payment. You can claim credit for the TCS amount when you file your Income Tax Return (ITR) in India, potentially leading to a refund if your actual tax liability is lower.
6. Fund Your International Brokerage Account: This step involves currency conversion.
- Wire Transfer: You will typically initiate a wire transfer from your Indian bank account to your international brokerage account.
- Currency Conversion: Your Indian Rupees (INR) will first be converted to US Dollars (USD) (as many international brokers use USD as their base currency for funding) and then, when you buy European stocks, the USD will be converted to Euros (EUR).
- Check Exchange Rates & FX Fees: Pay close attention to the INR-USD and USD-EUR exchange rates, as well as any foreign exchange (FX) fees charged by your Indian bank and the international brokerage. These can significantly impact your effective investment amount.
7. Research and Select European Stocks or ETFs: Before investing, conduct thorough research.
- Individual Stocks: Look for well-known European companies in sectors like luxury goods (LVMH, Hermes), automotive (Volkswagen, BMW), pharmaceuticals (Novo Nordisk, Sanofi), technology (ASML), or industrials (Siemens).
- European ETFs: If you prefer a diversified approach without picking individual stocks, consider Exchange Traded Funds (ETFs) that track major European indices.
- Popular European Indices:
- EURO STOXX 50: Tracks 50 large-cap blue-chip companies in the Eurozone.
- STOXX Europe 600: Tracks 600 large, mid, and small-cap companies across 17 European countries (including non-Eurozone members like Switzerland, UK).
- DAX (Germany): Tracks the 40 largest companies listed on the Frankfurt Stock Exchange.
- CAC 40 (France): Tracks the 40 largest companies listed on Euronext Paris.
- Benefits of ETFs: They offer instant diversification and generally have lower expense ratios than actively managed funds.
- Popular European Indices:
8. Place Your Trade: Once your account is funded and you’ve identified your investments:
- Brokerage Platform: Use your international brokerage platform to find the European stocks or ETFs you wish to buy.
- Order Types: You can place market orders (to buy immediately at the prevailing price) or limit orders (to buy at a specific price you set).
9. Be Aware of Tax Implications: Investing in foreign stocks has tax consequences in India and potentially in Europe.
- Indian Taxation: As an Indian resident, your global income is taxable in India.
- Capital Gains: Profits from selling European stocks are taxable in India.
- Short-Term Capital Gains (STCG): For shares held less than 24 months, gains are taxed at your applicable income tax slab rate.
- Long-Term Capital Gains (LTCG): For shares held for 24 months or more (effective April 1, 2025, for specified assets), gains are taxed at 12.5% without indexation.
- Dividends: Dividends received from European stocks are taxed under “Income from Other Sources” at your income tax slab rate.
- Capital Gains: Profits from selling European stocks are taxable in India.
- Double Taxation Avoidance Agreement (DTAA): India has DTAAs with many European countries. These agreements help prevent you from being taxed twice on the same income. You can usually claim a credit for any tax paid in Europe (e.g., withholding tax on dividends) against your Indian tax liability by filing Form 67.
- Consult a Tax Advisor: Given the complexities of international taxation, it is highly recommended to consult an Indian tax professional specializing in international investments.
10. Understand Other Risks:
- Currency Risk: Fluctuations in the Euro-Indian Rupee (EUR-INR) exchange rate will directly affect your returns when you convert your investment back to INR. If the Euro weakens, your INR returns will be lower.
- Liquidity: While major European stocks are highly liquid, some smaller companies might have lower trading volumes.
- Market Hours: Be mindful of the time difference for trading hours.
By carefully navigating these steps, Indian investors can access the diverse opportunities available in European stock markets.