We compare approximately 3 years of GPS height residuals (with respect to the International Terrestrial Reference Frame) with predictions of vertical surface displacements derived from the Gravity Recovery and Climate Experiment (GRACE) gravity fields for stations in Europe. An annual signal fit to the residual monthly heights, corrected for atmospheric pressure and barotropic ocean loading effects, should primarily represent surface displacements due to long-wavelength variations in water storage. A comparison of the annual height signal from GPS and GRACE over Europe indicates that at most sites, the annual signals do not agree in amplitude or phase. We find that unlike the annual signal predicted from GRACE, the annual signal in the GPS heights is not coherent over the region, displaying significant variability from site to site. Confidence in the GRACE data and the unlikely possibility of large-amplitude small-scale features in the load field not captured by the GRACE data leads us to conclude that some of the discrepancy between the GPS and GRACE observations is due to technique errors in the GPS data processing. This is evidenced by the fact that the disagreement between GPS and GRACE is largest at coastal sites, where mismodeling of the semidiurnal ocean tidal loading signal can result in spurious annual signals.