Expatriates often make mistakes with their finances as they move abroad - follow our financial expert's advice.
Expatriates have a lot to think about financially both before and after they move. According to Aidan Bailey of The Fry Group, there are three top mistakes expats commonly make.
1. Not being open with the tax authority – In Britain you need to inform the HMRC of your non- UK status. Fill in a form P85 before you leave, else you risk being taxed in the UK and your new country. It’s much easier to tie up loose ends before you leave
"Our Asian clients are still buoyant - you wouldn't necessarily know there had been a financial crisis."
Expat Wealth talked to Aidan Bailey of the Fry Group about their recent acquisition of Fulcra. He explained how they have established themselves as a leading financial consulting firm, about their current clients and their plans for the future.
Aidan, why the acquisition of Fulcra?
The Benelux region is a very important market to us. We focus mainly on Europe and Asia – in Europe we are split between the working and retirement markets. However, in the Benelux region we were in and out. We had a satellite office there a few years ago but, to put it nicely, we couldn’t compete with Fulcra. They were very established and it is hard to just turn up in a market and compete – longevity inspires trust in the market. We wanted a fixed presence there so we talked with Fulcra, our business models are very similar – it was a friendly takeover.
Make sure you're aware of changes to QROPS legislation
QROPS (Qualifying Recognised Overseas Pension Schemes) are set to undergo the most radical reforms since they were introduced in 2006. The changes, which come into effect on April 6th, will mean some existing schemes will not qualify for benefits.
Tax on pensions is usually only levied in the country where the pension holder resides. Under the new legislation the schemes that continue will also have to pay the rate applicable in the country where the pension is held.
Many expats have seen their finances improve despite the continuing economic downturn.
According to the annual NatWest International Personal Banking Quality of Life Index, expats who relocated to the UAE have seen their finances improve “dramatically” since moving.
The same response was also given by expats in Singapore, Hong Kong and China. The survey also showed that 72% of expats have not seen a decline in their quality of life over the past five years. This is despite the ongoing economic problems around the globe.
Investors continue to buy into the European property market
Real estate advisors CBRE have relased data showing investment capital continues to flow into the European market. Countries with strong economies and those outside the Eurozone are benefiting most.
European property investment grew in the final quarter of 2011, reaching €9.4 billion. The market continued to attract regional and international investors despite an unstable economic situation in the Eurozone region.
Expats must declare any property abroad to the tax office.
The UK tax office has set up an investigative task-force to track down expats who haven’t declared overseas property. The team will “mine” publicly available online information to discover people who own land or houses abroad.
The UK tax authority (HMRC) has put together a team of 200 investigators. Their first task will be in look into owners of overseas property. They will focus on those who have failed to declare any rental income or capital gains.
Are you familiar with all the services included in your credit card?
The advantages of getting a credit card go beyond paying with a piece of plastic instead of cash. As an expat, you should also check the additional services that go along with many cards.
Imagine you are skiing in a foreign country. While descending the most vertiginous mountain something goes wrong. Even before you realize it, you are rolling down the hill. Minutes later you are being evacuated by helicopter.
Expats need to check their tax situation to avoid double taxation.
As Albert Einstein said, filing tax returns is “too difficult for a mathematician. It takes a philosopher.” When you move countries, you should check whether double taxation could be a problem for you. If there are overlapping tax years, you might be in for a nasty surprise.
What is double taxation?
ATMs can lead to a financial nightmare if they've been tampered with.
All too often expats prove easy targets for financial fraud. They stand out in the crowd and are often much wealthier than locals. A perfect example is a recent spate of fraud cases in Thailand, where numerous wealthy expats have lost thousands of dollars to financial criminals.
The Phuket Gazette reported the expats were targeted by a mix of con men and hacked ATMs able to steal account information–a worrying trend for any expat paradise.
The website China Briefing has provided expats with a useful income tax primer, courtesy of financial consultants Dezan Shira & Associates.
China continues forging ahead with tax reforms, raising the hackles of expats all over the country. The new social insurance tax, for example, is devouring 48% of some expats’ salaries, without providing much in the way of added benefits.
Hence we read this income tax primer from China Briefing with great interest. It’s a handy (and fairly comprehensive) guide to China’s individual income tax (or IIT).