In 2010, more international movers than ever will be upping sticks from the UK and heading for foreign soil, yet there’ll also be a load of one-way tickets booked by expats who are returning to British shores.
Moving to and from countries as a place of residence can conjure up a massive can of worms, so these are the key questions you need to be aware of….
TAX RESIDENCY STATUS:
– At what date will I become [new country] tax resident, and at what date will I break [old country] tax residency? (You can sometimes claim tax refunds on either side for working only part of a year)
– Does [new country] give any advantageous tax treatment given my expat status, or am I taxed in the same way as a [new country] citizen? What will my tax classification be? (Jargon here includes tax resident, temporary resident, domiciled, etc. Eg. Temp visa holders in Australia aren’t taxed on their world assets and the UK has a similar lenience for in-pats)
– If I stay longer / shorter than planned how will this impact my tax? Will I be dual tax resident (eg. Aussies in the UK less than 2 years)? What must I watch out for when making plans.
– When I eventually leave [new country], will I break tax residency on the date I fly out or will it still hang over me for a period afterwards?
HOW MY MOVE WILL IMPACT MY FINANCIAL HEALTH:
Assets left in [old country]
– When I arrive in [New country], will they tax my world investments or just money I bring into [new country] (ie. will they tax my investment income on cash, rent, dividends etc left in (old country) or offshore)
– Will [new country] charge any capital gains tax on property I have in [old country] whilst I’m living there?
– Will [new country] tax the annual growth of my personal pension left in [old country]? (eg. A nasty tax suffered by British in Australia)
Tax and deductions:
– What are the income tax rates in (new country) and where can I find calculators?
– What relocation expenses can I deduct?
– What other tax deductions can I claim?
About the (new country) retirement system:
– What pension/retirement schemes could I contributie to in [new country] to boost my retirement?
– When I leave, can I transfer these back to my [old country] retirement fund?
– What tax applies to the contributions if I ‘salary sacrifice’ into the scheme?
– What tax applies on the growth each year?
– When can I get the money out (eg. what age), and what tax applies to benefits paid out if I left them in [new country]? Note: retirement systems often provide amazing tax breaks.
About the [new country] investment environment:
– Are there any other tax sheltered savings schemes (that might be similar to ISAs in the UK).
– Is interest on my home mortgage tax deductible? (in some places it is!)
– Is there any capital gains on selling your own home?