Lee Byers – Expatriate Tax Saving Advantages

Learn About the Expatriate Tax Advantage

When you move abroad to live or work permanently overseas, your tax situation changes.  Depending on the nation you originate from, you will need to be non-resident in your old home nation for a set number of days before you can officially claim this non-residency status for tax purposes, but as soon as you can, your entire financial situation can change for the better!

One of the main advantages of becoming non-resident for tax purposes in your old home nation is that you can embrace the wonderful world of offshore and take your full expatriate advantage as a result.  At this point there is a very real potential tax benefit to you from saving and investing, banking and doing business offshore.

In this article Lee Byers is going to explore expatriate tax saving advantages so that you can fully understand what courses of action are available to you to help you save tax once you move abroad.

The very first thing that it is important to state here is that you have an obligation to understand your own personal tax status.  It is a status that can be impacted by many factors such as where you earn money, whether you remit money earned abroad onshore to your new nation of residence, how many days you spend in your new country and how often you visit your old home nation.  An accountant or tax adviser can help you, or a good financial adviser may be able to advise you.  Ignorance is not an excuse – therefore, if you want to claim to your taxman that you were unaware that you had a tax obligation and that’s why you missed a payment, do not expect to be dealt with leniently!

Having said all of that, when you move abroad, your tax situation may change.  As a result you may be able to benefit by paying less tax particularly on any income you earn from savings and investments.  For example, on many offshore savings accounts you will find that there is no tax deducted on the interest earned.  I.e., interest on offshore accounts is paid without the deduction of tax.  Now even if you subsequently have to pay tax, you may be able to defer the payment of it to a later date when perhaps you cash in a given savings policy.  This can mean that even if you are eligible for tax payment on an offshore account, you can maybe defer payment until it is more convenient to you.  Perhaps you can defer until you’re a lower rate taxpayer, or until you have relocated again to a nation in which there is a lower rate of tax.  These are all possibilities to explore with your financial adviser.

Having no tax deducted from your savings also means of course that there is more money in the pot each month for interest to be earned on – so having no tax deducted can make your money grow potentially faster.

Offshore income may not be subject to tax too – depending on where you live, income on an offshore bank account or investments may not be subject to tax in your country of residence, if that money is not remitted into your country of residence.  As stated however, you and you alone have an obligation to understand your own tax status to see whether this applies to you.

A further expatriate tax saving advantage can be no inheritance tax, capital gains tax or death duties being payable when you make use of jurisdictions such as the Isle of Man and Jersey.  The Channel Islands have no inheritance, capital gains taxes or death duties – although probate may be required in certain circumstances.  So this may be another benefit you want to explore when you become an expat and can go offshore. 

It’s worth mentioning that your nation of domicile has a heavier bearing on IHT and death duty obligations however, but a good financial adviser will help you to understand any potential liabilities your estate might have, and work with you to perhaps offset or reduce them through the careful use of offshore and onshore structures and solutions.

Remember, your tax situation and any potential benefits from placing your money offshore will depend on your own personal set of circumstances – so you have to seek qualified and professional financial advice – but hopefully you have seen that there are very real tax advantages to going offshore, and these are enhanced by the variety and choice of savings and investment solutions available once you leave your old home nation behind.

About the Author

Justin Lee Managing Partner & Investment Analyst
Having more than 19 years experience in analyzing equities and investment instruments, Justin has spoken at numerous industry events in Hong Kong, as well as the US, Middle East and Australia. Mr Lee has often contributed to print media publications including Business Week and Fortune Magazine, and has appeared on television programs such as Bloomberg and The Nightly Business Report. Mr Justin Lee is responsible for identifying investment opportunities for Lee Byers.

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