Working and living abroad can be exciting and at the same time challenging. One of the many concerns involves finances. Of course, money management is a priority especially since your circumstances can change at any moment. This article aims to answer many frequently asked questions about finances. Most importantly, we’ll take a closer look at ex-pat pension, taxes, and investments.
How will the Coronavirus pandemic affect your tax obligations?
Paying taxes when you’re a foreigner living abroad is a concern for many because of the pandemic. Some non-residents were forced to stay due to extended lockdowns. In the UK for example, new lockdown regulations were put in place. The good thing is, the government may consider unusual circumstances as a reason to extend the non-resident status of an individual. If you are, however, a UK citizen living in a different country, you may want to check your tax obligations as well.
What are the tax obligations of an ex-pat?
Every ex-pat pays taxes according to these key factors: place of birth, source of income, and tax residency. The home country may impose varying tax rules as well. For example, a US citizen living in the UK will still be subject to US tax rules, even if he changes his tax residency to the UK. Tax residency almost always changes when an ex-pat works or lives abroad for a long time. And when tax residency changes, you’ll have to comply with the rules in your residence country.
What are the implications of transferring your pension?
Many people who work abroad for an extended period tend to consider transferring their pension benefits. According to www.pensionsforexpats.co.uk, transferring is a suitable option for those who don’t plan on moving back to their home country. Once again, let’s use the UK as an example. If you have a private pension in the UK, you can transfer your pension to your country of residence. But, note that even if your fund is already managed offshore, you’re still obligated to pay taxes in the UK. You’ll need to carefully consider how much this will cost, along with other fees that may apply due to the transfer.
Are offshore investment bonds a good option?
An offshore investment bond is best for those with knowledge and experience. Investing in this type of product requires understanding many complexities. But, if you’re a new investor and would like to grow your money while living as an ex-pat, you can seek the help of a financial advisor.
Taking extra precaution in hiring a wealth manager is necessary. There have been instances where dubious advisors sell bonds to make hefty commissions. As such, many ex-pats have been misinformed about fees and other underlying terms and conditions of the investment. But, if you find a trusted financial advisor from a reputable firm, make sure that every detail is explained before you sign an agreement.
Remember that the type of investment you choose will depend on personal circumstances and risk tolerance. Offshore bonds may be good for sophisticated investors but aren’t recommended if you prefer a more conservative approach to manage your funds.