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To believe the surveys, half the world is either already
an expat, or planning to become one. Tens of millions
of people work abroad, or have retired there, or have
property in a foreign country.
Once upon
a time, perhaps in the days of the British Raj, expatriates
had a financially golden life style in recompense for
the perceived horrors of a foreign posting involving
endless travel, unpleasant insects and unpronounceable
but deadly diseases. Once you had shaken the dust of
London or Paris or Philadelphia from your feet, you
could forget all about tax inspectors and set about
hiring an extensive staff of punkah-wallahs and major-domos
to run your immense colonial villa while you drank gin
and tonic on the verandah (against malaria, of course).
After your
30 years in the sunshine, with wrinkled skin and full
pockets, you could retire to a small country house in
the Home Counties, New England or Normandy, to swap
travellers' tales with your neighbours.
The reality
nowadays is both more mundane and more challenging.
Over-crowded airports, intrusive tax inspectors, the
Internet and hyper-active investment advisers are just
some of the features that are combining to form a new
and very different landscape for expats.
But at
least today's expat is not short of advice from the
banks which offer international financial services.
HSBC Bank
International has unveiled an ambitious project to conduct
the largest ever survey of expats. The
project aims to give more than 2,000 expats across four
continents the opportunity to have their say on what
life is really like for people living and working away
from home. The survey will look at opportunities that
come with starting a new life in a foreign country away
from home, and the challenges and difficulties that
they may face at home and at work. The
survey will also reveal how new technology helps expats
start their new lives, and manage their professional
and social affairs. It will additionally find out how
expatriate children’s lives differ from the lives
of the friends they leave behind.
Paul
Say, Head of Marketing and Communications at HSBC Bank
International, explained that: “Living in foreign
countries means expats often don't have the normal outlets
to express their point of view about their unique lifestyle.
This project aims to gather these viewpoints and capture
them on an unprecedented scale. As
well as giving voice to the expat population, the study
will provide new insight on their needs which will help
HSBC Bank International to improve its services and
products for its customers.”
Perhaps
it's the Internet which has made the biggest difference.
According to a recent study by offshore bank Alliance
and Leicester International, 83% of expats regularly
shop online, 63% use the Internet daily to keep in touch
with friends and family, 47% check their bank balance
online at least once a week, and almost two thirds (63%)
using the internet daily to email loved ones.
Indeed
the worldwide web has revolutionised expats' everyday
lives with 70% now logging on daily and over one in
four switching on every hour. The vast majority of expats
now have broadband access with almost half of those
surveyed owning webcams and one in three opting for
cheaper international calls via VOIP (Voice Over Internet
Protocol) technology.
Simon
Hull, Managing Director of Alliance & Leicester
International comments: "Our research shows that
the internet has revolutionised the lives of expats,
enabling them to go about their daily lives at the click
of a button, any time of the day - helping them to stay
in touch, do their shopping and manage their finances.
Whether it's making purchases, or transferring money
from accounts it's even more important that expats take
the same precautions with their safety online as they
do offline.
Another
recent study from ALIL showed that almost a third of
expatriates move overseas to land the jobs they want,
and the expatriate community is becoming more diverse
than ever,. Almost half (40%) are relocating to destinations
such as the Middle East, Australia and the USA to further
their careers. More recently, expatriate communities
as far as Africa, Singapore, Thailand and Russia have
been growing.
Optimizing
Tax
Expatriates
- whether working or retired - may still regard their
status as an escape from over-crowded, cold, northern
cities, but no longer does the tax inspector forget
about them when they leave. Americans have it worse
than anyone else, because they continue to be taxed
as if they are resident, with a few minor concessions;
but everyone else has to think about their residential
situation and taxation of current income both while
they are overseas and afterwards. Then there is inheritance
tax to worry about; and the major problem of how to
amass retirement savings that will not be pounced on
by one tax authority or another.
Still,
it is not all bad news. There are many countries in
which expatriates receive complete or partial exemption
from local taxation (some of them even with nice climates);
and for most nationals it is possible to find sophisticated
investment structures which do a good job of preserving
wealth during and after expatriation.
If you
are expecting to become or remain an expatriate in 2008,
the time to consider your financial and tax situation
is now. Don't leave it until you have made the move!
For most
expats, offshore banking and investment offers opportunities
for greater tax efficiency, confidentiality, and the
ability to take advantage of an international investing
perspective, free of the petty restrictions that often
apply in high-tax countries. Continuing globalisation,
and the increased use of electronic banking mean that
for you as an expatriate, a multitude of opportunities
have opened up which would not have been available a
few years ago.
These freedoms
do of course depend on your residential status and the
tax rules in your home country. For many expats a period
of non-residence can be just what the bank manager ordered;
but for some nationalities, US citizens for instance,
mere expatriation isn't enough to escape home taxes.
In this
special feature, we will be looking at the different
types of offshore investment suitable for expatriates
and the business of choosing a place to live - for those
that have a choice! But first, a warning: many high-tax
countries have been tightening up on residence rules
and most definitely have taken a far closer interest
in offshore investment structures during the last few
years.
For
Brits, for instance, a decision last October by a tax
disputes panel has sent an ominous signal of the UK
authorities' intent to crack down on Britons who are
resident abroad for tax purposes. The ruling by the
Special Commissioners caught many tax experts by surprise,
by upholding an interpretation of tax residency rules
by HM Revenue & Customs which runs counter to the tax
department's own guidelines.
The
case in question involves businessman Robert Gaines-Cooper,
a British-born multi-millionaire businessman based in
the Seychelles, who has claimed not to be resident in
the UK for tax purposes. Under UK tax law, a person
is treated as non-resident for tax purposes provided
that they spend no more than 90 days in the country.
This allows wealthy business owners to live in low-tax
jurisdictions such as Monaco and Switzerland but jet
into the UK for one day per week to do business. But
the Special Commissioners ruled that days of arrival
and departure were to be counted towards the 90-day
allowance.
The
Chancellor followed up in his pre-Budget announcement
by threatening to enshrine the ruling in law, and draft
legislation unveiled in 2008 has made good on the threat.
From 6th April 2008 onwards days of arrival and departure
will be counted in applying the 90-day test. The only
exception will be in relation to transit passengers
who remain in the part of an
airport inaccessible to members of the public.
The
Treasury is also tightening up on many aspects of the
'non-dom' status which has been enjoyed for many years
by residents of the UK who are not domiciled there,
and is attempting to drag non-doms' offshore assets
into the UK taxation net if they spend more than six
years in residence. Although there has been a storm
of complaint about the new rules, there is no sign that
the Treasury is going to back down. Many 'non-doms'
are said to be considering packing up and leaving.
US
expats also took a blow last year because of the Tax
Increase Prevention and Reconciliation Act (TIPRA),
signed by President Bush in May 2006. Although this
Act increased the amount that can be earned by non-residents
free from US taxes to $82,400 from the previous level
of $80,000, income earned by expats above this threshold
is now typically subject to higher tax rates. Furthermore,
high housing costs, much of which previously could be
excluded from the computation of US tax, are now treated
as a taxable benefit and taxed often at 30% to 35%,
making many individuals worse off, or leaving the employer
to pick up the extra bill. The legislation is retroactive
to January 1, 2006.
According
to a survey conducted by the American Chamber of Commerce
in Singapore, a substantial number of US expats living
in Singapore are considering returning home as a result
of these changes. The survey polled 585 members, and
received 144 responses. It found that almost 40% were
thinking about returning home to avoid being hit by
increased tax. Half of the sample also believed that
the tax changes would prompt employers to hire less
US workers abroad.
“These
tax changes are disastrous for Americans abroad and
for American business. No other developed country imposes
such onerous taxation on the earnings of its workers
abroad and our members are seriously concerned about
the financial impact on them and whether it is worth
remaining overseas selling American goods and services,"
stated AmCham Executive Director, Nicholas de Boursac.
AmCham
says that the financial impact will be felt most by
those American expatriates who are not tax-equalized
and whose employers do not absorb the additional tax
impost. 66% of those surveyed are not tax-equalized,
and of this group, 30% expect a tax increase of between
US$5,000-15,000, while a third expect increases of more
than US$15,000.
AmCham
warned that even those US expats who are not directly
financially impacted by the changes will still be affected
because companies will hire less expensive employees.
“Basically,
employers will hire Australians, Canadians or Europeans
who do not cost as much as Americans,” noted de Boursac.
"As
well as being inequitable to Americans abroad, these
tax changes are just bad policy. By making Americans
more expensive to hire, it will mean fewer Americans
working abroad. This will be bad for US exports and
US businesses, ultimately reducing US global competitiveness,"
he warned.
Offshore Banking
In most
offshore jurisdictions, interest earned on bank deposits
is free of tax for non-residents. Also of great importance
from an expat point of view is the convenience factor
associated with offshore, for example the ability to
receive and deposit funds remitted from your home country,
or income earned from working overseas (for example
fees, salary and expenses), in sterling, US dollars,
or any one of a number of hard currencies.
Many offshore
banks offer a range of services and options, including:
- Instant
access accounts with credit card facilities;
- Fixed
term deposit accounts, with the interest rates tiered
according to the length of the term, and the size
of the deposit, although usually levelling off at
around the $100,000 mark;
- Conventional
variable-interest deposit accounts, which may offer
higher rates than fixed-term accounts.
Setting
up an offshore bank account or investment portfolio
should prove to be no problem once you have decided
on the location and type of account. There is generally
a minimum amount for offshore deposit accounts, and
due to recent legislation designed to prevent money
laundering, identification is usually required, despite
the claims of some shady service providers to offer
'fully anonymous' offshore banking. Once the account
has been established, and if you are depositing a significant
sum, a relationship manager will usually be assigned
to advise and assist you in the management of your assets.
You will
almost certainly need to open a bank account in your
country of residence for day to day transactions. If
you are spending most of your time there, you will probably
have to pay taxes on income paid locally, so it will
often be best to have as much as possible of your income
paid directly into your offshore account in hard currency.
This incidentally protects you against any large fluctuations
in the value of the local currency.
However,
a recent fly to have taken up residence in the offshore
banking ointment is the EU's Savings Tax Directive.
The
European Union Savings Tax Directive (STD), which went
into effect on 1st July, 2005, in fact forms merely
one part of a major tax reform package launched by the
European Commission in 1997. As originally drafted,
the STD aimed at a uniform 'information exchange' regime
to apply across the Union, with all countries agreeing
to report interest on savings paid to the citizens of
other Member States to those States' tax authorities.
Because
of resistance from EU Member States with strong traditions
of banking secrecy, the Commission had to allow Austria,
Luxembourg and Belgium to apply a withholding tax (at
15%) until 2009. Many of the UK's offshore financial
centres have been forced to join the STD, along with
the Netherlands Antilles, Aruba and some European centres
(Andorra, Monaco, Liechtenstein and San Marino). Most
of these places took the withholding tax route, as did
Switzerland, which was the hardest nut for the EU to
crack.
The
STD applies to many types of return on savings instruments,
all loosely described as interest, when received by
individuals, but does not affect interest paid to companies.
Under the information exchange system, the identity
of recipients will be known to their home tax authorities;
when tax is withheld, the identity of the recipient
will not be reported, thus preserving confidentiality.
Returns
from the STD regime, which has now been in place for
nearly three years, are way below what had been hoped
for in Brussels, reflecting no doubt evasive action
taken by savers to remove their deposits from banks
in countries which are applying the regime. Other low-tax
countries outside the scope of the STD have seen quite
large inflows of cash, for the same reason. It is essential
to consider the effects of the Directive if you have
or are planning to have assets in the countries affected.
This
July, the rate of tax withheld from returns on savings
under the EU's Savings Tax Directive will increase from
15% to 20%, and in three years' time will come the final
increase to a swingeing 35%.
Although
the Commission's attempts to broaden the scope of the
tax to include jurisdictions like Hong Kong have been
firmly rejected so far, it certainly hasn't given up.
And a Commission Review Group which has been working
away for two years is expected to recommend in 2008
a major extension of the Directive in the EU itself
to close loopholes which have permitted many investors
to escape the tax until now, for example by moving assets
from bank accounts to vehicles such as companies and
trusts - which weren't included in the legislation -
or by shifting money to accounts based in territories
out of the reach of the directive's information sharing
provisions.
In
January, 2008, senior EU tax officials, including European
Tax Commissioner Laszlo Kovacs, were reported to be
preparing to make a fresh approach to Asian financial
centres, in a bid to have them included within the ambit
of the Directive.
Kovacs is scheduled to visit Hong Kong, while other
senior officials will launch a new charm offensive in
the territory of Macau and the city-state of Singapore.
In
the case of Hong Kong, signing up to the savings tax
directive could mean altering the Basic Law which safeguards
the future of its financial centre under Chinese rule.
Singapore on the other hand, is known to be staunchly
opposed to the idea of sharing bank account information
with the EU, and has rejected European overtures to
include information exchange provisions within a broader
economic agreement.
According
to a survey of expatriate hot spots by Mercer, the global
consulting firm, the United Arab Emirates (UAE), Russia
and Hong Kong are amongst the world's most benign personal
tax environments while Belgium, Denmark and Hungary
are the least attractive, The data also shows that,
in general, married employees are better off than single
employees, while married employees with two children
fare the best.
Mercer's
2007 Worldwide Individual Tax Comparator Report analysed
the tax and benefits systems across 32 countries, focusing
on personal tax structures, average salaries and marital
status. This data is used by multinational companies
to structure pay packages for their expatriate and local
market employees.
For
single managers, the UAE is the most attractive tax
environment according to percentage of net income available.
The UAE ranks highly, as it does not assess any income
tax, and the country's social security contributions
amount to only 5% of an employee’s gross salary.
Russia, ranked number 2, applies a flat tax of 13% across
all income levels, while Hong Kong was placed 3rd, with
taxes and social security contributions at 14.2% of
gross base salary.
Excluding
Russia, in general, European countries have less attractive
tax environments and dominate the bottom of the rankings.
The UK ranks joint 14th, followed by Ireland (18), Spain
(19), and Switzerland (21). France and Germany are ranked
22 and 29 respectively.
At
the bottom of the rankings, single managers in Hungary
(30), Denmark (31) and Belgium (32) pay, respectively,
48.5%, 48.6% and 50.5% of their gross income in taxes
and social security contributions.
Brian
Waite, a senior consultant specialising in international
issues, commented: "Local taxation is one of several
factors that multinationals take account of when deploying
staff across the globe. It has an obvious impact on
take-home pay, and in some countries with low or zero
tax rates it is an important incentive for employees
to work abroad. In other high-tax destinations, multinationals
need to create compensation packages that at least match
their expatriates' purchasing power in the home country."
"Other
important considerations for expatriate allowances are
housing, private schooling and local cost of living
adjustments, and there are additional complications
around contributions to the home country pension plan.
These factors can all contribute to the high cost of
a global expatriate workforce."
Markus
Wiesner, Mercer's head of operations in Dubai, added:
"We often find that the UAE's zero taxation is
a strong draw for expatriates on short-term assignments.
For three to five years, young professionals can fast-track
their savings to afford a mortgage when they return
home, while senior executives can maximise their savings
potential ahead of retirement. It's in these particular
groups that we get a really good mix of expatriate talent
in Dubai."
Asian
markets dominate the top end of the rankings with Hong
Kong, Taiwan, Singapore, South Korea and China (Beijing)
ranked 3, 4, 5, 6 and 7. The lowest ranked Asian market
is India at 14 (sharing this position with the UK, Australia,
and the United States). In the Americas, Mexico (8),
Brazil (9) and Argentina (10) outrank the United States
(14) and Canada (20).
According
to Niklaus Kobel, researcher at Mercer's Geneva office:
"Marital status is still a major factor in determining
local tax rates. The data highlights the fluctuation
in tax rates applied according to an employee's income
level and marital status. It is important to note that
high tax rates do not necessarily mean less affluence."
Not
all taxation systems vary according to marital status,
however. Married employees in Brazil, India and Turkey
have similar tax rates to single employees.
Offshore Investment
Offshore
banking is, of course, not the only option available
to you; depending on your situation, financial status,
and degree of openness to risk, there are a variety
of offshore investment options open to you as well.
Funds are the most straightforward and readily available
option. These range in risk from low yielding bond funds
to highly-geared hedge funds, so there is something
for everyone.
Fund investment
is especially suitable for the busy expat, because you
can choose to invest in a certain class of assets without
having to examine the characteristics of individual
assets in detail. The tax efficiency of offshore funds
often means that they have higher yields than equivalent
onshore funds, so it may pay you to transfer existing
onshore assets into offshore funds, although you have
to be careful about the costs of transfer, and especially
capital gains tax. You also have to consider what may
happen when, and if, you go back.
As is the
case onshore, there are two different types of investment
fund available:
- Private
funds. Suitable for those expats with a longer term
investment horizon, and more capital (usually not
less than $1,000,000, although individual investments
may be as little as $50,000). These are usually closed-end
funds, involving up to 50 investors, and often generate
greater returns than public funds. Quite often they
would use a structure known as a Limited Partnership
which allows residents of higher-taxed countries (eg
the US) to repatriate profits to offset against losses
or expenses at home. This might be a suitable structure
depending on your long-term plans.
- Public
funds. These are usually open-ended, i.e. you can
sell out at any time, which gives investors more flexibility.
More and more public funds are based in offshore jurisdictions
even though their investment targets may be in high-tax
areas. If they have invested in capital assets (eg
capital growth funds or real estate) then gains will
be tax-free. As is the case onshore, there is a wide
range of portfolio management tools available from
offshore fund management groups.
Offshore
equity investment is another rapidly developing investment
sector, which may also be of interest to you as an expatriate.
Equity investment used to mean investing in securities
listed on your local stock exchange to the exclusion
of foreign stocks, but of recent years, all this has
changed. There is a growing number of stocks that are
listed offshore - dividends and capital gains will of
course be tax-free and they can be bought through local
brokerages. As long as you have a satisfactory non-resident
tax situation, you can also buy onshore equities without
risking capital gains tax, but you will find that dividends
have usually been subject to withholding tax, which
you may not be able to reclaim.
This is
an area in which the Internet has opened up new possibilities
for investors, as online brokerages and some investment
sites and exchanges allow you to manage your portfolio
quickly and easily wherever you are in the world. The
physical barriers to international investing of a few
years ago simply do not exist for today's expatriate
investors. Expatriate investment is therefore not limited
to funds and equities, but can also include other types
of onshore investment activity such as derivatives trading
(futures and options), and their cousins spread-betting
and contracts for differences. But it must be said that
risk doesn't diminish with distance: arguably, if you
are away from a particular market-place, with even the
best on-line information sources you are somehow missing
knowledge you might have had if you were present. These
more exotic types of investment are not for the faint-hearted!
Pensions Investment
Whilst
you are thinking about offshore investment, it may be
worth giving some thought to your pension. Although
pensions investment is usually tax-privileged in high-tax
countries, as an expat, you face additional problems,
namely that while non-resident, you will probably not
be able to continue taking advantage of the tax incentives
'at home', even if you want to retire there.
Pensions
investment is a tricky area for expatriates, and more
than ever you will need to consult with an independent
professional. However, you can consider your basic options
prior to doing so, and these will depend greatly on
the circumstances surrounding your expatriation.
If you
are employed by a company in your home country (and
are part of an in-house pension scheme), and you are
moving abroad to work for that same company, then in
some countries you may be able to continue contributing
to that plan; in the UK for instance you can continue
to contribute for a maximum of 10 years.
If you
are moving abroad to work for a company with no ties
to your home country, then you may be allowed to join
their local pension scheme. Only in a few cases will
you be able to transfer the pension rights back to your
country of residence when you return, unless you continue
to work for the same company; and usually the terms
of transfer are highly unattractive.
If you
have been contributing to a personal pension scheme,
however, the news is usually worse, as in certain countries,
for example the UK, you are only allowed to contribute
to your pension plan for as long as you are taxable
there.
The right
decision will obviously depend on your personal circumstances.
If however you are going abroad for an extended period,
and especially if there is a good chance that you will
retire to some other part of the world, there may be
an argument for transferring your home pension assets
offshore straightaway, even though that may (probably
will) entail a tax penalty if your contributions have
been tax-privileged. On the other hand, the tax penalty
of transfer taken together with the exit penalty from
your scheme may combine to make a transfer very costly.
If you are lucky, you may find that your pensions provider
has an offshore branch, and you may be able to induce
them to make the transfer on favourable terms in order
to keep your business.
Whatever
you decide to do about your existing pensions arrangements,
once you have established non-residence (and non-tax-paying)
in your home country, you will have many options open
to you to make retirement provision offshore, in order
to take advantage of the peace of mind of knowing that
your assets are secure however your circumstances change,
and the greater flexibility over retirement date, payments,
etc, which could be so important to you as an expat.
These options
can't be examined in this brief primer; however, there
are two broad categories of pensions provision to choose
between:
- Designated
pension or retirement schemes. There are many of these
available now, and they usually accept payment in
a wider range of currencies, and generally require
less maintenance on your part. However, they do require
a longer term commitment (not ideal if your personal
circumstances are uncertain), and the penalties for
early withdrawal can be punitive. Although they may
appear to offer less generous rates of return than
on-shore schemes, remember that this is because they
don't assume tax relief on contributions. Instead,
you will receive the benefits tax-free if you remain
offshore.
- The
DIY approach. You can opt for a more diverse portfolio
made up of different types of investment. This is
obviously less of a safe bet, but it does mean that
you can retain greater control over your assets, and
there are no penalties should you need to withdraw
for any reason.
Offshore
companies
If you
are going to work in a country which wants to tax your
world-wide income, or are going to return to your home
country to a world-wide taxation regime, then you may
want to consider establishing an offshore company.
This is
another complex area in which professional help is needed,
but the interpolation of a company can sometimes distance
you from your income sufficiently to avoid taxation.
In some countries there are plenty of rules to prevent
this; but not in all, by any means.
The following
may be of especial interest if you are providing a personal
service (for example in the finance or engineering industry),
or if you have a substantial investment portfolio.
- Holding
Company. This can be used to hold investment portfolios,
and is useful in providing enhanced privacy. It can
be particularly useful in some offshore jurisdictions
if you want to become locally resident, and need not
to receive income yourself, although you may have
a problem with ownership restrictions on residents.
(This leads people to set up strings of holding companies
in different jurisdictions). If the income of a holding
company is used to make further investments, it may
be that you won't be taxed on it even when you return
to a high-tax domicile.
- Personal
Service Company. If you are engaged in providing a
personal or professional service, you may be able
to achieve considerable tax savings, as you can contract
to supply the service regardless of residence, and
the fees earned can accumulate offshore while you
work for a low salary in the country where you are
taxed. It only works in some countries, and you may
have to do something more complicated than just owning
the company yourself, if it is not to be 'looked through'
by the taxman.
There are,
of course, many other types of offshore company that
can be formed to deal with the needs of large corporations,
or expats with very specific needs, i.e. globetrotting
entertainers or sportsmen.
Offshore Trusts
An offshore
trust can be set up by an expat to serve the same basic
purposes as an offshore company, namely confidentiality,
tax minimisation, asset protection, and estate planning.
The principal
difference between the two structures is that with an
offshore company, ownership is maintained, whereas with
an offshore trust, ownership is transferred. This has
the effect of creating more distance between you and
your wealth, so that it's harder for creditors, the
taxman or your ex-spouse to get at it!
Trusts
used to be primarily aimed at tax avoidance, but in
recent years the tax authorities in many high-tax countries
have passed 'anti-avoidance' legislation that lets them
attack trust assets while you are alive, although they
are still effective against inheritance taxes. Trust
assets won't be taken into account during the probate
process, so that the death of the settlor does not affect
the administration of the trust, which still remains
under the custodianship of the trustees. This also allows
a settlor to maintain confidentiality over the size
of the estate, and avoid the delays and possible publicity
which would come as the result of a lengthy probate
procedure, not to mention the saving on inheritance
tax.
Trust assets
will remain in the trust for as long as the original
Trust Deed prescribed (in perpetuity, if necessary,
or for lesser periods), or until the terms of the trust
permit or require the Trustees to distribute them.
Another
area in which the use of trusts is growing is asset
protection, so if you have a fairly substantial liquid
net worth that you would like to protect, before, during,
and after your expatriation, an offshore trust may be
the way to go.
- A basic
trust structure consists of three entities; the settlor,
who sets up the trust, the trustee, who acts as custodian,
and the beneficiary/ies, who can receive income from
it.
Trusts
originated in England, and most of the ex-British offshore
islands have trust legislation. Civil law countries
on the other hand tend not to have trust laws, although
some of them have copied the concept of a trust in order
to compete effectively.
Choosing Your Jurisdiction
There are
several factors to consider when choosing an offshore
jurisdiction from which to bank, invest, or trade as
an expatriate. The following are areas that you will
need to look at in order to make a considered and profitable
decision:
- Political
and economic stablity. This is a basic, but important
concern.
- Legislature.
The situation with regard to banking secrecy, for
example, is undergoing changes at present, and it
is worth keeping abreast of any issues which may impact
on your investment, before, during, and after expatriation.
- Professional
infrastructure. This will need to be up to a good
standard, in order for you to receive the support
and services that you require, so you will need to
check the banking, professional and advisory services
available, whether the jurisdiction is well equipped
to deal with the particular offshore structure that
you wish to set up, and the general standard of the
business infrastructure in the jurisdiction. For a
comprehensive guide to the relative strengths and
weaknesses of jurisdictions, and contact details for
service providers in each, please click
here to visit the Lowtax jurisdictions guide.
- Communications
network. This is an obvious concern, but needs addressing.
As an expat, you will presumably not be resident in
the offshore jurisdiction itself, and may be moving
around on a regular basis. You therefore need to check
that effective communication between yourself and
your advisor, bank, or custodian will always be possible
(and preferably that you all speak the same language
with at least a reasonable degree of proficiency!)
- Geographical
location. This needs looking at carefully, as it is
of especial concern to expatriates. Assuming that
your expatriation is of fixed duration, you do not
want to have to move your money from jurisdiction
to jurisdiction as you move around, or repatriate.
The idea of investing it offshore is that it is safe,
and easily accessible from anywhere in the world,
in keeping with your global lifestyle. It is therefore
important that you consider the time zone in which
your offshore structure is based. For example, an
expatriate based in Australia would find a relationship
with a Hong Kong bank very easy to maintain, but an
offshore structure established in Jersey or Ireland
virtually inaccessible, during normal business hours
at least. Online banking makes this a little less
of a concern, but it still needs to be looked at.
As you
can see, even from this basic guide, the offshore options
for you as an expatriate are many and varied, and there
is something for any situation and pocket. However,
it is always advisable to seek one-to-one financial
advice before making a decision about the type of investment
that is right for you.
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