Whether you’re retiring overseas, moving abroad to take up a new job offer or relocating for a better quality of life for your children, there are a few affordability factors that you may have overlooked which could jeopardize your entire relocation.
Whilst everyone knows that moving can be an expensive commitment to make, and that moving countries comes with even higher potential costs, the money worries don’t necessarily stop there.
The good news is that knowledge really is power. And when it comes to ensuring you can afford to relocate and integrate, having the knowledge about the little-known affordability factors that could impact on you will help you to avoid any financial pitfalls.
- Understand your requirement to pay tax at home and abroad, and know how much you will be taxed on your income and assets.
Your tax status and tax obligations will depend on which nation you herald from and where you’re relocating to. What’s more, your obligation to declare income and assets and pay any taxation due is down to you.
Tax avoidance based on your ignorance of your tax burden is not an excuse that will buy you a fair hearing in any nation!
If you’re a US citizen your government wants to keep track of your every move, and as a result retains at least a reporting requirement on you no matter where you live in the world.
Other nations such as the UK for example do allow their citizens to move abroad and therefore become non-resident for tax purposes. However, that doesn’t remove your potential obligation to report and pay tax in your new nation.
Find out in advance of your move what the tax rates are in your new country. Find out about your reporting requirements. Find out if you can actually protect your wealth and assets by keeping them outside of your new nation.
Believe it or not, some countries only tax you on any money you earn or bring in to that country.
Even more interestingly perhaps, in some countries you can earn your salary income tax-free!
It really is worth looking into the tax implications of your move abroad and ensuring you’re not in for any nasty surprises.
Many nations have double taxation agreements in place to avoid the situation where you end up paying tax twice. But remember, never make a loose assumption about anything to do with your financial security. Check and double-check the facts about tax.
- Work out if you will be liable to pay for services you may currently enjoy for free.
If you’re moving abroad with children and you want to ensure there is consistency in their education despite your relocation, you may choose to educate them in an international school which follows the curriculum of your own home nation. This could end up costing you a pretty penny.
Those who come from countries such as the US, the UK, Germany or Australia where the entire school system is totally free can find that having to pay for private school fees abroad is a financial step too far.
Others who come from countries where healthcare or higher education is free can be massively stung by health insurance, private medical costs or university fees for student children.
Once again it comes down to you doing your own homework about what it is really like to live in your new nation.
If you’re being relocated by an employer or you’ve been head-hunted to a new company abroad, you may get financial help towards school fees, medical insurance or even housing. However, you may only get this as part of your remuneration package if you know to ask for it.
A good way of finding out what hidden costs may impact upon you is by reaching out via forums and social media platforms, and connecting with other expats who have moved to your new nation from your old home nation already…
They can give you the insight about what it’s really like to move – and they can flag up any specific financial concerns that you may need to prepare for.
- You may have additional travel costs to factor in. This is a positive financial burden – if there is such a thing! As a resident in a new nation, chances are you’re going to want to explore your new country and perhaps you will be living in a great place for wider travel in the region?
This can mean that your weekends and holidays are spent travelling and exploring, rather than sitting in your own backyard. Naturally this additional travel, that is often a perk of the expatriate lifestyle, comes with an often unplanned for cost.
Furthermore, you may want or need to travel ‘back home’ to visit the friends and family you leave behind when you move abroad.
So it will quite literally pay you to have a travel fund and an emergency travel contingency plan in place – to enable you to enjoy exploring your new country, and to give you the peace of mind that you can get home should an emergency ever arise.
Living the expatriate life abroad is a dream come true for many people, but suffering a financial shock at any stage of your relocation and integration process can undermine the entire experience.
Be as well prepared as you can be, and move abroad having done your detailed homework about the realities of expat life in your new nation.
Rhiannon Davies writes for Shelter Offshore, the leading online expatriate resource with living abroad, offshore investment and property abroad information channels.