One of the biggest financial challenges for expats is keeping up with cross-border tax changes.
Expats soon find that they fall into an information black hole when they switch homes between one country and another.
While many have no problem in finding out tax information in the country they once called home, once they have left the problems start stacking up.
Many factors combine to make finding out relevant, up to date and accurate tax issues difficult.
Factors such as time zones, different dates for tax years and a lack of contact with a former homeland erodes current knowledge.
Tax law is also changing at a fast rate.
International advice is at a premium
For British expats, tax tribunals, the annual budget, new financial regulations and changing laws mean it’s easy to lose touch with tax issues such as inheritance tax, pensions and capital gains tax.
Pensions is one example.
UK pension law has changed at a frantic pace over the past three or four years with changes in state retirement age, annual allowances, lifetime allowances, flexible access drawdown and QROPS rules for offshore pensions.
Tax experts in the UK are not qualified or experienced to deal with how these changes interact with tax rules in expat destinations such as the USA, Australia or Spain.
Likewise, experts in these countries have enough problems keeping up with local changes, let alone what’s happening in the UK.
Advice black hole
This makes choosing an international financial adviser difficult and expensive. Many expats need experts at both ends – the country where they live and the UK.
Sometimes they will also have to advice from a third expert on tax issues if their pensions and other investments are in one or more other financial centre.
Nigel Green, chief executive of one of the world’s largest financial firms deVere Group said “The only way advisers can remain up to speed on the various changes to taxation across jurisdictions is to have an established technical services department, whose sole job it is to track and understand the changes, and then help advisers implement them when working with clients.”
Green explained that double taxation agreements are meant to equalise tax between different countries, but each government has a different way of interpreting the treaties that can lead to difficulties for expats.
