Home » Expat Focus Financial Update 06 June 2016

Expat Focus Financial Update 06 June 2016

Demand for expat skills continues to grow

Despite the rise in technology to make global communications easier there is still a rising demand from employers for expats to fulfil overseas assignments.

Consultancy firm ECA International says that 10 years ago experts were predicting the demise of expats having to move overseas with the introduction of webinars and videoconferencing. In fact, the opposite has been the case.In a report, the firm says that studies over the last 20 years illustrate that the demand for expats has grown steadily. More than 50% of companies have also been increasing their overseas assignments.

The report highlights that despite several economic setbacks including global recession in 2008, these were temporary and did little to slow expat numbers.

Indeed, very few employers have reduced expat assignments compared to the rate they forecasted, and all have now returned to significant increases in employing expats.

However, there has been a significant change to the traditional socio-demographic profile of a typical overseas assignment for an expat, as well as the jobs they are tasked with.

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ECA says expats are mostly men aged between 35 and 50. Unlike the vast majority of expats hired 20 years ago, when many were from North America or Western Europe, expats are now increasingly more likely to originate from Asia.

In addition, rather than posting an expat overseas for an average of three years to carry out a local operation, employers are looking for specific project assignments which may last several months. This has led, in turn, to a growth in the number of single expats rather than those with families.

The report highlights that the diversity of women in the general workforce is not being reflected in the number of female expat assignments. They currently make up only around 12% of assignments, compared to 7% in 1994.

However, employers are more enthusiastic than ever before in sending their employees to work on overseas assignments and they use many of these short-term projects which last between one and six months as a way to develop careers and the skills of employees, particularly the younger ones.

Tax break for expats under review

A rule that enables expats moving to Holland to reduce their tax bill by 30% is being ruled as outdated after a report from the country’s National Audit Office.

Now the Dutch parliament has passed a vote to investigate the effectiveness and costs for having the 30% ruling in place, with the finance minister declaring there were no plans to abolish the benefit but it may be adjusted if necessary.

Not all expats living and working in Holland qualify for the tax break and it’s thought it costs around €700 million for the Dutch government to implement.

The idea for the 30% ruling was originally to attract highly skilled migrants after World War II and compensate them for the costs of moving and then settling into Holland.

However, growing numbers of expats are now using the 30% rule and around 52,000 claim the tax break.
The report from the audit office also highlights that no-one has ever investigated whether the ruling has actually attracted migrant workers by offering an incentive that is not available to Dutch workers.

US expats hate paying US taxes

US expats living and working overseas are widely opposed to the FATCA law – or the Foreign Account Tax Compliance Act – and 70% of them believe that while living abroad they should not have to file their US taxes.

The report from a specialist tax services firm also revealed that 45% of US expats wanted their government to repeal FATCA, which is a legal device for foreign banks and financial services to reveal the assets of their American clients.

In addition, 54% of respondents said they would support any initiative to repeal the act and 32% said they were affected by it and had to file Form 8938 as result.

However, 12% of US expats said they’d been made to change banks because their foreign financial institutions did not want to deal with American citizens as clients, so they would not have to comply with the US law and the expensive and burdensome administration it would take for them to meet FATCA’s demands.

Expats in Spain flee tax on assets

Thousands of expats have reportedly fled Spain after tax changes were introduced in a bid to crackdown on bribery and corruption and forced them to reveal their overseas assets.

Figures reveal that the number of European Union expats who are moving to Spain has fallen every year since 2012, when the new tax rules came in.

The law is aimed at local officials to prevent them from accepting bribes, but expats have been caught up in the legislation since they also must declare their assets overseas that are worth more than €50,000.

As a result, thousands of expats have failed to make the relevant declaration and have left Spain to avoid paying fines and penalties.

Indeed, Spain’s National Institute of Statistics has found that the expat population has dropped by 9%, or 128,372 people.

The largest expat communities in Spain are from Morocco and Romania, with more than 700,000 people in each. British expats make up the third largest community of 283,000 people – but this has fallen by 6% since 2014.

In addition, the German expat community in Spain has also seen a fall of 7% to number 130,900 people.

Health care provision for expat retirees

A survey has found that most expats who have retired are happy with their healthcare quality and costs since they are cheaper, generally, than in their own countries.

One website surveyed nearly 400 expats – mainly from North America – about where they retired to and their quality of life including healthcare provision.

From the results, 38% of respondents said their healthcare costs were less expensive abroad, with them spending between half and a quarter of what they would have done at home.

Another 37% said they were spending around a quarter of their expected healthcare costs while living overseas.

Indeed, US expat retirees can save an average of 75% on their health care costs, and this saving increases as the retiree grows older.

Even though they were paying less, the expats said, they were not getting less of a service and the quality compared favourably to what they had experienced previously. Just 11% said their quality of health care was worse than at home.

Most of the US expats who replied to the survey are living in Panama, Nicaragua and Belize.

India to ease customs rules for expats

Expats travelling to India with gold are being promised a ‘hassle free airport experience’ in future under new rules.

Current rules state that expat Indian women must declare whether they have gold jewellery worth more than $1,500; for men it is half of this value.

However, the Central Board of Excise and Customs is said to be creating a framework that would enable expats carrying personal gold jewellery to pass through customs without having to declare their gold.

The idea is for those carrying more to pay import duty on the gold’s value and then when they exit India the expat can claim a refund. It’s also being considered for expats to pay their duty online before travelling.

Expat professions banned by Oman

An original ban by Oman not to allow expats in certain professions the right to live and work there has been extended by six months.

Two years ago, Oman opted not to issue new visas for workers such as carpenters, blacksmiths, metallurgists and brick kiln workers. The new ban will now start from 1 July.

The move follows a visa ban for cleaners and construction workers which began in November 2013. It was followed several weeks later with a ban on camel keepers as well as sales and marketing professionals.

Officials stress that the bans are applicable to the issuing of new visas and not for renewals and will not affect international consultancies and companies who are registered as ‘excellent’ with the government or those undertaking government projects.

Meanwhile, Oman is also cracking down on those in breach of their work visa. Between 22 and 28 May, they found 886 expats violating their visa terms. Of those, 235 are described as ‘absconders’, 611 had been fired from their jobs and 24 were referred for other reasons. In the same week, another 387 expats were deported for labour law violations.

The government has also revealed that there are now 1.7 million expats working in Oman, of whom nearly 200,000 are women. The figure is a 1% rise on the year before, with most working in the construction sector.

Expat IT workers in demand

A shortage of skilled IT workers in New Zealand can only be bridged by accepting migrants, the government says.

There are apparently around 3,000 new jobs being created in the sector every year, and they are not being filled with current IT workers and those currently being trained. Companies are now forced to look overseas for their employees.

IT workers, such as IT support engineers and web developers, dominate the list of long-term skill shortages detailed by the New Zealand government.

A survey of the IT industry has revealed that over the next three years tech firms will need to recruit around 10,000 extra employees, and most of these are likely to be expats.

Expats boost Egyptian and Jordanian economies

According to data, the money sent home from expats is boosting the economies of Egypt and Jordan to the tune of $2 billion every year.

Those figures come from the World Bank, and Dubai-based Xpress Money says remittances from the region show how valuable the work of expats in the Gulf is to some countries.

With Egypt receiving around $1.83 billion from the UAE as part of its $19.7 billion global income, expats contributed 6.8% of the country’s GDP.

Expats around the world sent families in Jordan $3.8 billion, with those working in UAE contributing $716 million to account for 10.4% of their GDP.

However, the top spot for remittances is India which saw its expats send home $69 billion, followed by Chinese expats with $64 billion and those from the Philippines sending home $28 billion.

A spokesman for Money Xpress said: “Remittances from those in UAE to MENA and Asian countries have been growing year-on-year and as we approach 2020 we expect the amount of accelerate.”

In other expat news…

British expats are being reminded that they have until midnight on 7 June to register for voting in the EU referendum which is being held on 23rd of June. Apparently many expats are confused since they believe the original deadline was 16 May – but this was for postal votes only. To be eligible for voting, voters must have been registered on the UK electoral register in the last 15 years.

Expats living and working in Kuwait could be subjected to nationality quotas, according to the Minister of Social Affairs. The government is looking at a report to correct the country’s ‘demographic imbalance’ and some nationalities may be restricted to help reorganise Kuwait’s labour market.

Alongside China’s booming expat community is a demand for teachers to work in international schools and, as a result, they are offering jobs and lucrative packages to attract teachers to enjoy the Chinese culture. Employers are increasingly taking care of these applications and helping with housing and health certificates.

Research has revealed that should the UK vote to leave the European Union in the June 23 referendum then the number of expat job opportunities for European Union residents will be drastically reduced. The report from the National Institute of Economic Research also states that there will be a lower GDP per capita as a result, though it will take a ‘considerable time’ for the impact to be felt.

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