Home » Expat Focus Financial Update August 2021

Expat Focus Financial Update August 2021

American financial clients lose out

Despite J P Morgan having recently acquired the UK’s largest digital wealth manager, Nutmeg Saving & Investment Ltd, the fund is now allegedly telling American clients that they will have to leave and that their accounts are being closed. J P Morgan is said to regard Nutmeg as its biggest opportunity to break into the UK’s online banking market, following Goldman Sachs’ establishment of their digital savings bank Marcus. Nutmeg’s US clients do not amount to a large number of people: around 350 out of 140,000. However, it seems to be facing the same challenges that Marcus experienced with its American clients: namely, compliance with FATCA. Along with Eritrea, the USA is the only country in the world that bases taxes on citizenship, and FATCA compliance is often deemed to be too expensive for companies outside the States.


Spain’s cap on cash payments

You may have seen in the news recently that Spain is placing a ban on cash payments over €1000. The new regulation was introduced in July and affects registered companies and professionals. Its aim is to limit money laundering. It doesn’t affect personal or private transactions. So, for example, if you want to make a gift to a relative or buy a car from your neighbour, the ban won’t apply. In addition, it only applies to tax residents in Spain, so if you’re visiting, you’ll be able to hand out cash up to €10K. This is the limit imposed on cash transactions by other nations in the EU, although each country is allowed to set their own limits (in Greece, for example, it is €500). The penalty for violating these new regulations is a fine, which varies according to the size of the original transaction.


Portugal’s non-habitual residency tax scheme

Tax specialists Blevins Franks suggest that if you’re planning to move to Portugal, you should register with the Portuguese tax authorities as quickly as possible to lock-in current non-habitual residency (NHR) benefits, which could last for up to 10 years. The Portuguese NHR scheme has proved popular, and it’s still allowed after Brexit. However, just in case the UK government decides to include an exemption clause to increase taxation on British citizens living in the country, tax experts suggest you strike while the iron is still hot. They add that even without NHR, Portugal can still be a tax-efficient place in which to retire. For example, you may be able to take advantage of the country’s investment-based golden visa, which, after five years, gives you the opportunity to apply for either residency or citizenship. Get in touch with an expert for further information and advice.


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Financial passporting update

We’ve reported before on the increased restrictions placed on UK tax advisers, following Britain’s departure from the EU. Under the new regulations, financial advisers may not be able to legally advise British clients resident in the bloc, since the Financial Conduct Authority (FCA) is no longer subject to EU rules. For instance, if you’re resident in France and your tax adviser has not gained permission to work in Europe, you won’t be able to consult them legally. And if you have assets back home in the UK, now that Britain is not part of the EU, these could attract higher tax bills. It’s critical now to make sure either that your financial adviser is licensed to give advice in the EU, or that you can switch to local provision – but make sure the service that you choose is up to date with British tax regulations, too.


Bonuses in Hong Kong and Singapore

Expat Focus has reported extensively on the expat exodus from the city states of Hong Kong and Singapore, but for those expats who remain in the banking industry, bonuses are said to be rising. The Head of North Asia at Selby Jennings has said that the region’s bonus pool for 2022 anticipates a record high. Whilst APAC bonuses in the region were low for 2020 compared with Europe and the US (only 45% of bankers received a bonus), this is expected to change as regional economies gradually recover from the Covid-19 pandemic. Two thirds of the financial professionals surveyed by Selby Jennings in the region said that they would be looking for a new job in the next six months, and they feel that they have the upper hand now when it comes to salary negotiations. Western firms, meanwhile, are looking to China as the area of biggest growth, as we move further into the 2020s.

Meanwhile, some of those ‘new jobs’ may well be sought by bankers in Hong Kong who are looking to move to Singapore. 66% of respondents to Selby Jennings’ poll said that they were hoping to move to the city state, while only 6% were looking at Australia. Meanwhile, Australian financial professionals are also looking north to the same destination. Singapore is marketing itself as a popular, low tax, tension-free (relatively speaking), lower cost of living alternative to Hong Kong. At a time of rising unease about mainland China, it is ideally placed to attract personnel.


Biden warns about Hong Kong ‘risks’

US President Joe Biden has warned American companies about the risks of operating in Hong Kong. This has obviously garnered an irritated response by the Hong Kong authorities, who have accused the American government of fearmongering, and has not necessarily endeared Biden to US banks either, who are looking to establish a foothold in China. The country is, after all, the world’s second largest economy. Whether US banks will accept his warning is a moot point. CitiGroup has been outspoken about its recruitment plans for the China Greater Bay area. Hong Kong will be one of its proposed four major hubs.

Meanwhile, China has dangled a carrot over HK by suggesting that companies that go public in the territory will be exempt from prior approval by the country’s cybersecurity regulator. This is seen as giving the territory an advantage over New York when it comes to dealing with the Chinese market.

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