Home » Expat Focus Financial Update January 2018

Expat Focus Financial Update January 2018

Most expensive places for expats revealed

An annual cost of living index which reveals the most expensive places for expats to live in has been revealed by Numbeo.com. Their figures for 2018 reveal that Hamilton in Bermuda is the most expensive location overall for expats.However, expats in Switzerland will find that six of the top 10 most expensive destinations are Swiss and they include Zürich, Geneva, Basel, Bern as well as Lausanne occupying the second to sixth places with Lugano in ninth place.

Reykjavik is in seventh place, Stavanger in Norway is eighth and Oslo is tenth.

The most expensive US destination is New York in 14th place, while London is 42nd and Milton Keynes in the UK is 55th.

Expats in Spain win failed investment case

It’s taken them 10 years, but expats in Spain have won their battle with a bank over a failed investment project.

Get Our Best Articles Every Month!

Get our free moving abroad email course AND our top stories in your inbox every month

Unsubscribe any time. We respect your privacy - read our privacy policy.

The 80-strong group of British expats had invested in Majorca’s Cala Romantica scheme nearly 12 years ago. Now a court has ruled that Sabadell Solbank must pay hundreds of thousands of euros in damages.

There are several other cases working their way through Spanish court where expats have lost money and this case is being held up as an important precedent.

Warning to British expats selling property in the UK

British expats who are selling a property in the UK but then fail to report any capital gains tax (CGT) liabilities within 30 days will find it difficult to plead ignorance after two tax tribunal judgements.

The declaration must be made to HM Revenue and Customs (HMRC) within the deadline which has been in force since April 2015.

Expats will still need to complete a return, even if there’s no CGT payable and failure to tell HMRC within the deadline can lead to financial penalties.

Now the Society of Trust and Estate Practitioners says growing numbers of people, including expats, are complaining when HMRC tries to enforce these penalties but two recent judgements have reinforced HMRC’s position.

Meanwhile, it has been revealed that HMRC is planning to make it compulsory for any landlord who is applying for a house in multiple occupation (HMO) licence to be registered with them for tax purposes before they are granted one.

This could affect expat landlords who may be earning an income from lettings but not paying the correct amount of tax.

The move follows enforcement in several council areas – particularly the London borough of Newham where tax officials went through the official register of landlords and compared that with their own records. HMRC has now unveiled a consultation on the subject that runs until March.

Best paid jobs for Filipino expats

The best paying jobs for Filipino expats have been revealed by the Philippine Overseas Employment Administration. They looked at the skills needed in a range of countries and found that engineers, nurses and construction worker should head to Japan while skilled carpenters were needed in Papua New Guinea.

Filipino expats are needed as engineers and skilled construction workers in the Middle East and also in New Zealand. The UK and Ireland are looking for professional Filipino nurses, while the US needs engineering technicians. Most Filipino expats head to Saudi Arabia, followed by the UAE and Singapore.

Expat mining salaries are rising in Africa

The salaries for expats working in Africa’s mining industries are increasing quickly, says a specialist HR firm.

Globe 24-7 publishes a report every year from expat workers and found that 75% of employers have increased salaries in 2017, compared with 40% in the year before.

The firm’s chief executive, Lachlan Spicer, said: “This tells the story that companies are returning, or have returned, to financial health and stability.”

However, the pay increases have been relatively modest with an average in 2017 of 2%. That’s up from 2016’s figure of 1.3%. The firm is now predicting 2018’s expat mining salary increases to be around 2.3%.

France woos UK bankers

The French president, Emmanuel Macron, has unveiled plans to woo bankers from the City of London to Paris by cutting payroll taxes for high earners. The government hopes to attract 10,000 finance and banking posts from London after Brexit.

Also, it has been reported that American banking giants are now rushing to recruit expat employees for their post-Brexit European headquarters. Most of these will be located in Frankfurt with many of the banks now advertising for scores of expat staff ranging from compliance officers, risk managers and information technology specialists.

According to Frankfurt Main finance, around 10,000 new jobs could be created in the next few years when the UK leaves the EU.

New mortgage for British expats launched

A new mortgage aimed at British expats wanting to invest in a buy to let property in the UK has been unveiled by Aldermore Bank. The product is available to foreign nationals as well as British citizens who are living in any country that’s in the Financial Action Task Force – that is an intergovernmental organisation aimed at cracking down on money laundering.

The mortgage is available for up to 75% LTV (loan to value) for new acquisitions and remortgages.

Most expensive place for expats to rent in Asia

Hong Kong has once again topped the list as being the most expensive destination for expats in Asia to rent a home. Despite this, demand is increasing with rents rising throughout Asia for all expat workers.

It is the fifth year running that Hong Kong has dominated the ECA International survey with an average rent in a popular Hong Kong area for a three bed apartment costing $10,461 (£7,500) a month. That’s a rise of $2,000 a month since last year.

ECA’s regional director, Lee Quane says: “Hong Kong saw its first rise in rents for flats for five years last year with key driving forces including increasing demand and a lack of rental units.”

He added there was also a lack of quality housing near international schools available and multinational companies are still sending expat staff to Hong Kong so demand is consistent.

VAT levy begins in Saudi Arabia and UAE

The UAE and Saudi Arabia have now introduced their VAT levy which is set 5% on most services and goods in the region.

The UAE has estimated that the new tax will generate around 12 billion dirhams (£2.4 billion/$3.3 billion). VAT is now applied to food, utility bills, petrol and diesel as well as clothes and hotel rooms.

However, a zero tax rating has been extended to public transport, financial services and medical treatment.

The move follows government attempts to reduce both countries reliance on oil revenues; for Saudi Arabia around 90% of their budget revenue is from the country’s oil industry, while for the UAE it is 80%.

Also, expats in Saudi Arabia are facing taxes on soft drinks and tobacco while the UAE has put up road tolls and introduced a tourism tax. Expats in Saudi have also find that petrol prices are no longer subsidised with basic grade petrol nearly doubling in price to 27p a litre and high-grade petrol has risen to 40p a litre from 18 pence.

Other countries in the Gulf cooperation Council also looking to introduce that and some may do so next year.

Expats bear brunt of rising inflation in Saudi Arabia

One firm of economic experts says that expats in Saudi Arabia will be bearing the brunt of rising inflation there.

Capital Economics says the price rises will effect expats more because citizens in the public sector are compensated with cost of living allowances. Now the firm is predicting inflation rising to 6% in the kingdom plus expats must pay 400 riyals to work there and 200 riyals for their dependents.

Meanwhile, Saudi Arabia has also denied rumours that expats are facing a 10% tax on their incomes.

The move follows increasing criticism on social media and now the kingdom’s Ministry of Labour and Social Development has categorically denied that tax will be payable on any salaries of more than SR3,000 (£573/$800) per month.

US expats in UK hit by investment decision

Thousands of US expats living and working in the UK could be hit by a decision by investment firm Hargreaves Lansdown to remove hundreds of exchange traded funds and investment trusts from its platform.

The products are not complying with new European rules which cover disclosing risk to retail investors. Other investment firms are also expected to introduce similar moves to reduce the number of products they offer.

The delisting is affecting US nationals since many opt to invest in financial products such as these as an effective way for them to save for their retirement. Most of the funds that have been removed already are mainly from North American providers.

Immigration status of UK bank accounts checked

Since the beginning of 2018, banks in the UK are now required to check the immigration status of the account holder.

There are around 76 million current account customers who will be checked against a government database of those who do not have leave to remain in the UK.

The banks must now carry out these checks every quarter and should the account be flagged up by the Home Office, then the bank may close the account.

The government says it’s part of its aims to make it more difficult for those who have no right to work or live in the UK to remain in the country.

In other news…

Expats and citizens of the United Arab Emirates are being warned by the Dubai Financial Services Authority that fraudsters are contacting people pretending to be from a commercial bank as part of a money remittance scam. Other scammers in Dubai are also pretending to be immigration officers demanding money to resolve a residency status issue.

According to the UAE’s Central Bank, expats in the country sent home around £25 billion in the first three quarters of 2016. That is a 2% rise on the previous year. The bank says £18 billion was transferred using money exchanges and the remainder was sent via a bank.

Around 25% of properties bought in Portugal last year were by expats who are becoming increasingly active in the property market there. There’s been a 30% increase in the number of sales with 152,000 homes finding expat buyers, says the country’s real estate association.

Media reports in the United Arab Emirates have revealed that the government there is considering the introduction of an expat pension savings scheme which would replace the traditional end of service gratuity. The pension scheme would effectively be a savings investment fund with a proportion of the expat’s wages being deducted and put into it. A report to the government says that the proposed fund will ‘have a positive impact economic and social on all parties’.

Tax changes in France could see the country being a popular choice for UK property investors in 2018. A new wealth tax means investors will be taxed only on their real estate assets rather than their entire financial assets.

Saudi Arabia has revealed that in the second quarter of 2017, 62,000 expat workers left the kingdom after the imposition of the dependents fee. Expats there must now pay SR100 a month for every dependent and this will increase this year to SR200 and rise again next year. However, the Ministry of Labour and Social Development says that Saudi employers with five or fewer workers will be exempt from the new monthly expat levy.

Remittances from expats in Qatar in 2016 amounted to $12 billion (£8.59bn), according to figures released by the GCC. Expats accounted for nearly 8% of Qatar’s GDP while expats in Saudi Arabia remitted $38.9 billion (£27.8bn). Expats in the UAE remitted $32.7 billion (£23.4bn) and in Kuwait the figure was $15.3 billion (£10.9bn).

According to the Higher Education Policy Institute, international students heading to the UK generate £20 billion more than the cost of attracting them to the UK.

The London-based law firm Withers says the impact on US high net worth expats living in Europe from President Trump’s Tax Cuts and Jobs Act will be minimal, in most cases. However, while most European resident Americans are not affected there may be some changes to the traditional deductions that expat taxpayers have previously taken advantage of.