Where can expats earn the most money?
With most expats heading overseas to enjoy lucrative pay packages, a new survey reveals the best countries for earning.
ECA International says that expats heading to Japan will enjoy the best expat pay packages for middle managers at £269,332 ($356,224). This figure consists of a base salary worth £62,765 ($82,996) with benefits adding £94,614 ($125,111).In their latest MyExpatriate Market Pay report, the firm questioned more than 10,000 expats in 160 countries working for 290 organisations.
The next best destination for middle managers is the UK with a salary of £54,528 ($72,104) with benefits covering accommodation, car, utilities and international schools worth £93,992 ($124,288) with tax costs of £112,011 ($148,116). ECA says it is now $40,000 (£30,208) cheaper sending an expat manager to work in the UK than it was last year.
The third best country for middle managers is India with pay packages worth £221,653 ($293,097), followed by China with £209,016 ($276,387).
The US also makes the top 10 with expat pay packages worth £192,443 ($254,473); with a base salary of £59,777 ($79,045) and benefits worth £85,777 ($113,425).
ECA’s production manager, Steven Kilfedder, said: “There’s been a steady drop in expat pay package values over the last few years for employees in the UK compared in US dollars internationally. The fall in the British pound’s value after Brexit has made it cheaper for sending staff from abroad to the UK and has resulted in Japan replacing the UK as the most expensive country for sending staff.”
He added that the tax element tends to be the most expensive component for expat packages in the UK, with the cost of providing them running at around twice the salary element because of high rental accommodation prices for expats in London.
The report also points to expats in the Middle East enjoying high wages with 0% tax rate but ECA says the recent introduction of a 5% VAT tax in the region will push up the cost of living, which will affect the salary and benefits enjoyed by expats working there.
The figures also point to Singapore paying much less for expats with the figure now being $223,095 (£168,497) which is a fall from last year’s figure of $235,545.
Most expensive cities revealed
Living costs are an important part of an expat’s decision when moving overseas and a survey of the world’s most expensive cities will help in that process.
According to UBS, the world’s most expensive city for expats are Geneva, Brussels, Dubai and Frankfurt.
The Swiss bank looked at the earnings and prices for 77 cities around the world and used a formula to calculate how much it would cost for a family of three to live in rental accommodation.
The findings also highlight that the average salaries being earned have dropped, with London’s position for the best for earning potential seeing it fall below Madrid, Paris and Berlin.
Most expensive cities to buy a beer
In another survey, Deutsche Bank has revealed which are the most expensive cities to buy a beer.
The survey reveals that Dubai is the most expensive city for buying beer with the average price of a pint of being $12 (£9.06). The next most expensive city is Oslo where a pint will cost $10.30, followed by Hong Kong, Singapore and Zurich.
The cheapest city is Manila in the Philippines where a pint will cost $1.50 (£1.13) with Prague, last year’s cheapest location, being the second cheapest at $1.60.
US expats object to tax demands
Growing numbers of US expats are considering renouncing their citizenship because they do not feel that they should be filing taxes while living overseas, a survey has revealed.
The findings from Greenback Expat Tax Services questioned more than 3,800 expats and found 66.8% do not feel that they should be required to file US taxes while living overseas. That’s a rise of 1% since the firm carried out a similar survey last year.
Many expats are objecting to the reporting requirements under the Foreign Account Tax Compliance Act (FACTA) which requires foreign financial institutions to report US taxpayer assets to the IRS.
The survey also highlights that 51% of expats did not owe any tax to the US government while 30% did owe money. The findings also highlight that 7% of US expats did not file a tax return in the last year.
There’s also an indication of future problems with 22% of US expats saying they are seriously considering renouncing their citizenship in the near-term which could equate to 1.9 million people. Of these, 38% said their decision for renouncing citizenship was based on the annual burden of having to file taxes every year, while 18% said their renouncing would be based on disappointment with the US government’s direction.
Expat Americans offered a one-year reprieve
Meanwhile, it’s been announced that US expats have been offered a 12-month reprieve from an unexpected move to tax their overseas business interests.
The 15.5% one-off tax is mainly aimed at persuading large corporations to bring their profits back to the US but it’s caught out small business owners who hold more than 10% in a foreign corporation.
The Internal Revenue Service has also issued a statement confirming that US expats who have tax liabilities of less than $1 million for the last tax year are no longer facing penalties.
British expats waste £40,000 on buy to let properties
British expats living overseas who purchase a buy to let (BTL) property in the UK are squandering around £40,000 on unnecessary transaction costs, one currency specialist firm reveals.
The money is also being wasted on loan and exchange rates, says Mercury FX and Thistle Finance.
They say that a specialist currency firm can save clients up to 4% on their transaction fees compared to high street banks. And with expats transferring around £500,000 of foreign currency into sterling for buying their BTL property, they could save around £20,000.
In addition, expats are squandering funds by taking out specialist expat buy to let finance without searching the marketplace. The firms say that the interest rate differential on a £500,000 loan can add up to £4,000 every year or £20,000 over five years.
The money firms have now teamed up in a bid to deliver savings for those expats wanting a buy to let property while living overseas.
The managing director of Thistle Finance, Mark Dyason, said: “Too many British expats purchasing a buy to let property are being hoodwinked by banks when getting their cash into the country. They compound their misery by failing to search for better finance rates in a competitive market. It’s vital they do their homework before any transaction and the result could be saving them tens of thousands of pounds.”
Brits spending more on European property
Brits are spending more on European property, with the figure rising by two-thirds according to new data.
International payment specialist Fexco says that Brits are spending 66% more in sterling terms when buying a property in the Eurozone in the first four months of 2018 compared with last year.
They say there is a trend for UK buyers looking for a place in the sun, with total sterling value of property transactions being conducted over the same period in 2017; 69% less than it was the year before.
New CGT regime leads to 'unsettled’ expat investments
Around 61% of investors in real estate are worried about the new capital gains tax (CGT) tax regime on taxing gains made by non-resident investors in the UK’s real estate sector, a report reveals.
Intertrust says that property investors are worried about the changes, which come into effect in April 2019, for non-resident investors who will be paying capital gains tax when disposing of all types of UK property. The rules currently apply to residential property only but are being extended to include commercial real estate.
Overseas investors are worried about the amount of transaction costs they may incur when restructuring their property investment interests.
Intertrust’s head of real estate, Jon Barratt, said: “The new CGT regime presents a fundamental shift in international property investment and we are seeing growing numbers of clients discussing the changes and what these changes mean for them and their investments.”
Crown dependencies could be forced to reveal offshore investments
The UK government says that money laundering through offshore financial centres is now an issue of national security and it wants to have legal authority over dependencies to bring an end to financial secrecy.
In a report published by the government, Moscow’s Gold: Russian Corruption in the UK, the Foreign Affairs Select committee says it wants a move towards increased transparency for all of the UK’s offshore centres.
This could mean that dependencies including Guernsey, Jersey and the Isle of Man as well as British Overseas Territories such as Bermuda, the Cayman Islands and the British Virgin Islands could be forced to reveal offshore holdings whether they want to or not.
In their report, the committee makes clear that too much ‘dirty money’ is entering the UK with offshore jurisdictions helping because of their banking systems’ secrecy.
The UK says it will force overseas territories into action if they do not first agree voluntarily to introduce transparency registers by 2020.
However, two of the overseas territories say they will launch a legal challenge to the government’s plans for imposing a public register on the details of beneficial ownership. The legal action promised by the Cayman Islands and the British Virgin Islands could prevent them from complying with the deadline.
UAE to issue 10-year visa to investors
A move by the United Arab Emirates’ government to issue 10 year visas to investors could lead to a big jump in in expats investing in the Gulf nation. The new visa means expats will not have to deal with rearranging their visa every two or three years.
Research published by the Propertyfinder Group highlights that the number of expat professionals working and living in the UAE will increase sharply over the next two years because of the new visa rules. One aim for the new visa is to keep more of the money generated by expats in the country with a boost to investment; expats will now be able to own 100% of local businesses.
Meanwhile, Bahrain has announced that it will begin to issue 10 year investor visas, following the UAE’s lead. The laws are currently being prepared and will underline Bahrain’s ambition to be an investment location for foreign investors who can obtain a ’10-year renewable residency permit’ by self-sponsoring, the law states.
HMRC investigations criticised
Accountants have criticised a move by the UK government to extend the time limit for assessing a case involving offshore tax matters to 12 years.
The plans announced by HM Revenue and Customs will give them more time to investigate a case where someone may have potentially made a mistake relating to an offshore tax matter.
The current assessment time limit is four or six years but this is deemed as being not long enough. Now the Low Incomes Tax Reform Group (LITRG) says that those taxpayers who have made innocent mistakes may be caught up in an unnecessary extended investigation.
LITRG’s technical director, Robin Williamson, said: “If HMRC is struggling to deal with the number of cases involving offshore tax they should be treated as a resource issue rather than an excuse for reducing taxpayer protection.”
In other news…
There has been a dramatic increase in the number of foreigners looking to invest in Mauritius after the government there relaxed the rules over property and residency. The moves include a lower threshold of $500,000 for obtaining residency and buying property. The government says there’s been a big rise in the number of South African expats in particular looking to buy property.
Research from law firm Reynolds Porter Chamberlain reveals that American financial watchdogs are increasing their investigations into executives with UK financial services firms. They used data from the Financial Conduct Authority to find that the number of misconduct cases have increased 17% year-on-year. A partner with the firm, Parham Kouchikali, said: “The increase in assistance requests from the US to the FCA should serve as a warning to those who think they are safe from the regulators.”