Tax Breaks in Spain
We have reported in recent months on the tightening of restrictions on British (and other) expats in Spain, with tax ‘traps’ and high percentages of tax on house purchases. Recently, however, Yahoo Finance reported that the Basque region is defying this trend by offering attractive tax incentives to expat professionals — including a 50% income tax reduction for high earners and a €20,000 tax-free personal allowance, significantly higher than the UK’s. For the first 11 years of employment, you’ll pay just 30% income tax, along with an additional 20% tax deduction for relocation expenses — including moving costs, language classes, children’s education, and other resettlement needs.
Thanks to a century-old agreement with the Spanish government, the Basque provinces of Álava, Gipuzkoa, and Biscay have autonomy over their tax laws. As a result, they are not obligated to enforce the 100% property tax on non-EU residents — and high earners in the scientific, financial, or commercial sectors may still qualify for the region’s tax discount scheme.
Investec Promotes New Product for Expat Landlords
Investec Bank is launching a new buy-to-let mortgage product aimed at high-end landlords based in Dubai or Switzerland — specifically targeting expats looking to purchase property in the UK or the Channel Islands while living abroad. The new product will have a £1 million loan size and is intended to provide a bespoke banking service which fills a niche.
Peter Izard, Head of Business Development, told the press:
“Our approach is tailored to address the unique challenges faced by expats who are looking to purchase their first BTL property or are seeking to expand their UK and Channel Islands property portfolio while out of the country.”
Financial Planning: Qatar
Qatar is an attractive relocation option for expats, many of whom are drawn to the Middle Eastern state as a consequence of its lack of income tax, capital gains tax and dividends tax, plus its high salaries. Most people who move to Qatar cite financial gain as their main motivation, with 21% planning to retire back in the UK. However, a recent educational seminar hosted by Hoxton Wealth in Doha this spring revealed that only 35% actually have a financial plan in place.
Hoxton Wealth’s CEO Chris Ball says that:
“There are a series of common mistakes that expats make. These include holding assets in the wrong structures; failing to set up a structured pension plan like in their home country; underestimating inheritance tax exposure or future tax implications on their existing assets; currency risk exposure; and holding substantial amounts of capital in local banks. We’re here to help them avoid those mistakes.”
Issues With Japanese Banks
The international press reported this month that some Japanese banks are freezing the bank accounts of foreign nationals once their visas have expired. MUFG Bank and Mizuho Bank are two of the banks concerned; the latter say that they have been undertaking this practice since 2019.
The Japanese Financial Services Agency (FSA) says that this measure has been introduced to combat fraudulent practices such as money laundering and to hamper the practice of selling your bank account to criminal groups when you leave the country. This is of course illegal, and if caught, you will be blacklisted from opening a bank account in Japan in future.
You shouldn’t have any problems if you keep the authorities informed about any changes in residence and visa status, and if things do go awry, banks will also reactivate your account if you give them proof of residence.
Expats ‘Shocked’ by Cost of Living in Australia
Yahoo’s Finance division reported this month that expats were experiencing ‘shock’ on moving to Australia and experiencing the high cost of living – a state which is shared by many Australians. Interviewees said that accommodation was ‘comparable’ with prices in London and groceries were costing twice as much.
Edith Cowan University recently undertook research into supermarket prices across Australia, New Zealand, the UK and Ireland. They checked prices at Sainsbury’s, Tesco, Pak’n’Save, Countdown, and Dunnes. In Australia, they compared Coles and Woolworths, finding only a AU$1 difference between the two. With a combined market share of around 65%, the two supermarket giants appear to be closely monitoring each other’s prices. Overall, New Zealand emerged as the most expensive country, followed by Australia and then Ireland, with the UK ranking as the most affordable — supporting the anecdotal findings reported by Yahoo Finance.
Australia’s ABC News summed up the findings as follows:
- UK — the cheapest, with grocery costs ranging between AUS$283—$297
- Ireland — next in line with prices ranging between $313—$345
- Australia — in third with costs between $324—$332
- New Zealand — the most expensive with prices ranging from $342—$409
However, when adjusted for wages, Australia ranked as the second most affordable, with the UK remaining in first place.
The Woolworths/Coles duopoly has come in for considerable criticism in the political arena recently, with politicians commenting that Coles’ $1.1 billion profit is unacceptable in an economic climate where so many Australians are struggling to afford the basics. However, the authors of the supermarket price study question whether breaking up the duopoly is the best plan.
Associate Professor Flavio Macau told ABC that:
“Implementing radical solutions, such as compelling supermarkets to disinvest, might have counterproductive effects, potentially increasing prices due to rising costs.”
He said that supermarket prices needed to be examined through the lens of costs and revenue, and when this was done, their apparently steep profits were put into greater perspective. He added:
“A strategy that empowers consumers with smart shopping practices and encourages strategic purchasing could offer a more immediate and effective solution.”