Home » Expat Focus Financial Update September 2022

Expat Focus Financial Update September 2022

Alexandru Bittner v. United States 

The case of Alexandru Bittner v. United States has been occupying the pages of both the Washington Post and Bloomberg recently. This is to do with the thorny issue of tax compliance. We’ve taken a look at FBAR compliance before, but this case has brought it back to the attention of the American media.

Bittner is a businessman with dual citizenship of both the States and Romania. Like other American expats, he has been obliged to open accounts in Romania, where he’s been working, and, again like other expats, must therefore complete an FBAR form and submit it to the US Treasury’s Financial Crimes Enforcement Network.

Bittner did not make timely full disclosures, and everyone involved in the case is in agreement that this was unintentional. Bittner was not trying to defraud the system. However, in a rather nightmarish instance of ignorance of the law being no excuse, Bittner has been issued with fines anyway, and these have been described by Bloomberg as ‘ruinous – and frankly insane.’ At appeal, the court assessed his fine at $50,000 ($10,000 per year of omission), which is steep enough, but at a subsequent hearing at another court the fines escalated to $2.72 million ($10,000 for each year and each account of omission of the FBAR).

The case has now gone to the Supreme Court. American taxation abroad for US expats is described by Bloomberg as a ‘hairball of complexity’ which consistently trips up the financial affairs of Americans abroad and, in extreme cases, results in headaches like Bittner’s above. We’ve reported extensively on the plight of ‘Accidental Americans’ in France, the Netherlands and elsewhere, and this is all part of the same phenomenon.

Bittner’s action is not the only one. Jenny Webster, an American-born British citizen, is taking the British authorities to court for disclosing her financial information to the States, which she says runs counter to privacy legislation. There is a gathering groundswell of people trying to combat this knotty, punitive tangle of taxation regulation. Watch this space.

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Singapore’s new visa

Singapore is, as you may be aware, overhauling some of its visa regulations and has now published further details of the new Overseas Networks and Expertise (ONE) pass. This will be in place from 1st January 2023, and will permit foreign workers who earn a minimum of S$30,000 ($21,431) per month to secure a five-year work pass. However, those applicants who don’t meet the minimum salary criteria but who are regarded as exceptional talents in sports, arts, academia and science will also be able to apply for the long-term visa version of the ONE pass.

Under the new rules, their dependents will also be allowed to seek work, and the visa will permit you to start, operate and work for multiple companies. It’s not just the ONE pass, either. Under revision of other work permits, the personalised employment pass will be attached to you rather than your job, meaning that you should be able to switch jobs without reapplying.

From September of next year, the authorities are also planning to exempt jobs comparable to those held by the top 10% of Employment Pass holders from local hire regulations (currently, a number of jobs must be advertised and filled by local hires rather than foreign expats). The city state is looking to open up the upper levels of the employment market in order to attract overseas talent to its employment sector.

Amit Gupta, president of global non-profit organization TiE Singapore, says, “It feels like Singapore is really addressing the gap at the top end of talent, not just in terms of salary, but capabilities. Talent, globally, is quite mobile, and there’s a number of competitive hubs that are trying to get access to that global talent.” TiE has its home in Silicon Valley, proof that the digital and tech sectors are continuing to look to Singapore. Australia and the UK already have such talent visas, and the new regulations are designed to allow Singapore to further compete with locations such as Dubai, which is currently positioning itself as a crypto hub.

New mortgage available for Australian expats

Non-bank lender Brighten is floating a new mortgage product specifically for Australian expats who are returning home, the local press announced recently. Natalie Sheehan, head of distribution for Brighten, says that the lender has been seeing an increase in demand from expat Australians for investment properties due to Australia’s relatively stable economic performance globally. The new product is aimed at these borrowers, but also at executives who want to move back to Australia, young migrant families.

The product is flexible: there are versions of it for remortgaging and also for equity release, as well as a more straightforward mortgage. Its loan-to-value ratio is a maximum of 80%, and it’s only available on variable, not fixed, rates.

‘Bigger bills’ for returning Brits (and don’t bring your parrot)

The Financial Times reported on the cost of returning to Britain for many expats, including those relocating from troubled Hong Kong, in late August. Average air fares from HKSAR have escalated in 2022, not to mention shipping costs for possessions. One Hong Kong-based returnee interviewed by the FT reported costs of around £17K for shipping, £10K for air fares, plus over £3K for a spouse visa. The most expensive part of the move, however, relative to size, proved to be the family’s parakeet, which cost a whopping £9K to relocate – surely one of the most expensive parrots in history.

The FT warns that you could also face a big tax bill on coming back home, so make sure that you understand the financial implications of your return, including tax, before you decide to take the plunge. Check out the temporary residence regulations, for example, and be aware that the point at which you relocate during the tax year can have some serious implications. Check, too, the implications of assets in any low tax jurisdiction, and seek full financial advice from a professional international accountant. Coming back home should be a relief, not a series of eye-watering pecuniary penalties.

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