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Financial

Financial > Expat Focus

Expat Focus

Expat Focus Financial Update September 2018

  Posted Wednesday September 19, 2018 (18:28:49)   (923 Reads)


 

British expats can transfer pensions post-Brexit

Fears that British expats will not be able to transfer their pensions post-Brexit have been allayed - even if the UK crashes out of the EU without a deal.

The promise has been made to Parliament by Pensions Minister Guy Opperman, who says that the rights of British citizens and their pensions will remain unchanged. He said in a statement: "The EU and UK have agreed the terms of implementation already lasting until the end of 2020."

He said that this implementation period will offer access to each countries’ markets and on current terms so these will be unchanged - he says this will ensure continuity for businesses and consumers.

Essentially, UK and EU citizens will be able to transfer a pension to an overseas pension scheme, while British expats will be able to transfer their pensions into a UK pension scheme.

However, among the technical papers published by the Government to highlight potential issues with a 'no deal' is for British expat retirees living in the European Union who may not be able to access their pension annuities in future.

The papers reveal that if there is a 'no deal' Brexit then annuities could be among the financial products that the expats will struggle to receive if they live in EU countries.
Also, insurance, deposit and lending services could also be threatened.


Hong Kong is home to the most UHNWIs

New York is no longer home to the largest community of ultra-high net worth individuals (UHNIWs) with the crown passing to Hong Kong, research reveals.

According to data firm Wealth-X, the number of people worth at least $30 million (£22.8m) grew to 10,000 in Hong Kong last year, that's a rise of 31% over the year.
New York is in second place with 8,865 individuals - a figure which grew by 7% over the year. The combined wealth of the super-rich in Hong Kong now stands at $1.3 trillion (£990bn). Other cities in the top 10 include Tokyo, Los Angeles, London and Paris.

The number of UHNWIs around the world grew by 13% last year to reach 250,000 people who are now worth $31.5 trillion (£24 trn). Around 14%, or 35,000, of these global UHNWIs are women.

The firm's head, Vincent White, said: "Hong Kong's rise is mainly because of its investment and trade links to China's mainland where self-made wealth is growing fast."

Their research highlights that more ultra-rich people are holding their wealth in liquid assets, such as cash, which accounts for 35% of their wealth. Private holdings account for 32%, public holdings are 26% while alternative investments account for 6.6% and include items such as art and real estate.


Expats win QROPS appeal
Expats who invested in an international pensions scheme, which had been listed originally as a valid QROPS (Qualifying Recognised Overseas Pension Scheme), have won a court case against HM Revenue and Customs.

The First Tier Tribunal judge agreed with the pension savers that HMRC issued its assessments that the scheme did not comply with the relevant criteria too late though its officials knew that the Latvian-based pension scheme failed QROPS qualifying tests.

As a result, HMRC levied unauthorised payment charges on the expats, which led to four of the expat savers challenging the move in the tribunal hearing. The Wenns International Pension Scheme was set up in 2009 and delisted in 2010 with 11 expats transferring money into the scheme.


UK tops inflow of overseas deposits

The value of deposits being held around the world is growing with the UK topping the inflow of overseas deposits by a 'large margin', a report reveals.

The Knight Franks Wealth report reveals that the amount of cross-border deposits in December 2017, amounted to $6.4 trillion (£4.9 trn), which is $632 billion (£481 bn) more than the year before. And despite the political uncertainty and issues over Brexit, the amount of deposits flooding into the UK rose to $1.8 trillion (£1.37trn) with an annual currency adjusted net inflow of $239 billion (£182bn).

The second most popular country for deposits is France with Taiwan in third place. The US tops the list of the largest increase of deposits being held outside a country's borders with US investors depositing $220 billion (£167bn) across various locations - mainly to the UK, France and Canada.


HNWIs leave Brazil

Growing numbers of HNWIs are leaving Brazil, with 2,000 fleeing the country in 2017, says research firm New World Wealth.

The numbers place Brazil in seventh place in the firm's rankings, with China, India and Turkey taking the top three spots for wealthy people emigrating. The cities that saw the largest number of millionaires leave last year were São Paulo, Istanbul, London and Moscow.

Most of the Brazilian millionaires are heading to the US, followed by Spain and Portugal.


Most expensive destinations for international students revealed

A survey has revealed where the most expensive destinations for international students are in Europe and, unsurprisingly, London tops the list. The findings from Nestpick found that the average cost of an apartment in London is €12,450 (£11,072/$14,548) per semester.

The next most expensive destination is Zurich in Switzerland, followed by Manchester. London rents makes the capital city expensive and these are fuelled by some of the world's highest property prices, Nestpick says.

The cheapest destination is Bucharest in Romania at €3,583 (£3,186/$4,187) a semester.


Fears over Kuwait property

Fears over the property sector in Kuwait City have been raised after an exodus of expats has left 77,000 empty properties. Government statistics reveal that these account for 23% of all investment residential buildings.

In a report, one real estate firm says that the sector's woes are becoming worse after 60,000 expats left the country last year and 200,000 will leave by 2020. Rents have dropped in Kuwait by more than 12% and look likely to full further, the report concludes.


Expats in the Netherlands fight tax change

Expats working in the Netherlands say they will take legal advice over changes to a lucrative tax break they enjoy. Expat organisations are urging the country's tax minister Menno Snel to have a transition period when the tax break is removed.

The proposal from the Minister will be presented to Parliament as part of an overhaul of tax measures and expats still hope the 30% ruling will remain. The issue is over an incentive for expats that gives a tax advantage for highly skilled workers to enjoy 30% of their salary tax-free.

Essentially, highly skilled and professional expats only pay tax on 70% of their gross Dutch income and employer organisations say its removal could lead to a brain drain.
The removal could see thousands of expats losing thousands of euros every year to tax even though they accepted their position with the tax break in place.

A spokesman for the United Expats Foundation says that without a transitional period being put in place, they will be looking for legal opinion to see if the move is illegal and how it can be stopped.

A crowdfunding campaign has now been launched help pay for the legal bid and within hours it had reached half of its target.


In other news...

Moneyval, the Council of Europe's financial watchdog, has given the Isle of Man government until July next year to improve its money laundering legislation and comply with European rules or face potential sanctions.

High earners in the UK have been warned by one national newspaper that the Chancellor Philip Hammond is planning to raid pension pots by reducing tax relief on contributions they make. Government sources say that £38 billion in pension tax relief is being targeted.

A talent war has broken out between Hong Kong and Singapore for wealth managers with offers of 30% pay rises to switch employers. The aim is to attract more of Asia's multimillionaires to private banks but there are only 10,000 licensed relationship managers to meet rapidly growing demand, Bloomberg reports.

HSBC has unveiled plans for digital branches in the UAE to meet the needs of 'tech savvy expat clients'. Clients will be able to use smartphones and tablets to carry out typical banking tasks and interact with bank staff when necessary.

Saudi Arabia has officially denied reports that it will impose fees on expat remittances after growing speculation on social media. Last year, expats remitted the $38 billion (£28.9bn) and the kingdom says it is committed to supporting the free movement of capital.

Growing numbers of wealthy UAE expats are increasingly seeking a second passport from Caribbean countries. Wealthy applicants are using citizenship by investment schemes with demand growing by 67% in the first six months of 2018, says Bluemina. Another report highlights that Portugal's 'Golden Visa' scheme sees Chinese applicants topping its list of nationalities investing in the country.

Fears of a 'no deal' Brexit scenario is forcing thousands of British expats to return home from Spain as the pound's fall against the euro reduces the value of their savings. One Spanish bank says growing numbers are leaving the country to return to the UK.

The Internal Revenue Service is warning US expats who have problems with offshore tax compliance to contact the organisation and its Offshore Disclosure Program before a crucial deadline expires. All US expats with a foreign bank account must disclose voluntarily their worldwide income by the end of September to avoid penalties and possible prosecution.

Expats heading to the US may be interested in a survey that highlights the country's most expensive zip codes for renting a property. According to RentCafe, the most expensive location is Battery Park City in Manhattan with an average rent of $5,657 (£4,300) and all of the top 50 most expensive areas are found in just three areas with New York in first place - 26 of the top 50 are in Manhattan - followed by California and Massachusetts.

British and Irish expats living in Cyprus are being warned that unlicensed and unregulated international financial advisers are targeting them. The chief exec of Woodbrook Group, Michael Doherty, says expats may be risking their life savings unwittingly by trusting these advisers.

Expats living in China are now able to invest in shares but, apparently, most are avoiding doing so. Critics say that the initiative has not been well publicised and expats still have to apply, which can be a complicated process. In addition, Chinese stock markets have endured a dismal performance of late with the benchmark equity index sinking to its lowest level in nearly four years.

The United Arab Emirates has unveiled a visa aimed at encouraging expats to retire in the country after they finish working there. The five-year visa will be available to expat retirees aged over 55, though they will need to meet criteria including proof of income of more than AED20,000 (£4,142/$5,446) every month, or financial savings of more than AED1million (£200,000/$272,000) and real estate investments worth more than AED2 million.

Ultra-High Net Worth Individuals (UHNWIs) across Africa are being targeted by financial firm Absa with a range of tailor-made products as it aims to create a standalone rebranded firm that was once part of Barclays Africa.

The World Bank is warning that remittances in the Gulf Cooperation Council (GCC) region may fall because of higher living costs. In a report, the organisation says that the introduction of VAT at 5% in several GCC countries, along with reductions in subsidies for living costs may lead to the cost of living increasing and hitting remittances expats are sending home.

A survey by Forbes magazine has revealed the top 10 countries for business investment globally. The Global Exchange Index (GEI) looked at a range of factors for global travellers, entrepreneurs and investors wanting to put their money and rated countries for how welcoming they are to foreign investors and protecting private property. Singapore came top, followed by Switzerland and the Netherlands. The US and Hong Kong make up the top five with Germany, Canada, the UK, Ireland and China also making the grade.


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