Expat Focus Financial Update June 2022

Expat wealth manager fined

We reported back in December 2021 on the case of CEO Nigel Green and questions raised over the finance group deVere’s conduct. The deVere group is one of the biggest financial advisers to UK expats in South Africa, headquartered in the UAE and specialising in insurance and selling savings plans. It operates in around 30 countries, but concerns were raised some time ago about its sales practices.

A number of affected customers, including NHS staff who had seen their pensions halved after taking counsel from the deVere group, complained. Readers may recall that expats reported taking tax advice from deVere after being encouraged to move their money out of more trusted sites, such as the NHS pension scheme, and place it in unregulated investment companies with high or undisclosed charges. Many of these investments were high risk. When they failed or diminished, deVere representatives were suddenly unavailable.

Expats affected felt that this was, to say the least, sharp practice, and it seems that the SA financial regulators agreed. On May 27th, the group and Green were fined a combined 12.5 million rand ($800,000) for the breach of a number of financial sector regulations. The unit’s licence has been withdrawn and Green has been banned from working in the financial sector in South Africa for five years. The South African Financial Sector Conduct Authority said in a statement that Green “failed to comply with various financial sector laws which impacts on his fitness and propriety.”

The group says that it will appeal, but it has fallen foul of financial regulatory authorities before, having been fined a $8 million penalty in 2018, set by the US Securities and Exchange Commission.

British expats turn to Mexico

An increasing number of British expats, reacting against stricter residency requirements in Spain following Brexit, have been looking at moving to Mexico. Property broker Zisla says that the sector is anticipating a rise in expat workers and retirees in the years to come. The UK has also recently signed a major trade deal with Mexico.

“Mexico is capitalising on the gap in the market,” Zisla’s CEO told the press in late May. Popular destinations include Cancun and Tulum, which have historically been popular with US expats, and are now appealing to Brits turning away from Spain and its stricter bureaucracy. A luxury villa can, for instance, be bought for £110K, substantially less than a similar property in Marbella.

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However, some expats already resident in the country are worried that the sudden influx may cause expats to wear out their welcome – with Covid-19 cases surging in high-tourism areas and Oaxaca’s famous nudist beach having to bring in legislation against public sex acts committed by foreigners, for example.

Experts suggest a ‘spending reset’ in UAE

British broadcaster and business consultant Kate Hardcastle has warned Al Arabiya News that expats in the UAE face a cost-of-living crisis and that many will need to face a ‘spending reset.’ She said that expats in the region have been spending with ‘renewed vigour’ after the Covid-19 pandemic, but that many will need to put the brakes on in the months to come in order to avoid slipping into financial hardship. She cautions against a “paradigm shift of people dipping into their savings rather than pressing forward with their savings goal,” and comments on the ‘keeping up with the Joneses’ lifestyles experienced by many in places such as Dubai. Expats need, she says, to have open conversations about money with family and friends, and to treat their finances with more respect.

Prices in the region have been creeping up, and the purchase of second homes in the UAE by Westerners has – as in so many places – driven up property prices, too. Rents have also risen, pushed upwards by new visa categories which allow those working in other countries to be able to live in Dubai. Expats told Al Arabiya that the rise in fuel costs was affecting their mobility, with questions of where to live in regard to long commutes suddenly becoming more of an issue than in recent years. Car rentals have been rising significantly in comparison with car purchases. And some expats hark back to the 2008/2009 crash, remembering the sudden nose dive of the economy and wondering if this might happen again.

Expats are unlikely to start leaving the Emirates in droves just yet. The country is still relatively cost-effective compared to many nations, and issues such as political stability and safety are a factor. But many expats are beginning to feel a cold economic wind starting to blow, and they’re wondering where the future of the region lies.

Expats living in pension lock have a new champion

Carol Monaghan, the Scottish National Party (SNP) MP for Glasgow North West, is re-addressing the issue of frozen pensions for expats. As we’ve reported before, the rise in pensions in the UK is not reflected in the pensions of expats living in some nations abroad, such as Canada or New Zealand. Groups have been campaigning for a change in pension legislation for a long time, without substantial results. Monaghan says that the consequence of this is that some expats, including veterans, are now living in poverty, and the End Frozen Pensions Campaign has recently estimated that this situation affects over half a million British expats across the world.

The UK government, however, has proved intransigent, stating that they are not prepared to foot the bill or make UK taxpayers cover the cost, even though many expats still pay tax in the UK.

Dutch salary cap on 30% ruling

The Netherlands is looking to bring in a cap on the 30% ruling – the tax-free allowance which permits expats to claim expenses incurred in working for a Dutch employer. The Dutch government is planning to introduce a maximum baseline for the tax-free 30% allowance, reducing this over a three-year period to a cap of an annual amount of €216,000. This isn’t enshrined in law yet, but might appear in the September budget statement. So, if this affects you, it’s worth keeping an eye on any forthcoming changes.


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