Appropriate management of your finances will be critical to ensuring that you can enjoy your new life abroad without leaving a mess behind you. Here’s our guide to expat banking and expat taxes.
Expat Banking and Expat Taxes
Expat banking rules and regulations vary according to the country within which you will reside. Many banks will not allow you to keep an account open if you are no longer resident in the country. There are currently a small number of global banks available that can offer cross border services and support. Where possible you should consider moving your funds to a bank that has a presence both in your home country and in your new destination. This will make life a lot easier for you in the long run as it will allow you to easily transfer money instantly overseas as well as complete transactions in your home country, even after you have moved abroad. Another suitable alternative is an offshore bank account. Through transferring some funds from your home account to this account you can ensure that your funds are always internationally accessible.
Whenever possible, you should try to ensure that you have bank accounts in more than one currency. Potentially your home country and that of your relocation destination. Not only will this ensure that you have funds readily available for all situations, it also allows you to offset any currency exposure you may have.
For full details of recommended banks and their accompanying contact details please see our international relocation guides.
If you are in a position whereby you have an outstanding mortgage or debt then you will need to face up to this before you leave. Many banks will force you to close your bank account if you will be residing out of the country and, as part of this, you will be expected to settle any outstanding loans. Your debt situation will be unique to you so we cannot offer definitive advice here. You should meet with your service representative at the earliest opportunity so that they can assist you to develop a plan for settling any debt before you leave or helping you to incorporate repayment measures into your expat banking systems whilst you are out of the country.
When implementing your plans for moving abroad and getting your finances in order you should bear in mind the need to reserve a contingency fund. By reserving a budget for unexpected emergencies you can be assured that you have the appropriate funds to assist you in the unlikely event that something goes wrong. At a bare minimum you should always make sure you have enough money in the bank to cover flights home. Many expats reserve a credit card for such purposes.
You should always ensure that you have sufficient funds available to assist you during the settling in period. Many organizations will only start to make salary payments a month after you commence work. Sometimes it may be even longer depending upon the date you arrived and the date of their payroll processing. You will need money to survive during this interim period so reserving a suitable amount of money and ensuring that it will be readily available to you once you move will be crucial.
This is another area that expats overlook. By moving abroad there’s a strong chance that you will no longer be able to make consistent payments to your existing pension. You may also lose any tax benefits you have previously been receiving in your home nation. Before moving abroad you should seek advice from an independent financial consultant, who should be able to provide you with recommendations as to how you can continue to ensure that you are making sufficient pension contributions in advance of your retirement.
Aside from the tax obligations you may face in your host country there may also be a number of responsibilities you will have to face in your home country, both before you leave and whilst you live abroad and you may be required to pay expat taxes. Any emigration may have an impact on your tax position at home and you may find yourself in serious trouble if you fail to meet requirements. Furthermore, you may also find that your savings can be subject to taxes if you leave them in the wrong place, or move them home at the wrong time. You should thoroughly research the tax requirements before you leave. We currently have advice available for those who are emigrating from the USA, United Kingdom and Canada.
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