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Recortes de Prensa

Don’t let your expat dream be a financial nightmare

The Guardian, 19 | 07 | 2009 - Noticia

A survey has revealed that 87% of those who made the big move believe they’re better off, but are they right? Chris Alden warns Brits that they should learn to manage their money like the locals

Can’t decide whether to move abroad? No wonder. The papers are full of stories of expats caught by currency swings and falling property prices - yet a recent NatWest survey reported that 87% of Brits abroad think they’re in a better position to survive the downturn than they would be at home. So who’s right?

The answer, says Mike Hardaker, co-founder of expat website AngloInfo, is that moving abroad can be rewarding - if you keep your eyes open and have the “cultural humility” to ask stupid questions. With that in mind, here are 10 pitfalls to avoid.

Currency swings

Of all the problems to hit expats, the weak pound has been the biggest. But currency swings aren’t new. “I lived for six years in South Africa, and the exchange rate fluctuated by about 40% over that period,” Hardaker warns. To protect against surprises, try to arrange affairs as a local would do, says Rupert Holderness, managing director of Siddalls France, an independent financial adviser for emigrating Brits. He has been advising clients to hold euro-dominated investments for that reason. Check out past rates at and seek the best rate by contacting specialist currency brokers; don’t assume your bank will offer the best deal.

Unexpected taxes

If you become a tax-resident abroad and expect the system to work just like in the UK, you’re in for a shock. Other countries, for example, tax you not just on income, but on assets. This includes “wealth tax” in France, now effective after five years’ tax-residence; and the “foreign investment fund tax” in Australia - which, Siddalls consultant Robert Brealey warns, is levied on non-Australian investment growth, including Isas and personal pensions, if those assets total more than A$50,000 (£24,400). And in France and Hong Kong, there’s no PAYE - so put money aside for tax.

Lost UK perks

As well as finding out about taxes abroad, budget for lost UK perks. For example, you can’t add to an Isa if you’re not a UK tax resident, unless you’re a Crown servant or married to one - although you can keep it, and add to it if you return.

Homebuying costs

Buying a British house is complicated enough. Abroad, transaction costs can top 10% of the purchase price: in Germany, costs include the notary (up to 1.5%), property tax (3.5%), agents’ fees and registration. In many countries, says Hardaker, you might have to put up a bigger deposit than you do here. Check local media for problems: there have been pages of coverage in Spain, where Brits have bought into illegal developments, while in Cyprus, others have bought homes and then discovered they can’t get title deeds released.

Health cover

We whinge about the NHS, but it’s free at point of use, unlike many countries. In France, suggests Holderness, budget for top-up health insurance, because the state doesn’t pay the full cost of care. And if you’re not paying social insurance in France and aren’t receiving an EU state pension, you’ll need evidence of private health cover, he adds.

Inheritance planning

If you move abroad, take some advice on inheritance to avoid problems. Generally, if you’re domiciled in the UK but resident abroad, UK inheritance tax will be chargeable on your worldwide assets - unless there’s a double taxation agreement that says otherwise. That’s the case in France, says Holderness, where succession rules can be a “shock to the system” - if you die, they provide for children to inherit part of the estate before the death of your spouse.

Internet - or lack of it

If you rely on comparison websites to find deals on everything from consumables to utilities, then going to a country where internet shopping is an immature market can feel like stepping back in time. And access might cost more too - in Cyprus, for example, budget more than €40 a month for 2MB broadband.

Changing luxuries

Depending on where you are in the world, the perception of “luxury” can differ. Oranges are expensive in Singapore; computer equipment, furniture and white goods all cost more in southern Europe than in the UK; but in Cyprus, you can buy a large bunch of rocket for €0.30, which would set you back £2 in Sainsbury’s.

Used cars

You can always pick up a used car for a few hundred quid, right? Not outside the UK you can’t. “The UK has very inexpensive second-hand cars,” says Hardaker, “partly because the market is flooded by fleet sales.”

Remember relatives

You should budget for flights to see friends and relatives back in Britain. “If I want to take the kids, there’s even more cost involved,” cautions Matt Shaw, Netherlands-based community relations manager at the expat advice website Expatica.

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