Money Guide for Expats: How to Relocate Your Money

By James Lindsay

Moving house can be a trying experience, and one of the most important reasons it can be so stressful is the financial upheaval it causes. That’s compounded for expats when they’re not just trading up for the sake of a few more square feet, but actually moving to a new country. Then there’s the fact that we’re so frequently buffeted by corporate HQ’s new plan for the company (or, as global HR puts it, their “new plan for you”). Being sent hither and thither, often with very little notice, does nothing for the ease of financial planning. And the half-pats, entrepreneurs and, yes, even the much maligned English teachers among us can suffer from our own caprices and choose to move on – or move back home – without as much as a by-your-leave. But it’s possible to be more prepared rather than less prepared.

When it comes to the move, you really will need to take specialist advice. One of the most striking things I’ve discovered during my research about this field is that all of the experts inserted caveats about the relevance of their advice. “Giving blanket advice is tough,” they warned. “I specialise in this and I don’t practice that.” And it’s a sign of my discerning taste in expat-experts that I was able to pick such careful advisers; they know that being an expat is not a nationality and it doesn’t come with one set of tax rules. As I’ve said before, you carry a lot of your tax status with you – it varies according to your identity as much as your residence at any point in time.

That said, there are some general guidelines that will give you a starting point. In terms of leaving China in particular, Shirley Brown, a tax accountant based in Beijing, who specialises in US taxation, says that we need to “be aware of post-departure taxation, like bonuses and stock options, paid after leaving China.” With careful planning, you can “minimise Chinese tax on some kinds of income, such as severance.” But it’s not just being careful to pay the right amount of tax. Now, with the new rules about social security payments for expats, Brown says, “The new laws might mean an expat leaving China would need to apply for a refund.”

Next, in terms of getting ready for your new residency status, Shanghai-based, fee-only financial adviser Tony Noto says, “My top tip would be to talk to a tax consultant from the country you will be moving to before the move.” This would give you the chance to take advantage of possible capital gains tax benefits. Noto continues, “You may be able to significantly reduce future tax bills by selling assets before the move, like appreciated stocks and bonds held in an offshore brokerage account. Then, assuming your investment goals remain the same, repurchase your investments after the move, maintaining them offshore if that still makes sense or re-establishing the investment account onshore if your new home offers better tax treatment. Flexibility and forward thinking could help you avoid a lot of unnecessary tax bills.”

That question of investment goals is taken up by UK tax specialist Martin Rimmer of the Fry Group. Talking about moving back home, he says, “This is an excellent opportunity to take control of your investment portfolio. The first step is to review how your investment objectives can best be met once you are home.”

Again, Rimmer highlights capital gains tax. “Plan ahead,” he says, “And consider making changes to your portfolio in the light of your return.” And it may pay to be sure about your origins. It’s not just your citizenship but also your domicile that affects your tax status. Rimmer points out, “Real tax advantages can follow if you originate outside what you consider to be your home country.”

But always the careful caveat: specialist advice should be taken. Whether it’s not falling foul of the law, getting a rebate, minimising capital gains, or getting your investments in shape, think ahead and take advice before you move.

James is the editor of ‘eg’, the online money magazine for expats in Shanghai. Visit www.egmoneymagazine.com to read more about making the most out of your money.