Working abroad and the money side

Moving country for work involves a set of financial consequences that are easy to defer and expensive to defer, particularly around tax and pensions.

Tax residence

The determining question.

Tax residence is determined by rules that vary by country, typically involving days present, ties to the country and where your permanent home is.

It is possible to be resident in two countries simultaneously, which is where double taxation treaties become relevant — these exist between many countries and determine which has taxing rights over which income.

Leaving a country does not automatically end tax obligations there, particularly for income arising there.

And several countries tax on citizenship rather than residence, which means obligations continue regardless of where you live.

This is an area where professional advice before moving is worth its cost.

What to sort before leaving

Practical.

Notify the tax authority of your departure, which is required in many systems and which affects your position.

File any outstanding returns.

Establish your residence position for the year of departure, which is frequently split.

Decide what to do with property, since letting it has tax consequences in both countries.

Check what happens to bank accounts, since some providers close accounts for non-residents.

Check the position on any investments and tax-advantaged accounts, which frequently lose their advantages or cannot be contributed to from abroad.

And check whether student loan repayment arrangements need notifying, since failing to do so results in fixed high repayments being applied.

Social security and healthcare

Where the consequences are long-term.

Social security contributions generally follow where you work, with agreements between some countries allowing continued contribution to the home system for a period.

Contribution records affect state pension entitlement, and gaps reduce it.

Which means checking your home country record and considering voluntary contributions to fill gaps, which are frequently excellent value.

Healthcare entitlement changes, and reciprocal arrangements vary.

Private health insurance is frequently necessary and is generally cheaper arranged before a health condition arises.

Pensions

Where the largest sums sit.

Existing pensions in the home country generally remain and continue to be invested.

Contributing to them from abroad may not be possible or tax-efficient.

Transferring pensions internationally is possible in some cases and is an area with substantial scam activity and significant tax charges if done incorrectly — regulated advice is essential and unsolicited approaches should be refused.

New pensions in the host country accumulate separately.

Which means most people who work in several countries end up with several pots, and keeping a record of each with its provider and reference is the practical step that prevents them being lost.

Banking and transfers

Practical costs.

International transfers through traditional banks frequently carry poor exchange rates in addition to fees, and the rate margin is where most of the cost sits and is generally not disclosed as a fee.

Specialist transfer services and multi-currency accounts generally offer better rates.

Compare the total received amount rather than the fee.

Maintaining an account in the home country is frequently useful and increasingly difficult for non-residents.

And be aware of reporting requirements for foreign accounts, which several countries impose with substantial penalties for non-compliance.

Currency risk

Which affects anyone earning in one currency and with commitments in another.

A mortgage in one currency and income in another creates exposure that can be substantial.

Regular transfers can be arranged at fixed rates for a period through forward contracts, which suits people with known regular commitments.

Holding savings in the currency of eventual expenditure reduces risk.

And retirement plans involving returning to a home country need to account for exchange rate movement over decades.

Insurance and protection

Which frequently does not travel.

Life insurance, income protection and critical illness policies may be invalidated by moving abroad, or may exclude the destination.

Check with the insurer before moving rather than after.

Travel and health insurance requirements differ.

Home and contents insurance for a property left behind may require notification if it is unoccupied or let.

And vehicle insurance and driving entitlements change.

Coming back

Planned in advance.

Re-establishing tax residence has consequences for the timing of income and disposals, which can be planned.

Credit history generally does not transfer, which means returning residents frequently find themselves with a thin file.

Healthcare entitlement may require re-establishing residence.

Bringing money back has exchange rate and sometimes tax implications.

And pensions accumulated abroad need tracking, which is considerably easier while you still remember the provider.

General information only, not financial, tax or legal advice. Rules vary enormously by country and treaty — consult a qualified cross-border tax adviser before moving.