In Focus News & Insights

Recent news about the 30% tax ruling in the Netherlands could have substantial implications for British expats and their financial planning and wealth management strategies.

The 30% tax ruling for expats in the Netherlands enables employers to offer working expats 30% of their salary tax-free as long as they meet certain requirements. The intended aim is to encourage highly skilled workers from around the globe to bring their expertise to the Netherlands. After all, relocating to the Netherlands is not cheap, and the tax advantage is there to help offset all the expense that comes with relocating. There are approximately 60,000 expats who currently claim the tax break.

As we reported last year, the tax break came under fire in a report published by the Dutch research bureau Dialogic for being far too generous and, therefore, costing the Dutch government too much money for it to be sustainable. When published in June 2017, the report suggested several reforms to the system, including shortening the number of years that expats could claim the tax-relief from eight years to five. This was because research carried out by Dialogic found that the vast majority of expats making use of the benefit (80%) claimed it for fewer than five years; less than 10% actually claimed the benefit for the full eight years.

From pension transfers into beneficial QROPS to careful tax planning, expats have a lot to consider so that they can be financially confident and live their life abroad to the fullest.

But with Brexit looming, there are other considerations afoot. For example, should expats keep their British citizenship or apply for nationality in their new expat homeland? And according to new statistics, it appears that the Brexit referendum result has had a significant effect on the number of Britons gaining citizenship elsewhere in the EU. Figures from Eurostat, the EU's statistics agency, show a substantial surge in the number of Britons acquiring citizenship in other EU countries between 2015 (2,478) and 2016, when the number more than doubled to 6,555 – that's an increase of 165 percent. The figures include both those who chose to adopt dual citizenship, so that they kept their British citizenship, as well as those who renounced it.

Maintaining your physical health and wellbeing as an expat is often one of the most pertinent aspects of financial planning abroad. Without the NHS to fall back on for care, making sure you've got adequate health insurance in place is an essential part of your preparation when moving overseas.

There is no doubt that ecommerce is one of the most exciting investment sectors that exists today. Every aspect of our lives is affected by ecommerce. It is fast, high profile, and the numbers are breathtaking:

Amazon processed nearly $89 billion in sales from 240 million customers; Visa and MasterCard have over 1,600 million credit cards in circulation; Apple and Google are now worth more than many entire countries.

Amazing as those number are, they pale into insignificance when you consider that the total ecommerce market was estimated to be $1.6 trillion in 2015. However, 20 years ago it didn’t exist, but it is forecast to grow to $3.5 trillion per annum by 2019.

"Non, je ne regrette rien".

Expats in France may be able to translate this famous song title to "No, I regret nothing," which is ideally what every saver wants to be able to say as they reach the end of their expat retirement planning period and look forward to moving abroad to their own personal paradise.

But not everyone has the initiative to stay on top of their pension pot, and it might be interesting for the younger generation to hear what older workers and retirees have to say about their pension saving experiences and what they would do differently if they could turn back the clock.

With this in mind, research recently released by Aegon, which asked pension savers about which decisions regarding their pensions they regretted the most, could prove very useful and serve as a firm reminder of why sufficient retirement planning isn't something to leave until the eleventh hour.

Recently released research from AXA Global Healthcare has given a better idea of how living and working abroad has been of value to professional men and women.

The study, which was exclusively focused on people who'd moved as a result of work assignments, aimed to discover how taking on international roles impacted upon life.

Focusing on men and women separately, the results showed that 43 per cent of male respondents believed their international assignments had increased their value to employers by enabling to become regional experts.

Overall, 51 per cent of men felt that shifting their job overseas accelerated their career development, making this is a top benefit for professionals. Of female respondents 39 per cent, said the same.

Because many UK expats will still have friends and family living back in the UK, it's common for them to make frequent trips back and forth between their previous home country and their chosen destination, especially during holidays such as Easter and Christmas.

This arrangement works nicely for many expats, allowing them to enjoy the best of both worlds as they set up a new life in an new location while still being able to retain a taste of home. But it's not without complication, and it is wise for all expats moving between countries to understand their rights regarding healthcare in every place they visit. Otherwise, they may be left to face the financial consequences if their health take an unexpected turn.

The importance of putting money into a pension cannot be understated, and the British government has a regulation in place – the pension tax relief scheme – to encourage people to save. But many experts are predicting significant changes to the scheme. If you're planning to retire overseas as an expat and take advantage of international pension transfers, you'll need to stay updated with these changes.

How does pension tax relief work?

The pension tax relief scheme is an incentive to entice people to put money into their pension pot. To reward people for thinking ahead to their retirement, the government currently tops up their pension contributions based on the rate at which they pay income tax. So, basic rate taxpayers will receive 20 per cent tax relief (meaning they only need to pay £80 into their pot to get £100), while higher rate taxpayers are entitled to 40 per cent relief.