Protection News & Insights

Expat financial planning clients should be aware that HM Revenue & Customs have increased powers to ensure full disclosure of financial information in order to assess tax liability.

This follows a ruling by the Court of Appeal in London* in which the Court upheld the right of HMRC to demand compliance from a UK-connected individual living in Dubai.

The case clearly indicates that UK-interested parties with cross-border financial interests must consider their UK tax liabilities as part of their wider expat financial plans.

As reported in our Big Deal blog, the UK and Spain have a tax treaty agreement for Gibraltar and Spain. This 2019 treaty is designed to clarify a number of important issues, including the long-standing, contentious issues of tax disputes and tax residency.

Furthermore, the Treaty resolves the issue of Gibraltar's ongoing consistency with EU law following Brexit as the British Overseas Territory has elected to retain legislation equivalent to EU law on all matters related to financial transparency, taxation, administration and Anti-Money Laundering.

If your expat financial adviser in the Netherlands has not alerted you to the fact already, you should be aware that the deadlines for Dutch tax returns are looming. Depending on your circumstances, these are as follows:

30 April – This is the general deadline and applies to the majority of taxpayers in the Netherlands 1 July – This is the deadline for most non-residents, including those who are newly arrived in the Netherlands as well as all other parties who qualify as M Form taxpayers (those who have only spent part of the tax year in the Netherlands due to immigration or emigration)

Expat financial advice is a must for any British expat living in Portugal, Spain or Italy to ensure they meet their cross-border taxation obligations while also making the most of the financial growth and preservation opportunities available to them.

However, there is no off-the-shelf recipe for success in this regard. Instead, expat financial advisers need to take full account of every client's individual circumstances before recommending any product or strategy.

Furthermore, the parameters affecting expat investors are subject to jurisdictional differences and change, so it is not only essential that expat financial advisers stay abreast of their clients' changing needs and circumstances but also the changing legal and regulatory environment in which their investments operate.

The structure of your wealth and your tax affairs should always depend on the particular laws and regulations of where you reside in the world as well as the nature of your long-term goals. The expat financial services market has evolved in order to help cater to these considerations and in some cases this includes helping ensure clients meet the demands of wealth tax.

The notion of wealth tax is an easy one to understand – a tax levied on personal capital above a certain threshold or thresholds – but it is by no means universally embraced as economic good sense, not least because it often may serve only to keep high net worth individuals from emigrating to a high wealth tax jurisdiction.

By now you are probably really fed up hearing about Brexit!  Yet, it's important that you are prepared financially; not just for a Deal or NO Deal Brexit, but also by being ready to meet the Spanish requirements for living in the country. 

You will have, no doubt, heard lots of horror stories about what Brexit means either way for UK expats and I do not intend to go into that here. Having said that, please read on, as I explain some fundamental issues that may need your attention sooner, rather than later.

Tax planning should be a New Year priority for any British citizen who has recently become an expat.

Just last year HM Revenue & Customs increased its efforts to ensure expats met their full tax obligations and has begun to successfully use EU laws that encourage co-operation between member states. "We will not hesitate to use all legal means to collect taxes that are owed," commented an HMRC spokesperson. Despite this tough talking, the EU this year criticised the UK for its poor record of cross-border tax collection.

It is important to remember that although the HMRC's new stricter approach remains at an early stage, it is already paying dividends for the government, which estimates that it lost £1.7bn in tax revenue in 2016-17, compared to £4bn in 2011-12. Furthermore, 1,006 requests for tax information were made to EU authorities in 2017. This resulted in the recovery of £5 million. In comparison, similar requests in 2013 yielded just £800,000.

Spanish property ownership is a fairly common part of many expat wealth management strategies. However, Spanish taxes have been known to present obstacles to some expats in this regard and the uptake of both home ownership and property investment in Spain has suffered as a result.

Previously, the law held that expat buyers must pay mortgage tax out of their own pockets, which, as well as being an administrative annoyance also left many expats feeling a little like second-class citizens; however, with changes recently introduced by parliament, the tax will instead be paid by the bank financing the mortgage, with the new rules taking effect immediately.