There are some professions that have a really bad reputation - think estate agents! And there are some that are simply ridiculed – accountants fall into this bracket; they are often labelled ‘boring.’ But the plain truth is this - an accountant can be an expat’s best friend! An accountant can make the difference between you paying too much tax and getting a tax rebate, or between you being investigated for tax and having your tax return signed off without question.
For an expat, an accountant can also be the key to the success (or otherwise) of your new life abroad…
If you’re wondering what I’m talking about, the answer is quite simple – it all comes down to the cost of living. And as we often preach at Shelter Offshore, the one thing that can be the biggest hurdle for expats when starting a new life abroad is money…i.e., if you don’t get money matters right then your entire dream of a new life abroad can turn into one long nightmare. Therefore you absolutely have to have a comprehensive understanding of what the cost of living will be in your new nation, and an accountant can help you out with this.
If you’re going to be working abroad, running your own business or even ‘just’ earning an income from a pension or investment, you need to know everything about taxation…and not just the headline rates of personal income tax.
For example, you need to know about any social contributions you may have to make, whether there are any ‘special’ taxes like VAT or a temporary tax perhaps, and you need to know about wealth tax, property tax, capital gains tax and tax-free allowances. Not only that, but you need to be aware of whether you retain a tax liability in your old home nation too.
As tax is the most significant deduction from your gross income, it’s critical that you understand what you will be exposed to in your new nation…and an accountant is the best person to help you determine this in advance of your move.
It’s no good assuming that the tax system in your new country works the same way as it does in your current country. Everything from who pays tax on what, to when you actually submit your tax return can be different. And when it comes to tax there is one universally true saying: ‘ignorance is no excuse.’ Therefore you have to be well informed about your liabilities.
If you take the time and effort to go abroad on a reconnaissance visit to your chosen nation before you relocate, you can spend time getting to know what property prices are like, what goods and services will cost, and how much your day to day living will equate to - but if you fail to factor in tax, you could fail full stop.
If you think your new salary will be enough to cover your outgoings you could be in for a very rude shock when your monthly tax deductions are removed. Therefore you need to know in advance of your move how much taxation you will be exposed to. Only then can you work backwards, take your deductibles away from your salary, and see if you really will be earning enough to enjoy the standard of living you’re hoping to achieve.
An accountant in your new nation will be able to help you understand the tax system and what you will be exposed to. For anyone starting their own business in the new nation, it will perhaps be even more imperative to speak to an accountant before even embarking on buying or building a business.
An accountant will show you whether your plans and aspirations are actually achievable…
You can do a Google search to find an English-speaking accountant in your new nation before you relocate, or you can use any form of nu-media to reach out and get the information you need. You can tweet, connect via Facebook, search forums and local expat websites to get the name of a good accountant from expats in the know.
Do this research in advance – it could literally pay you dividends. After all, a good accountant will also tell you about things you can deduct, and legitimate ways for you to pay less tax in your new country!
After you’ve settled in to your new life abroad you may well find that you can manage your own tax affairs – from preparing a return to filing it for example – but in the first years you will find an accountant is invaluable in helping you to understand and successfully navigate the local system.
And as stated, use their advice in advance of a move to make sure you have a handle on how much tax you will pay, and whether that still makes your move financially viable. Don’t cut this corner if you want to be as well informed as possible about the cost of living in your new country.