International Tax Planning

As an expatriate or someone who regularly travels outside of your country of residence for work reasons, it’s essential to get a handle on your taxation status very early on during your period of secondment overseas or as soon as you move abroad for a prolonged period.

Your taxation status will dictate how much tax you pay and to whom and on a positive side it may entitle you to capital gains or even income taxation breaks, whereas on the negative side it may mean you encounter double taxation issues or even issues relating to your residence status.  It is therefore essential that you understand the tax rules and laws of your ‘home’ country and your new country and that you change your focus towards international tax planning rather than domestic or local tax planning.

To this end there are various groups of professionals who can assist you - generally they fall into 4 categories: -

1) local accountants
2) international accountants
3) professional tax planners
4) international financial advisers

1) Local Accountants - to gain an international taxation perspective it would be essential for an expatriate to employ the services of a local accountant in their ‘home’ or original country (usually their country of domicile) and also an accountant in their new country of residence.  It’s unlikely that a local accountant in either jurisdiction will have as in depth an understanding of tax rules, laws and breaks in any other country and so by employing two professionals it’s possible to ensure you cover all of your potential liabilities in both countries.

The problem with this approach is that neither accountant will necessarily understand your unique tax status as an expatriate, rather each will be considering you as a resident or non-resident of a given country, treating you accordingly and only ensuring you pay the maximum taxation due!  As an expatriate you are often entitled to make best use of your offshore advantage and certain tax breaks - local accountants aren’t likely to have this depth and breadth of knowledge and you’ll probably be left paying excess taxation as well as two sets of charges!

2) International Accountants - you can usually find these guys working for accountancy firms who deal with global corporations; they can certainly help you with your international taxation planning as they understand the taxation rules and breaks cross border and globally.  On the negative side their fees and charges may be high and they will be unable to assist you and advise you when it comes to the considerations of utilising your offshore investment and banking advantage.  They will however ensure you only pay tax due and that you do not fall foul of double taxation issues.  They will advise you on the rules relating to residency etc., which you can then work with if you wish to remain non-resident in a country to avoid paying local taxes for example.  International accountants can therefore offer a good basic service to expatriates.

3) Professional International Tax Planners - these are usually people with an amalgamation of skills that combine international accountancy and financial planning.  They can assist the high net worth expatriate or international professional with taxation assistance as well as helping them to understand and gain access to any advantages that their status affords them.  International tax planners will cover taxation liability, legal tax break utilisation and embracing the offshore advantages an individual is entitled to and can help you formulate a legal plan to assist with lowering your overall taxation liability.

Companies offering international tax planning services to expatriates, international professionals and global corporations often advertise their services on the internet, on expat sites and in various trade newspapers and magazines.  Their fees may be relatively high, but their services can save companies and high net worth individuals a substantial amount of money in taxation and also assist them to formulate an international plan to help them legally ‘avoid’ certain taxation.

4) International Financial Advisers - offshore and international independent financial advisers are a great asset to any expatriate as these guys really do understand the offshore world and how to position financial assets offshore to limit or negate taxation liability.  Combined with a good international accountant who will highlight the taxation you owe on any income or gains, an international financial adviser can give you free advice and assistance to help your money grow free and unrestricted offshore.

The majority of good, professional international independent financial advisers will have a solid understanding of what is and is not legally possible for an expatriate depending on their countries of domicile and residence and they will only recommend an approach to investing, saving or banking offshore that is legal, beneficial and sustainable long term for the individual based on their current and potential future circumstances.

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