Where in the World do Expats Pay Less Tax?

Whilst it shouldn’t be the only deciding factor on where you move to in the world, if you are thinking about moving abroad to further your career or boost your savings and investments, wouldn’t it be nice to know where in the world expats pay less tax?

Well, thanks to the nice people at Mercer Consulting, we can now tell you where you should be living if you want to earn more and pay less tax, where you are better off if you’re married and even if you have children, and where single professionals benefit from reduced tax and a decent standard of living.

If you’re planning to move abroad but you’re not sure where to go, or if you’re negotiating a pay packet with your employers who are relocating you overseas, you need this information to make sure you’re getting a fair deal or to help you plan where you want to relocate to.

According to Mercer’s last Worldwide Individual Tax Comparator Report, despite what we may think in the UK, we are not the highest taxed nation – well, not yet anyway, although we’re sure to shoot up the rankings when the Chancellor’s 50% tax rate hits.  So, if you’re being relocated by your company to the likes of Hungary, Denmark or even Belgium, you need to know that the amount of tax you pay is highly likely to increase substantially.  Single professional individuals can expect to pay in the region of 48.5% of their gross income in taxes and social security contributions in Hungary, 48.6% in Denmark and a scary 50.5% in Belgium.

So, that’s the bad news!  What’s the good news for expatriates when it comes to personal rates of taxation?  Well, as you may well have guessed, one of the most attractive places to live and work and pay tax in the world is the UAE, with Dubai ranking very highly indeed for professional individuals.  However, thinking about it, the cost of living in Dubai is high, rental costs are astronomical, and even though you’re not taxed much on your income, your salary is still well eroded thanks to your day-to-day living costs.

You may well be wondering where’s better than Dubai then?  The answer may be Russia or it could be Hong Kong.  Mercer report that in Russia most individuals are taxed on average at a rate of about 13%, whereas in Hong Kong that figure is in the region of 14 – 15%.  Each of these three locations, namely Dubai, Russia and Hong Kong, therefore benefit from attracting the most professional and highly skilled individuals and can really have the pick of the crop when it comes to the best employees.  Dubai for example has seen these expatriates using a relatively short-term contract to boost their short-term savings to get them on to the housing ladder back home, or to fuel their retirement savings pot.

If you’re thinking about going abroad for the same reason, you need to not only look at your tax liability in your new nation of choice, but at the fact that you can utilise your non-residency status in the UK to enhance your savings even further by perhaps offshoring your money or making use of structures and solutions such as portfolio bonds or qualifying recognised overseas pension schemes.

Saving tax on the income you earn is one thing, then putting that income to good ‘use’ and maximising your returns on any investment made is the next step for expatriates to take when thinking about how they can make the very most of their time abroad in a purely financial sense.  We would suggest you explore your offshore and tax saving options with a financial adviser who specialises in assisting expats and international individuals…that way you can be assured that your status is really being taken into proper consideration when any investment solutions are being proposed to you.