Are U.S. expats being pushed out of business deals because of FATCA? There are rumblings that this may be one of the unintended consequences of the law that is intended to crack down on U.S. tax evasion:
Yet Bartolini admitted he had heard of various problems, such as claims Americans were being pushed out of business deals and prevented from climbing the corporate ladder allegedly due to their US nationality and perceptions about tax reporting and FATCA. If a foreign corporation has a ten per cent ownership by an American, under Fatca the firm is obliged to report that ownership to the US.
Facta is also causing tensions within mixed couples, say critics. If financial assets are jointly held, FATCA requires the disclosure of the identity of the non-US spouse.
Expats doing business abroad should do their research and retain as much professional assistance as possible to ensure they don’t run afoul of the new laws as they are implemented. Being prepared and knowing everything that must be done will help you avoid the relational tensions also mentioned.
To the extent that they are preventing them from conducting business abroad, inform your representatives and help them understand what will help you avoid such treatment by others doing business in other countries.
Every year, various companies and organizations somehow connect to the expat experience find some way to declare a city or country the “winner.” Winner of the “most expensive place for expats to live,” title, that is. It’s ECA International’s turn, and they’ve crowned Oslo, Norway this year’s champ:
Tokyo is no longer the world’s most expensive city for expatriates – Oslo is.
According to research findings on the cost of living by expatriate management firm ECA International, the Japanese capital has slipped to number six on the list.
Oslo, Norway’s capital, was previously ranked second.
The research, which was done by comparing “a basket of consumer goods and services” normally purchased by expats “in more than 400 locations worldwide,” also showed that Tokyo’s five-place fall was due to the “significant depreciation of the yen against other major currencies in recent months,” according to ECA International.
Poor Tokyo. What will it do to regain the crown? In all seriousness, it’s always interesting and useful – for expats and HR departments alike – to get a sense of exactly what they might be getting themselves into financially when moving overseas or sending employees abroad. It’s also important for HR departments and employees to have a common understanding of cost-of-living when expatriate packages are designed, offered and accepted.
ExpatExchange got some ink from the New York Times on Wednesday, in an article about Making a Move Abroad, and Working There, Too:
There’s a wide range of jobs that globe trotters may consider. Of course, there’s the possibility of accepting contract assignments from former employers. And there are often positions available to teach English, work as a translator, lead English-speaking tours, or work at hotels that cater to English-speaking travelers, according to Betsy Burlingame, founder of ExpatExchange.com, a leading Web site on international living.
This is a great article, as it covers a trend that is unlikely to change: people will need to work later into life. I think those that are able are likely to find a way to enjoy it, too – if you don’t have a choice, why let it ruin your life? Retiring abroad is adventurous and offers great opportunities – international experiences – that can’t be had at home. It won’t always be fun and games, but what is? So many people don’t have a choice, or they want to move overseas, and they are finding fun, rewarding lives abroad.
Expats continue to face a challenge getting credit when they move abroad. This can make the simplest financial services, such as getting a bank account, very difficult and source of great frustration for a lot of people when they move abroad. A recent article about expats and credit on WSJ.com re-examines the issues involved:
U.S. lenders rely heavily on credit reports and scores, more so than in other countries, relocation experts say. That reliance can pose challenges for returning expatriates and foreign nationals whose companies bring them to the U.S.
“Even though we are in a global marketplace, the credit marketplace is still very segmented by country,” with different rules and standards, says Maxine Sweet, vice president of public education at credit bureau Experian.
That means your credit experience in one country isn’t shared when you move to another country. The result: Even senior foreign nationals on assignment to the U.S. often “cannot open a bank account or get a line of credit,” says Ed Hannibal, North American mobility leader at consulting firm Mercer.
Expat finance will always be a critical aspect of expat life, and it’s one that should be addressed before moving overseas. Too many expats assume that financial services will be just like they were in their country, and that is just not the case.
A recent article by TheHill.com examines the push for expatriate tax relief proposals before the House Ways and Means Committee. This initiative has largely been driven by American Citizens Abroad. Here is an excerpt:
Letters are pouring in to the House Ways and Means Committee from as far away as Australia, Germany and Bahrain from citizens who say the IRS inflicts a particularly cruel form of punishment on them for living abroad.
“For the simple tax situation of one wage and some interest income, my 2012 U.S. tax return, with supporting documentation, is 28 pages!” an American living in Australia wrote to the House committee. “I muddle through as best I can, spending dozens of hours each year on it.”
Here is more in an article about the overseas tax initiative on Yahoo!. Here’s hoping that the Ways and Means Committee is truly open to finding a fair and balanced approach to overseas taxation for American expats!
An article about expat finance on NYTimes.com, Overseas Finances Can Trip Up Americans Abroad, advises the same advice Expat Exchange has espoused for our entire 15+ year history: research, research, research. Also noted are some of the realities expats face due to increased scrutiny of overseas finance by the IRS:
Increased I.R.S. scrutiny of bank accounts abroad under the Foreign Account Tax Compliance Act, which began to take effect this year, means foreign banks must report more information on American account holders. Mr. Comisky, [partner at the law firm Blank Rome and co-author of "Tax Fraud and Evasion"], said he had received calls from people with undeclared overseas accounts who asked if they could transfer the money to a friend who was not an American citizen and have that person transfer it back to them as a gift to avoid the penalties from years of not paying their taxes.
“I said, ‘You can do it, but it’s illegal,’” Mr. Comisky said. “That’s pure tax evasion.”
I was particularly fond of this quote from an expat who retired back to the U.S.:
“You get excited being back and say, ‘I lived away — I should be able to treat myself,’” Mr. Crew said. “You can, but you need to look at some of these things and their impact on the long term and do that without the emotional element to it.”
Removing emotion from financial decisions is a difficult task, but one that must be undertaken to avoid costly mistakes and lost opportunities.
Media reports continue to circulate about the weakening pound and the impact it has on British expats (FTadviser.com), particularly on pensioners:
A decade of a weakening pound has left many expat pensioners with up to 50% less buying power from their retirement income now than when they first retired, research from Equiniti has revealed.
Equiniti Paymaster currently administers the payroll and international payment of pensions for over 50,000 expat pensioners, many of whom are former public sector workers receiving an average pension of around £5,600 a year.
The largest single group of these 50,000 pensioners, 12.45%, has retired to the eurozone where someone who retired in 2003 will have seen the purchasing power of their pension fall by 22%. Someone with a £5,000 pension would bring in just under €7,300 (£6,212) ten years ago, whilst the same pension amount would now bring in only €5,692 (£4,843).
That is a huge loss of purchasing power. We also posted about the weakening pound and its impact on expats at the end of February. Expat finance is something that anyone living abroad must continually monitor and take appropriate steps.
An agreement has been reached that has clarified just how much money Cypriots and expats living in Cyprus are going to lose to what is described as a “one-off levy.” Sure it is. So now they’ve gone from “we’d never do that” to “we’re only going to do this once?” Good luck:
British expats with savings under £85,000 have been spared from being taxed by the Cypriot government in a last-minute EU deal.
But it means that any of the island’s 60,000 British expats who break the threshold will be subjected to the compulsory one-off levy.
Cyprus was saved from a banking system collapse and bankruptcy in the early hours of Monday morning when eurozone ministers agreed a draft rescue package of £10 billion euro (£8.5 billion).
The UK Government has previously said it will only compensate British armed forces personnel left out of pocket.
So is this some kind of magic bullet that is actually going to save the Cypriot economy? I Would love to read the evidence that demonstrates what exactly is going to be done to produce different results.
British expats in Cyprus? Not happy these days. Not happy at all. The recent move to syphon off funds from depositors in Cyprus has ensnared British expats along with native Cypriots:
British expats in Cyprus and the British press have reacted angrily at proposals to force depositors to share in the bailout costs for Cyprus banks.
Britain has close ties to the island nation and Cyprus was a crown colony of the British Empire until 1960. Roughly 3,000 personnel from the British Armed Forces are based on the island for strategic reasons.
British expat Jean Stark said: “It was a huge shock. We hadn’t expected it all as it hasn’t happened in any of the other countries that have been bailed out.”
The deposit levy is set to hit 60,000 British expats and around 170 million pounds ($255 million) in their savings.
The article includes a quote from U.K.’s Finance Minister that indicates government related personel will receive compensation, but all other Brits are out of luck. You can guess the reactions of expats and the media, which are also noted.
Expat Finance is critical when anyone moves abroad, and this latest event only highlights how those that think they have planned wisely can still be caught off guard.
British expats abroad, especially pensioners, need to consider their currency options as the decline in the value of the pound has potential to significantly impact their income level even further than it has already. Here are a few quotes below from a BBC.co.uk article about the impact of the pound on British expats:
While holidaymakers might take a short, sharp hit from a weakening pound, a change in the strength of sterling may be more of a lingering issue for expats…
Financial advisory group deVere has calculated that many UK expats in Europe have seen their monthly retirement income reduced by an average of 8% since the start of the year…
“With this in mind, and to avoid being subject to further volatility in the currency markets, those who are living abroad and claiming a UK pension should consider the various ways to mitigate the fluctuations with their financial adviser,” [says the group's chief executive Nigel Green].
The full-text contains a bit more insight that should be helpful for expats considering their options should the value of the pound continue to fall. This is the kind of research expats should always do ahead of time to prepare for all possible scenarios!
