The latest HSBC Explorer survey shows that expats tend to make extra money. A recent Fool.co.uk article on Yahoo suggests that this is the case, although there may be a catch:
The times may have changed but the advice hasn’t. Exactly 160 years ago, American newspaperman Horace Greeley advised ambitious young men to “go west and grow up with the country”. As we know, a lot of young men did just that, and grew wealthy as a result.
Judging by recent research, the contemporary version should go something like this: Go abroad, young, middle-aged and retired people and grow wealthier than you’re ever likely to get in Britain. In short, become an expat because Brits living abroad are better off than their counterparts back home, as the latest HSBC Expat Explorer survey proves.
And the catch? Life can be a lot more complicated as an expat. You’ll have to pay close attention to tax law, immigration law, and much, much more. Read the article linked above for more information.
Expats exempted from Facta? You betcha!
Well, some will be anyway. Here’s what Forbes.com reported:
In IR-2011-117, the IRS revealed it will shortly be releasing a new information reporting form that taxpayers will use starting this coming tax filing season to report specified foreign financial assets for 2011. Form 8938 (Statement of Specified Foreign Financial Assets) will be filed by taxpayers with specific types and amounts of foreign financial assets or foreign accounts. The IRS stresses that you need to pay attention to these filing requirements. If you don’t, the penalties are quite high.
Individuals who may have to file Form 8938 are U.S. citizens and residents, nonresidents who elect to file a joint income tax return and certain nonresidents who live in a U.S. territory. We all knew that, but the thresholds were key. We thought the rule would be $50,000 plus, but for certain types of taxpayers only higher numbers will trigger these rules.
Form 8938 is required when the total value of specified foreign assets exceeds certain thresholds. For example, a married couple living in the U.S. and filing a joint tax return would not file Form 8938 unless their total specified foreign assets exceed $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year.
Living Abroad? The thresholds for taxpayers who reside abroad are higher. A married couple residing abroad and filing a joint return do not need to file Form 8938 unless the value of their specified foreign assets exceeds $400,000 on the last day of the tax year or exceeds $600,000 at any time during the year.
That’s good news for many expats. Also, read the rest of the article linked above on Forbes.com for more information about when Form 8938 needs to be filed. There are large penalties for those who fail to do so when it is required.
Expats might have a harder time making a new life in Singapore. While some research shows that Singapore is a great place for expats to live, recent changes by the government stand to have a considerable impact on whether or not that remains the case:
Singapore’s reputation as a destination of choice for expats in Asia has been hit by a triple whammy this month
Two measures by the government last week have made the city less attractive to non-Singaporeans the biggest being a 10 per cent hike in stamp duty for any foreigner wanting to buy property in the city.
Stamp duty was only three per cent at its highest rate, so this move is seen as a strong curb to discourage foreigners from buying homes in Singapore.
Foreign purchases made up 19 per cent of all private property transactions in the second half of 2011. This compares to just seven per cent for the first half of 2009. Low interest rates, political stability and a strong economy have all led to a surge in property investment from wealthy foreigners.
Ku Swee Yong, chief executive at Singapore-based estate agency International Property Advisor, worries that “we leave foreign investors with a bad taste in their mouths.” He said: “Many foreigners are here to work and settle their families down and they need to own one home for shelter over their heads.”
Also, the government recently did away regulations that allow graduates of foreign universities to stay there for up to a year while they conduct a job search.
How much does it cost expats to live in Australia? The answer is more than it used to, according to an article on Telegraph.co.uk about The true cost of expat living in Australia:
All of the basic commodities – bread, fruit, milk – are more expensive than I can previously remember, the cost of petrol has risen, house prices continue to climb, and the only saving grace is that interest rates seem to be dropping whilst salaries remain high, even if I feel constantly penniless and barely scraping by.
Perhaps I’m just whinging, as all British expats here allegedly do, but expat life in Sydney has grown far less affordable over the past five years, which make it far more appealing to be some place else.
Expats need to do so much homework to prepare for the economic realities of moving overseas to live abroad. The trick is not to just focus on current conditions, but to assess what your options will be if should these change in six months, a year or even further on down the road.
Creating spreadsheets for varying scenarios might seem a little over-the-top now, but they’ll serve you well in the end when the economic climate goes up or down.
According the most recent HSBC Explorer survey, Expats just love Southeast Asia… unless there are children in tow.
The results of an HSBC Bank online survey of more than 3,500 expats in 31 countries around the world unveiled Monday ranked Singapore as the top overall destination for expatriates, followed by Hong Kong, United Arab Emirates, the United States and Australia.
However if you take out the criteria connected to raising children abroad and recalculate the survey results on HSBC Expat Explorer’s website then four of the top eight in the rankings are in Southeast Asia. Thailand is at the top, followed by Singapore in third, Malaysia in seventh and the Philippines in eighth. The other countries of the top 10 without children include Switzerland and Mexico and are from all over the globe.
One of the main reasons expats feel richer in this region is they get more bang for their buck.
The linked article on WSJ.com goes on to report that there actually wasn’t enough data to conclude whether or not several of the countries would rank high for expats with children.
Are American Expats Renouncing Their Citizenship for Tax Purposes? Some say that they are, and that it is due to Foreign Account Tax Compliance Act (FATCA). This act is supposed to help the U.S. government fight tax evasion, but many expats believe that it will force financial institutions based in other countries to isolate their American customers, turn them away, or stop doing business with them all together:
swissinfo.ch: How can this law, which aims to crack down on tax evasion and net billions of dollars of badly needed tax revenue, work against the interests of the US, as you argue?
Jackie Bugnion: The FATCA works 100% in favour of the US, putting the total legal risk and financial compliance on foreign financial institutions (FFI), turning them into arms of the Internal Revenue Service (IRS).
But it will fail as FFI will say it’s just too expensive. The consequence will be that they cut out US clients and stop investing in the US.
The US government projects that it can possibly secure additional tax revenues worth $8 billion (SFr7.5 billion) over ten years, but I have seen estimates of the cost of implementation for FFI of $200-500 billion, plus $10 billion per year for the filing requirements.
It’s the wrong time to impose this kind of thing. It will especially hit foreign banks in Europe, which are very weak right now.
It would be very intersting to hear what expats are hearing regarding this new level of regulation throughout the world. What have you heard? How will it affect already struggling European Banks?
You can post your comments on the ExpatExchange.com Global Forum.
