International Tax Planning Strategies
It is one thing to be tax efficient in one country, but you need to ensure you are not paying too much tax in two or more countries in total.
Many people will meet with their local accountant to speak about international tax. Sadly, the accountant in front of you may say, “I know international tax”, but what this really means is that they know about tax in their country and how it relates to foreigners.
This certainly does not mean they understand the complexities of another country and how to make you tax-efficient globally. International tax planning strategies take time but are worth putting in the effort from the start.
Are you thinking of moving to the UK or leaving the UK?
People moving to another country need to think about the exit tax charged by HMRC in the UK. Examples of exit charges could be an income tax on the money earned in the tax year or Capital Gains Tax on any assets sold.
Equally, moving to the UK may lead to tax implications from the country you are leaving.
There may be entry tax charges here in the UK in the form of Stamp Duty Land Tax, also called SDLT when buying a home in the UK.
The number of days you live/work in the UK would determine your tax residency. If you are deemed a UK resident, you will need to pay income tax on any UK earned income and potentially on your worldwide income.
British people need to think ahead and plan for taxes when leaving the UK to move to countries such as Hong Kong, Spain or the United States. There is always a danger that expats pay more tax than they need.
What things should you consider when moving to or leaving the UK
Moving countries may be stressful enough. You first have to deal with VISAs, relocate family, move your worldly goods using freight services, and then, tax. Who thinks about tax when embarking on an exciting adventure. Internal tax planning is not the first thing that pops into your mind, but it should
Local tax and international tax planning
How much tax will you pay in the country you are leaving
There may be a number of exit tax charges on the income earned during the year and capital gains tax on any assets that you have sold
How much tax will you pay in the country you are moving to
Not only do you need to consider exit tax but you also need to consider residency status in the country you are moving to
Paying tax twice
It is possible that you pay tax in the country you are leaving and pay tax again in the country you are moving to. You need to be aware of all tax treaties, tax credits and tax deductions in both countries.
Are you looking to move to a country that charges less or more tax than the country you are leaving?
You can pay less tax because the country you are moving to has lower tax rates. This is where international tax advice is essential as it may help you decide which country you and your family eventually move to.
Optimise Accountants are expat tax specialists & international tax advisors who take a holistic approach to tax planning.
The co-owners of Optimise Accountants have faced issues with accountants in different countries for their financial interests. The problems that both Louise and Simon Misiewicz have faced have centred around:
– The accountant in the “moving to” country did not understand the tax system in the UK. As such, the tax advice provided was isolated and unconnected.
– Accountants took too long to understand the situation and did not provide tax advice instead of regurgitating what Louise and Simon shared with them.
– Time seemed to pass by without any firm commitments of when the answers would be provided. This led to refunds being made and apologies being sent
Louise and Simon Misiewicz, the co-owners of Optimise Accountants, empathise with you and have designed an international tax advice service that promises to deliver in the following ways
– Provide you with answers. We know this because we guarantee that you can book a tax consultation with Optimise Accountants with our international tax advisors within three working days.
– You can upload questions and documents ahead of the call so that the tax advisors, in their morning group huddle, discuss your questions and agree on the right set of solutions to discuss with you.
– The call is held with you, and answers are presented on screen so that the right solution may be discussed and developed with you in mind.
– The international tax planning meeting is concluded, and notes are accompanied by the relevant legislation links to give you comfort and confidence in the international expat tax advisor’s solutions.
You may need to file tax returns in the country you are leaving and the country you are moving to.
What income will be taxed?
There are many counties that only tax you on the money you earn in that country. However there are many other countries that will charge you tax on world wide income.
Getting the right advice
Getting international tax advice from accountants in both countries is very important to ensure that they work together. They will need to work with you to identify ways for you to pay the least amount of tax before you move.