Expats can avoid financial gloom, it is claimed

by Ray Clancy on January 24, 2012

Expats can manage their money through EURBS, QROPS and other such schemes

As leading economists and senior politicians warn that 2012 will be one of the bleakest on record, financial experts say that expats will be comparatively resilient to the tough economic conditions in the year ahead.

Around the world economies are expected to shrink, taxes are set to rise, the markets are to become even more volatile, and pension payouts rates will be the worst that will ever exist.

But financial planning can help expats manage their money, according to Nigel Green, chiewf executive officer of the deVere Group, the world’s largest financial advisory firm, which manages funds more than 60,000 expat clients worldwide.

‘There are a raft of ways that they can acquire a far greater disposable income than their friends and family in the UK and their counterparts in their country of residence,’ he said.

He pointed out that an European Union Retirement Benefits Scheme, or EURBS, is an increasingly popular method adopted by the deVere Group’s clients to get their most from their money.

‘Modifications in EU legislation allow pension holders to move substantial funds to different member states when they retire. This means that they’re able to transfer their accrued pensions to a significantly more tax efficient jurisdiction,’ he explained.

‘A EURBS is particularly useful for those expats who move from country to country during their lives,’ he added.

In addition to potential tax benefits, a EURBS also allows for a tax free, lump sum withdrawal of up to 30%, depending on where the client resides. Similarly, there is greater currency flexibility and more scope with the fund’s key investments.

The deVere Group uses Malta for their clients’ EURBS as it is regulated by the English speaking Financial Services Authority, has a long history of financial security, and has 56 double tax agreements.

Other attractive options open to British expats include a Qualifying Non UK Pensions Scheme (QNUPS) whereby they save on local taxes in the country in which they are tax resident, as well as on UK inheritance tax and a Qualifying Recognised Overseas Pension Scheme (QROPS) which allows inheritance tax and lifetime allowance charges to be avoided.

‘Expats require a completely different approach to their financial planning if they’re to get the most from their money and, fortunately, there are many unique options available to them,’ said Green.

‘From tax solutions to pensions, from health and education schemes, if they get expert, independent advice, expats should be in store for very prosperous time ahead,’ he added.

The deVere Group’s optimism for their clients is supported by the latest HSBC Expat Survey. The bank’s report says that expats are seemingly downturn defiant with their finances remaining comparatively unaffected by the wider economic turmoil.

Green believes that this is triggered by two key factors; the types of jobs expats are employed in and the raft of financial advantages open to expats generally.

‘Expats can be divided into two groups: those who aren’t necessarily attracted to their new countries of residence but who are reeled in with high salaries and incentives; and those who have spent time in a country and who are lured by its lifestyle,’ he said.

‘The first category will naturally have a significant bearing on the overall figures for expat wealth as they’re a country’s high earners. Historically, many top jobs in emerging markets, places such as Russia, China, Egypt and Dubai for example, have gone to expats as they have often had more professional experience,’ explained Green.

But the second category, that is those lured by a country’s lifestyle, as well as those in the high earning first category, are often able to take advantage of substantial tax savings.

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