Working overseas is a wonderful opportunity for personal and professional growth. As the business world becomes increasingly global, it is common to gain some experience working abroad. If you are joining the almost 60 million professionals working on an expat assignment in another country, there is a lot to think about, not the least of which is the tax implications of your move.
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Tax considerations for new expats
Understanding your tax obligations as a new expat
Globalisation has made expatriate tax increasingly complex as expats today move from and into a wider range of countries. As an individual, it can be difficult to know where to begin, particularly if you are not always clear on your tax obligations in your home country. To add to the challenge, cross-border tax involves new laws and requirements that can vary significantly by home and host country.
Although the answers will vary, there are some questions you should ask before taking up a position abroad, so you understand what is required of you before you leave, while you are away and when you return.
Who do I ask about expatriate tax?
There are several options when it comes to seeking advice on paying tax while abroad:
- Human Resources Department: if your company regularly sends expats to work in offices abroad, they may have all the information you need for tax purposes. If your company provides pre-departure training it may cover tax compliance.
- Independent Tax Advisor: if you have complex needs, you may wish to consult an independent tax advisor in both your home and destination countries.
- Colleagues: although you need to be careful and verify any advice received, it may be worth informally consulting with colleagues if they have also worked in your planned destination, they may have contacts you can use or advice to offer.
What questions should I ask about expatriate tax?
Ultimately when it comes to your expat tax affairs try to ensure:
- you don’t suffer undue financial burden by working abroad
- you comply with all tax legislation while on international assignment
- your tax affairs are easy to administer and understand
These are just some of the questions you should research or ask an expert before you move abroad if you want to keep your tax affairs in order:
1. What do I need to do before I leave my home country?
Prepearing your finances in advance for living as an expat will make everything easier. Depending on the rules and regulations in your home country this may mean:
- splitting the tax you pay in your home country so you are only taxed until the day you leave
- claiming relief in your country of residence for any tax you may pay at home i.e. on rent from an investment property
- paying tax in your home country on money earned abroad. South Africa is introducing an expat tax in March 2020 whereby South African expats have to pay tax in South Africa on income earned abroad above a certain threshold
2. What are the tax implications of working abroad now and in the future?
Ask this question to understand how your time abroad will impact tax credits, the income tax you pay, contribution to a state pension (if there is one) and anything else you may be entitled to in your home country. Don’t forget to ask about the long-term impact, what might happen if you still retire at a planned age or if were to be made redundant in five- or ten-years’ time. Often it is not until these events occur that we realise there is a problem.
3. What do I need to do when I arrive in my new destination?
There are likely to be steps to take when you arrive in your new country of residence to get your tax affairs in order; this may involve:
- registering for a social security number or similar
- finding out if you need to file a tax return
- filling out paperwork for both your home and destination country
4. Do I still need to file taxes in my home country while I am living abroad?
This is an important question to ask. For many countries the answer will be no, you don’t have to file taxes while you are abroad, but this is not always the case. It is vital that you seek advice and know your tax obligations in your home country.
5. What are the tax implications of repatriation?
Returning from an assignment abroad is not always plain sailing from a tax perspective. Depending on the country you are returning to, you may be taxed on your worldwide income, with credits for any foreign tax paid. In other countries there are ‘foreign workers exemptions’ which you may qualify for. No matter what country you are moving to, there are likely to be some tax implications if you plan to bring monies earned while abroad with you, ensure you ask this question so you can be prepared for them.
6. Are there any taxation agreements in place?
A double taxation agreement is something many expats can benefit from. This prevents you from paying hefty taxes at home and in your new host country. If an agreement is in place between the two countries, make sure you are fully aware of any requirements before moving overseas.
While you are planning your finances, don’t forget your health and wellbeing - private health insurance from your home country is unlikely to cover you while you work abroad. You need specialist international health insurance to access the best medical care in your destination country.
Are you moving abroad?
Before venturing to another country, make sure you have a health insurance plan you can rely on.
Meet the author
Allianz
At Allianz Partners, Health, our blog is crafted by a team of experts dedicated to providing valuable insights and guidance on global health and insurance topics. With a focus on expatriates, international businesses, and individuals navigating healthcare abroad, our authors bring a wealth of knowledge and experience to every article.
We aim to deliver practical advice, industry updates, and actionable tips to help you make informed decisions, whether you're exploring international health insurance, managing employee health plans, or staying informed about the latest healthcare trends. Trust our blog to be your go-to resource for navigating the world of global health and insurance.
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