Five Most Common Expat Mistakes

According to a recent study, new Expats often make five common financial errors

London, UK (Pryce Warner International) August 23rd, 2011 – The process of relocating and setting up finances in a new country can often be difficult, but some Expats struggle to even properly set up bank accounts according to a new study.

This is because new countries bring with them numerous new laws, regulations and tax systems. Young Expats in particular, can often fail to properly prepare and deal with the breadth of these new systems.

One common mistake is using financial planners that are not properly regulated or experienced in the country you are moving to, or not using any at all. According to the study, using professional advisors often means that individuals save a lot of time and money when setting up all their new financial arrangements.

Those that do not use professional advisors also usually only take advantage of the financial services in that country, whereas professional advisors are able to help individual save more money by setting up Expat specific arrangements or offshore services.

The five most common financial mistakes relate to overseas bank accounts, wills, taxes, life insurance and pensions.

Setting up a local bank account can sometimes feel like extra hassle but it makes paying bills and utilities as well as general spending much simpler. This is because you do not have to pay overseas transaction charges or currency exchange fees, which can add up considerably over time.

Wills often cause problems when individuals have written one in their home country but not had it officially approved in their new country of residence. Different countries can have dramatically different laws relating to wills and it is vital that this is taken in account when moving abroad.

It is especially important to do this when moving to a country that operates under Shariah law, as the when a man dies all the assets will be automatically transferred to the closest living male relative.

Some new expats can run into trouble with taxes when they forget to inform the tax authority in their home country that they are moving abroad. This can lead to situations where individuals are charged tax in both authorities.

It is also vital to update any life insurance policies as the laws governing payouts can often change from country to country and some elements of cover may not be automatically carried over.

The final aspect, and the most important for those retiring overseas, is properly planning your pension. When moving overseas it is often possible to apply for offshore pensions or Expat specific pensions wrappers like a QROPS which can provide many benefits over a traditional private or state pension. Anyone moving to one of the 150 countries in which there is no reciprocal tax agreement with the UK (Australia, Canada, South Africa) need to be especially careful with this, as their pension will be frozen at the amount it was when first drawn.

David Retikin, Director of Operations at Pryce Warner International, a Financial Services Provider for Expats, commented: “This new study highlights many of the common mistakes new Expats make, and many of the reasons our clients speak to us in the first place. Moving abroad is often a very exciting and stressful time, and so it is important to speak to independent financial advisors so as to ensure that all your financial arrangements are handled as quickly and easily as possible, as well as taking advantage of whatever investment opportunities may be available in your new country of residence.”

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By: Aneil Fatania
Financial Editor
Pryce Warner International Group
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