Especially when it comes to paying tax, be sure to do your research in advance. You may find yourself having to pay various kinds of tax or account for fiscal charges that you were not familiar with before. Understanding the implications of tax are therefore of huge importance when relocating.
This helpful guide provides an overview of what you should know about taxes before you move to a new country.
Paying taxes abroad
Tax repercussions can be of such relevance that it is not uncommon for it to become a reason for moving abroad.
This can be the case for both wealthy people and people with a much lower income. In some countries, taxes can be very costly and often take up much of a person’s salary, or represent a major difficulty for affording property.
A lack of the relevant legal knowledge could get you into trouble with the tax authorities or could lead you to pay more taxes than necessary, so make sure you do some research on the tax systems in your new destination prior to your move. Find out also about local regulations concerning international taxation, as in some cases there may be ways to minimize international tax burdens.
Finding your local tax office
Some tax authorities require all taxpayers to be registered, or to acquire a tax ID, so it’s best to start by finding out who the authority is in your new country and what you’ll need to do to get things in order.
In many cases, expats will receive assistance from their employer to take care of this, , so we recommend asking your employer if you are in doubt or whether they need any documentation from you.
If you are an expat and eventually decide to return to your home country, you may be able to apply for tax return. It is therefore worth finding out about applicable tax return claims; which local office can handle your tax return and what would be required to get yourself prepared for this scenario.
Tax offices can be a great place to find information and advice. Before your move, we suggest finding out where your local tax office will be and what services they can provide.
When trying to figure out the tax system, try and think of all the different aspects that might apply to your particular situation.
How much will taxes take up your salary? Will you be liable for income tax in your new country? Are there property taxes you are not yet aware of? If you are married, will you have to pay different taxes?
As with income tax, many countries have a social security system in place to which workers contribute via salary deductions. You may be required to contribute to a social security system if you are employed or self-employed.
With some basic research, you can find out if there is a social security system in the country you will be moving to. As employers deduct employees’ social security contributions directly from their salaries, try and find out what the impact on your income will be.
Your contributions to a social security system may grant you benefits such as medical care. In other cases, however, you may be excluded from the system as a foreign national, in which case it’s highly recommended to get personal insurance.
Getting advice for expat tax
Fiscal matters and taxes change vastly from one country to another, and a system becomes more difficult to decipher in countries where taxation is particularly complex or where the language is an obstacle.
If you feel overwhelmed in trying to comprehend the repercussions of taxation in your new country, consider the options of getting help from the tax office, or consulting an advisor.
Getting advice from an expert can be expensive, but it can make the understanding much easier. It would keep you in line with the tax authorities and it could even save you money - as it might prevent you from paying more taxes than you need to.
Now you know essential information about paying your taxes abroad, read our guide to managing your finances abroad and see what’s involved before you make the move.