Tax planning woes for expats due to lockdown restrictions
Countries around the world are at last starting to ease the lockdown measures implemented to contain the spread of coronavirus.
However, the restrictions that were put in place could mean many expats will likely be faced with unexpected tax complications.
Many expats, and other people who live outside their countries of origin, have been stuck in other countries where they don’t usually live because of the global quarantine measures, national border closures and next to no commercial flights operating.
Even though some countries are moving to ease the restrictions, the situation as it stands may not change for quite some time, particularly in regard to the aviation and wider travel sector.
Therefore, for people left stranded in different jurisdictions, they may find their residency status could be subject to change. Remaining in a location for a prolonged period of time, a period of time they hadn’t planned on, could mean they involuntarily become a tax resident there.
As a result, this could affect their tax planning strategies, which, subsequently, could impact other personal finance matters such as retirement planning, estate planning and trusts.
There is strong potential for unexpected tax complications, especially as each jurisdiction has their own rules and regulations in terms of cross-border tax planning. In addition, because it is widely expected that taxes will increase.
Therefore, those who feel they may be impacted by this should seek cross-border financial advice as soon as possible to avoid any unwelcome shocks.
And it’s not just the HNW individuals who may be affected by the impact of the lockdown measures on their tax situation. Other people who live and work or retire outside their country of origin could also be affected.
There will typically be a range of legitimate solutions to reduce the chance of being hit with tax difficulties. Nevertheless, to sidestep complex, onerous and costly issues surfacing, the sooner those who may be impacted seek advice, the better.