Expat Life 101: Different Financial Regulations between Your Home and Your Host Country

Expat Life 101: Different Financial Regulations between Your Home and Your Host Country

For many people who are addicted to traveling and a nomadic lifestyle, there is no better way to explore a new country than to go live there for a while. While adventure trips are often associated with activities like surfing or spelunking, moving to another country is embraced by some people as the ultimate adventure travel. Whether you are looking to do this for a bit or want to move permanently, relocating to a new country can be as exciting as it is daunting – especially when it comes to dealing with financial issues.

How to Make the Transition Financially Smooth

Expats face many challenges, not least feeling lonely and struggling to adjust to a new culture after the initial shock. Managing your finances can become one of the most important issues that take over your new life if you do not know what to look out for. One aspect of sound expat financial management is understanding your new source of income – as you may have just quit a career in your home country that you might have worked on for years. Take notice of how financial regulations regarding wages and labor law are different in the country you have moved to. Finding out that the minimum wage or overtime pay is very different after you have already moved can set you up for trouble – especially if your partner is tagging along looking for work to supplement your income. This will provide you with a much-needed sense of what your income will look like once you relocate.

The next vital step to take is to look at how you can migrate your financial life to your new home – and to what extent. In the globalized world that we live in, many banks have already planned for expat services, allowing you to open accounts in multiple currencies. However, it is important to check whether bank accounts are regulated differently between your home country and your new place of residence: overdraft and withdrawal limits, as well as interest rates, may vary. Furthermore, certain types of banking products, like various loans, can be very different than what you are already familiar with. If you are planning to save up in order to buy a house, you need to look into what kind of internal regulations are influencing the real estate market – which may be surprising sometimes. For instance, in Greece, only individuals and companies from Greece or the EU are allowed to buy real estate property in border areas without prior authorization.

Expat Life 101: Different Financial Regulations between Your Home and Your Host Country

Do Your Research Beforehand

You must also carry out the same kind of research before you actually move with regard to your investments. Whether you are employed in a trading job or are into private investments, it is important to scrutinize the financial landscape beforehand. One good place to start is with regulatory authorities. In the Philippines, the Bangko Sentral ng Pilipinas (BSP) is the official authority that monitors the economy and ensures its stability, including determining the exchange rate policy of the local currency against other currencies. It is the local equivalent of the US Federal Reserve or the Bank of England, so understanding a bit more about how the trading market is regulated by similar authorities can allow you to go on with your investment activities unhindered and avoid nasty surprises.

Finally, there is, of course, the issue of pension and tax payments. You need to check your eligibility for local retirement plans in your home country and see how your employment status affects this, as well as how your previous pension contributions can be recognized against your new retirement scheme. Your tax obligations are also quite tricky to figure out, as you need to check both your home and your host country’s tax regulations, make sure that you move your tax residence, and take all necessary steps to avoid double taxation.

All in all, while moving abroad can be one of the greatest experiences of your life, it could also be life-changing in terms of your finances. If you are unsure about crucial aspects of your finances, it might be worth the effort to speak to a financial advisor with expat experience.

This is a contribution from one of our contributing writers.


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