Some of the biggest challenges facing advisers whose clients live abroad are changes to local taxation rules, not to mention the effects that some tax agreements have on overseas clients.
Jason Porter, director for Blevins Franks, says: “It is very difficult for individual advisers to keep up to speed with various changes to taxation across jurisdictions.”
While various websites will publish changes to financial and tax law across jurisdiction - often in English - he said this may not go into sufficient depth to enable the individual to advise clients living overseas.
Therefore, Mr Porter suggests: “It may well be that a UK practising IFA who has expatriate clients should put in place information exchange agreements with practices in local jurisdictions.”
According to Nigel Green, chief executive of the deVere Group, “The only way advisers can remain up to speed on the various changes to taxation across jurisdictions is to have an established technical services department, whose sole job it is to track and undertand the changes, and then help advisers implement them when working with clients.”
Without this, Mr Porter says there could be problems.
He says: “Without having the necessary in-house expertise or support of local accountants, lawyers and other professional contacts, a UK adviser may not be able to ‘qualify’ the advice he provides in respect of an overseas jurisdiction as being correct.”
Sam Instone, chief executive of AES International, agrees, saying tax, legal and regulatory frameworks can change so quickly advisers tend to refer business to specialists. However, advisers must still commit to continuous learning, he says, adding: “Advisers in international firms tend to specialise in certain markets or sectors, while undertaking focused CPD to ensure continuing competency in these areas.”
Paul Stanfield, chief executive of the Federation of European IFAs, adds: “Some international life assurance companies, particularly those based in Dublin and Luxembourg, specialise in cross-border business in the EU and these can be a good source of information and guidance.”
Double taxation agreements
Expats who are members of UK DC schemes are eligible for the same pension freedoms as those in the UK, and HM Revenue & Customs regards the pension and related benefits as being subject to UK tax regulations.
Therefore, expats can get their 25 per cent tax-free lump sum and subject to any income tax on withdrawals above their annual allowance, but there are complications, as Marilyn McKeever, associate director, private client, for Berwin Leighton Paisner, explains.
Withdrawals may be taxed differently depending on the local tax rules of the country in which the expats reside. For example, they may end up being liable for local tax on payments on their lump-sum in some countries.
Double tax agreements (DTA) between the UK and various countries aim to reduce the tax burden on individuals. For example, in Spain, an expat who withdraws money from their UK pension scheme will only be taxed in Spain.