If You’re an Expat, Tax Changes Are Coming for You. Are You Ready?
You moved abroad for better opportunities, higher earnings, and fewer tax burdens. You built a life in a new country, assuming the rules were in your favour. But what if everything changed overnight?
Imagine receiving a letter from your home country’s tax office saying you now owe thousands in back taxes because a tax treaty was revised. Or discovering that the "tax-free" salary you’ve been enjoying is suddenly subject to local taxation because your host country changed residency rules. Maybe you’re relying on a favourable pension or wealth tax break, only to find that your assets are now taxable due to a government policy shift.
This isn’t a hypothetical scenario, it’s already happening to expats around the world. Portugal recently axed its tax-friendly NHR regime, leaving many foreign residents paying far more than expected. South Africans in the UAE found themselves pulled back into their home country’s tax net, facing surprise tax bills despite living in a tax-free jurisdiction. The UK, in its latest policy overhaul, abolished its long-standing domicile system, replacing it with a new residency-based tax system, meaning that long-term residents will no longer escape UK taxation simply by claiming a non-domiciled status.
The tax system is shifting faster than ever, and your finances could take a serious hit if you don’t have a plan. The question isn’t if a tax change will impact you, it’s when.
How Tax Changes Are Catching Expats Off Guard
Residency Rules Are Shifting, And You Could Accidentally Become a Tax Resident
Many expats assume that tax residency is just about counting days. They think that as long as they spend fewer than 183 days in a country, they’re safe. But governments are becoming much more aggressive in determining who counts as a tax resident, and in many cases, it’s not just about time spent in a country, it’s about economic ties, family connections, or even unintentional loopholes.
Spain is a prime example. It applies the 183-day rule, but even if you spend fewer days than this, you can still be considered a tax resident if your family lives there or if the government deems that Spain is your “centre of economic interests.” Even if they live elsewhere, expats who own businesses or property in Spain can still be classified as tax residents, and suddenly owe tax on their global income.
The UK’s new residency-based taxation system, which replaces the abolished domicile rules, is another major shift. Previously, expats who claimed non-domiciled status could legally avoid tax on foreign income and gains. Now, under the new system, long-term residents (those who have lived in the UK for more than four years) will be taxed on worldwide income and gains, regardless of where the assets are held. Many expats who had carefully structured their affairs under the old non-dom system are now finding themselves fully within the UK tax net, facing unexpected liabilities on foreign-held assets, investments, and pensions.
Expats who work across multiple countries are particularly vulnerable. A business traveller who frequently moves between jurisdictions might find themselves accidentally triggering tax residency in multiple countries. Without careful planning, they could end up paying tax twice or even three times on the same income.
It’s not enough just to track your time abroad; you need to understand the full residency rules of any country in which you spend time. Keeping a close eye on legal thresholds and working with an expat tax advisor can ensure you don’t end up with unexpected tax liabilities in places you never intended to become a resident.
Double Taxation is Becoming a Major Problem for Expats
One of the biggest financial shocks expats face is realising they’re being taxed twice on the same income. Many assume that if they move to a tax-free or low-tax country, their earnings are safe. But what they don’t realise is that home countries are changing their tax treaties, removing exemptions, and enforcing worldwide taxation more aggressively than ever before.
British expats living in the UAE, for example, often continue to earn rental income from UK properties. A few years ago, they wouldn’t have needed to worry about capital gains tax if they decided to sell. But with the UK’s new Capital Gains Tax (CGT) rules in 2015 and 2019, non-residents are now fully liable for CGT on any property they sell worldwide. Many property owners never accounted for this in their financial planning, leading to huge tax bills they hadn’t budgeted for.
Dividend income is another problem area. If an expat owns shares and receives dividends, they might be taxed in their country of residence and their home country. If a tax treaty doesn’t fully eliminate the risk, they could be paying far more tax than they should. Some countries withhold tax at the source, meaning that even if your home country offers tax relief, you may still lose a chunk of your income before you can reclaim it.
Pension taxation is another growing concern. Some countries used to offer tax-friendly pension withdrawals, but in recent years, several have tightened restrictions. Expats who are withdrawing from pensions in one country while residing in another may suddenly find their withdrawals taxed far more aggressively than before.
To avoid these pitfalls, expats need to review tax treaties between their home and host countries regularly. What was true five years ago may not be true today. Expats can avoid losing tens of thousands in unnecessary taxation by structuring investments carefully and ensuring that income sources are set up in the most tax-efficient way.
Expats Are Being Hit with New Wealth and Inheritance Taxes
Many expats assume that they aren't subject to inheritance or wealth taxes because they no longer live in their home country. But in reality, governments are tightening the rules on global wealth, and many expats are unknowingly leaving their estates open to massive tax liabilities.
The UK’s new residency-based inheritance tax system means that individuals who have lived in the UK for at least ten years in the past 20 years will be subject to UK inheritance tax on their global estate. This replaces the previous domicile-based system, where expats could avoid IHT simply by showing they were non-domiciled. Under the new rules, those who maintain significant ties to the UK, even if living abroad, could still be dragged into the UK’s 40% inheritance tax net.
Other European countries have introduced annual wealth taxes that apply to expats even if their assets are held elsewhere. Spain, France, and Italy impose wealth taxes on worldwide assets, which means that an expat living in these countries could be taxed on property, stocks, and even offshore accounts. Many are caught unaware and find that they’re paying thousands in additional taxes each year just for owning assets.
Expats who plan ahead can legally structure their assets to avoid these taxes. This can involve using trusts, offshore investment vehicles, and international estate planning strategies. Waiting too long can mean losing a significant portion of your wealth to taxation, a risk that can be avoided with the right planning.
Expats Who Plan Ahead Pay Less Tax, It’s That Simple
Every year, governments introduce new tax rules that impact expats, and by the time most people hear about them, it’s already too late to fix it.
I work with expats across the UAE, Saudi Arabia and the rest of the Middle East to keep their finances secure and tax-efficient before the rules change again. You could already be paying too much if you haven’t reviewed your tax strategy in the past year.
Our first meeting is completely free, and in just 60 minutes, we can assess whether your wealth is protected from future tax changes. This one conversation could save you thousands, or even hundreds of thousands, in unnecessary taxes.
Take the Stress Out of Expat Tax Planning with Our Help
Managing expat tax planning in an ever-changing tax environment can be confusing. That’s why My Intelligent Investor offers expert guidance specifically for expats.
We can help you with:
Personalised tax strategies to help you stay compliant and save money
Advice on foreign income, tax treaties, and residency rules
Support with offshore banking, investments, and estate planning
Whether you're moving abroad, investing overseas, or dealing with complex tax obligations, we’re here to make the process simple and stress-free.
Get in Touch Today:
📞 Call Us: 00971 (0) 58 577 2265
📧 Email Us: info@myintelligentinvestor.com
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