It has been estimated that approximately 1 million Australians are living and working overseas at any point in time and Europe is one of the leading destinations for expats. However, with the advent of the COVID-19 crisis, many Australian professionals who have been long term residents in the Netherlands have been considering their options in terms of repatriating to Australia, when it is possible to do so.
Moving from one country to another is a big deal and opens up a wide range of tax, financial, employment and physical transition issues that need to be addressed.
In collaboration with ABIE Netherlands (Australian Business in Europe) and Geoff Taylor from Majenda Australia Tax Consultants, we held a webinar to discuss all the important points for Australians living in Europe to consider if they are planning to go back to Australia in the short term or in the longer term future.
You can watch the video of the webinar here.
We find that most internationals, Australians included, fit into one of three categories:
- I am never going home;
- I don’t know where I am going next or when;
- I am never going home.
Whichever category you fall under, if you have assets and reporting or tax obligations in more than one country, it is important to manage your assets in a manner now that is in line with your future plans and that prepares you and your family for how you manage these in the future.
We discuss the main items you need to consider in the video and summarise them here:
Most expats will accrue pension assets across countries in which they have lived and worked. Even if retirement is a long way away, you need to think about if, and if so, how you invest into your pensions in different countries. There can be significant differences in when you can access your pension in different countries, anything up to almost 10 years. There are also differences in how you can access it. In some countries you may be eligible, under certain conditions, to access some of the capital. In other countries this is not an option and you can only draw income.
You need to consider these impacts now, because how you invest now will determine how you live in retirement.
Then there is tax. You need to consider the tax impact of drawing pensions from countries when you are living elsewhere.
If you are planning on moving home in the coming years, you also need to make sure you are holding your assets in the most effective manner for both countries. Repatriation can be tough, it can be a difficult adjustment and one that many people don’t expect to be challenging. On top of that, it is expensive. You need to make sure therefore, that you have prepared to cover all the items like temporary housing, international relocations, and buying new essential household items. You also need to position your finances so you can still effectively manage your global assets. Real estate is the most frequently considered item here. Managing a rental property across the world can be problematic for some. You also need to ensure that you are not unduly penalised when moving back due to the way you are holding your assets.
There is a lot to consider. As we state in the webinar, ideally you need to start planning a few years before you return and seek good advice both here in Europe and back in Australia. Please contact us at [email protected] if you would like more information or to be connected with Majenda Australia.