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The Struggle Of Repatriating Funds From Abroad

Wednesday 5th June 2019




The world's workforce has gone global. Not only are companies outsourcing positions to workers overseas, but people are also moving abroad in search of opportunity.

However, life as an expat can be difficult - for example, to avoid double taxation, you'll need to move your assets. When you do, high fees, poor exchange rates, and repatriation taxes are a few of the challenges you’ll face.

In this blog, we'll talk about the problems surrounding asset repatriation, and how it can be done cheaper.

Why Do We Move Money From
One Nation To Another?

In previous generations, travel abroad was rare. Business travel, military assignments, and once-in-a-lifetime trips were the exceptions to that rule. Nowadays, the globalised nature of our world has made it easy to seek opportunities overseas.

However, governments have made this endeavour harder. For instance, the Canada Revenue Agency (CRA) has a test that determines if one needs to pay taxes in Canada. They have multiple indicators they can use to prove you still have a substantial presence there. These criteria include bank accounts - as such, you'll need to move your assets to avoid getting hit twice by the tax collector.

Having said that, it is possible to retain ownership of some assets in your country of origin. These often include properties that do not serve as your primary residence. If you have a mortgage, moving capital to the underwriting bank each month will present problems.

Finally, the ongoing expat revolution means some have family living in multiple countries around the world. When elder members die, they leave behind inheritances their children will then need to repatriate. Like the above scenarios, this task can be fraught with challenges - we'll address these in the next section.

What Challenges Do Expats Face
When Repatriating Their Savings?

Borders may be invisible, but you have legal obligations to fulfill the second you move a penny over them.

For example, Belgium has a flat 'gift' tax of 3% between family members, and 7% between individuals. Croatia taxes all gift amounts above 50,000 HRK at 5%. Italy isn't as bad - the first million Euro is exempt for parent/children and spouse-to-spouse transfers.

If you are running a business, the steps required to shelter repatriated profits from excessive taxation can be headache-inducing. For example, setting up dividends is one way a company can move profits into Canada from abroad. However, you'll need to consider relevant tax treaties, as well as withholding taxes.

And then, you have to deal with the banks. Financial institutions charge high fees and excessive exchange rate margins to those who move money through them. To move 20,000 AUD to a Singapore account, an Australian would pay a rate of 0.924 with ANZ. Less 24 AUD in fees, this would give them 18,456 SGD on the other end. This arrangement may sound fine to you until you learn the interbank rate for AUD/SGD is 0.957. That’s a margin of approximately 3.4% - a bit excessive, as you'll soon find out.

Money Transfer Providers Are More
Cost-Effective Than Banks

Why is there such a gap between actual exchange rates and the ones banks charge? Save for complicit 'competitors' like Western Union, they've had a monopoly on the money transfer business for generations.

With no one to push them, they charged whatever the market would tolerate. This business environment changed with the rise of the internet - PayPal led the way in 1998, followed by others in the 2000s. With legacy financial institutions as their main competition, they hit their weak point hard - obscene exchange rates and fees.

Fast forward to today, and there are scores of recommended companies of companies offering repatriation services to the UK.

Let's use OFX as an example - our Aussie friend is shocked at the fees and margins ANZ is charging. Rather than passively accept what they are offering, they opt to go with OFX.

When they move 20,000 AUD with OFX, they pay zero fees for an online transfer. Not only that, but they use an exchange rate of 0.954, giving them 19,083 SGD in their Singapore account. That's a difference of 627 SGD or 654 AUD. Why pay 654 AUD of your hard-earned money for the 'privilege' of sending it through your bank?

With banks still charging ridiculous fees 30 years into the internet revolution, it's astounding people still use them to move money.

Don't Let The Banks Bleed You Dry

The world is rife with opportunities for employees and entrepreneurs alike. No matter your skills or ideas, someone is willing to pay good money for them.

Don't let money matters keep you trapped where you are now - yes, there are obstacles that you'll need to overcome. However, the web has disrupted the money transfer business, making it cheap to repatriate your assets from your country of origin.

By doing your homework, you can avoid getting soaked, giving you time to adjust to your new home overseas.

 

 

 

 

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INQUEST RESPONSE TO INSPECTION REPORT ON HMYOI HINDLEY -
The Chief Inspector of Prisons has today published an inspection report on HMYOI Hindley that notes, despite 'significant improvements', Hindley was 'still struggling to keep some of the boys it held safe'. More...

CHESTERFIELD ARMY CADET PASSES OUT FROM SANDHURST MILITARY ACADEMY -
A young cadet from Chesterfield has joined around 200 fellow graduates in a prestigious ceremony as she passed out from the Royal Military Academy Sandhurst More...

'FARM TO FORK' ROADSHOW HITS CHESTERFIELD'S TESCO EXTRA -
Tesco customers are being invited TODAY (Friday, 125th August) to the Chesterfield Tesco Extra store at Lockoford Lane, for a 'Farm to Fork' roadshow. More...

THE SHORTLIST FOR THE 2014 FOOD AND DRINK AWARDS IS ANNOUNCED -
24 food and drink businesses have been shortlisted across nine categories in the 2014 Chesterfield Food and Drink Awards, organised in association with Chesterfield College - headline sponsor of the awards for the second year running. More...

FLOODING AND ROAD COLLAPSE CHAOS FOLLOWING HEAVY DOWNPOURS -
Chesterfield was once again left struggling with flooding at major junctions into the town tonight following heavy rain in the early evening. More...

NEW MARKHAM DEVELOPMENT BRINGS FURTHER JOBS BOOST -
A new family pub and restaurant development is to open on Derbyshire County Council's flagship regeneration site bringing 40 jobs to the area. More...

LOCAL MCDONALD'S VOLUNTEERS CLEAN UP CHESTERFIELD SKATE PARK -
Local McDonald's franchisee, Walter Wright and crew from the two restaurants in Chesterfield joined forces to tackle litter in the local skate park situated in-between the two restaurants. More...

DERBYSHIRE COMPANIES URGED TO EXPLORE OMAN AND QATAR -
Forward-thinking local companies are being urged to make the most of business opportunities in some of the fastest growing areas in the world, as export body UK Trade & Investment (UKTI) launch a high profile market visit to Oman and Qatar. More...

HAVE WE GOT A HANDLE ON ONLINE GAMBLING? (GUEST ARTICLE) -
With the World Cup finally ended, sports betting and online gambling in general has been making the headlines for more than a few reasons recently. More...

COUNCILLORS CAMPAIGN FOR
SAFER EXIT FROM WHITTINGTON STORE -

Cllrs David and Paul Stone have been campaigning on behalf of local residents for a clearer and improved view of passing vehicles when cars are exiting the Tescos Store on the High Street at Whittington. More...

NEXT STOP, AWARD WINNING APPRENTICESHIP PROGRAMME -
Three talented young people are being given the opportunity to join one of the transport industry’s leading engineering apprenticeship programmes. More...

CHESTERFIELD TURNS OUT TO WELCOME HOME THE LANCERS -
The 9/12th Lancers, marched through Chesterfield this morning as part of their homecoming parade after returning from an eight month tour of duty in Afghanistan.
More, Pics & Audio...

CHESTERFIELD SOLDIER READY TO PARADE THROUGH HER HOME TOWN -
Soldiers from the 9/12th Royal Lancers (Prince of Wales') are looking forward to marching through the streets of Chesterfield tomorrow - Thursday, 3rd July More...

NEW FOOTBRIDGE IS OPENED AT CHESTERFIELD CANAL FESTIVAL -
The new Constitution Hill Footbridge, built over Chesterfield Canal in Staveley has been officially opened More...

 

 



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