In the absence of a double taxation agreement between the previous and new country of residence (such as when moving for example from the Netherlands to Monaco), only the respective domestic fiscal regulations apply. These are, as a rule, stricter – at least for high-tax countries – i.e. it is more difficult to terminate one’s former tax residence if you directly move to a no-tax jurisdiction and there is no tax treaty. In order to avoid continuing to pay tax on one’s global income and possibly assets too, often all links to one’s former country of fiscal residence must be severed, and even then extended taxation may apply for some time after emigration.
1.6 Financial planning and insurance
For many wealthy people, an alternative residence is an effective tool for international tax planning, but it also increases the financial planning options and facilitates more privacy in investment and banking.
Anyone who is transferring their residence to another jurisdiction will certainly have to revisit their financial and estate planning. It is implicit that the various parameters of the financial aspects of one’s estate will be affected. You may be familiar with the legal and fiscal situation and general framework conditions prevailing in your home country but you must become adept with a new framework.
It may make sense to retain investments in other currencies, for example if one moves from the US to Europe, where the local reference currency is the Euro. As a rule, however, a move of a person’s regular activities to a new currency area will also lead to different weighting of the currencies in their personal investment portfolio and will require a rethinking of their financial planning and asset management arrangements. It may be wise to consult a specialized investment advisor familiar with clients with cross-border issues.
It is also sensible to obtain advice from a tax advisor in the original jurisdiction as there may be some interesting financial and tax planning options, or in a less favorable case, there may be exit taxes due that need to be calculated.
A move abroad also offers the opportunity for more flexible pension planning, as capital tied to government-regulated pension funds can often be released. Previous retirement provisions may have to be reorganized, liquidated or taken out prematurely (e.g. life insurance policies, pension claims, tied-up assurance funds etc.). It is particularly important to consider withholding taxes when receiving payouts from pension institutions and any tax concessions when drawing any benefits in the form of pensions or capital payouts. As a rule, different costs of living also change the provision requirement and usually make it necessary to adapt one’s cash planning.
A move will also require careful examination of previous estate or succession planning (partnerships, foundations, trusts, family holding companies and the like). Here too, considerable scope may be available for optimization depending on one’s destination. Thus anyone moving for example to the Bahamas, Ireland, Malta, St. Kitts and Nevis or the UK can structure their assets by means of suitable succession structures so that they – or lifetime enjoyment thereof – are transferred without restrictions and in many cases also in tax-neutral form to freely designated heirs. The situation will be quite different when moving to a country such as France or Spain, although here too various opportunities for optimization usually exist. In any case, existing estate-planning strategies should be checked and their adaptation to the new conditions and opportunities examined. Professional support is usually indispensable in this domain too.
It is also important to include the aspect of asset protection, especially in the US. In view of the peculiarities of the American legal system, which is characterized by a relatively low threshold of civil litigation, suitable measures to avoid excessive exposure of one’s personal assets are indispensable. But when moving to other countries, it may also make sense to structure at least part of one’s assets – perhaps including real estate – so that they are safe from seizure. Suitably designed asset protection trusts as well as specially structured Swiss annuities and life insurance policies are sensible options for this purpose.
1.7 International health insurance14
International health cover is a highly relevant topic for anyone thinking of moving abroad, and yet it is scarcely considered and hardly mentioned at all by advisors. Admittedly, it is not the job of a lawyer specializing in international inheritance law or an international tax advisor to know all about insurance as well – and especially about international health insurance. There is consequently relatively little specialist competence in this sector available to private clients. Most advisors and insurance brokers worldwide with such expertise merely represent a single insurer. Only very few offer more than a small number of products and are able to provide really comprehensive advice.
Trying to find ideal health cover is no easy task even without moving abroad, but it is of particular importance when moving to another country or even staying there for a limited period. The risks of sickness and accident must be covered comprehensively in an international context in order to avoid unpleasant surprises. A few important points must be considered in view of the wide choice of diverse solutions and different insurance products.
Anyone who lives or works abroad, runs a company or retires there should arrange insurance cover that is extensive and applicable around the world. Health insurance in particular should allow the patient to choose his preferred doctor and hospital with as few restrictions as possible, and ideally none at all.
A question of residence
In the event of a temporary stay abroad with no change of residence, basic state insurance usually assures at least minimum cover in emergencies. In addition, almost all local health insurers offer the option of comprehensive cover for sickness and accident via private supplementary policies, even for temporary stays abroad. Before moving abroad however, it is useful to check out the insurance options in detail, from free choice of doctor and hospital to medication cover. Previous health policies normally terminate with a move abroad, and continuing insurance cover must be assured during the actual process of moving.
Comprehensive cover with a free choice of doctor and hospital worldwide is strongly recommended in most cases. This is because even in many developed countries the public healthcare system satisfies only minimum requirements and it is essential to seek out private hospitals to ensure competent medical treatment. And there is no alternative to comprehensive insurance cover for anyone thinking of moving to, say, the US or the Caribbean, or Eastern Europe, or to a developing country. Many countries have good local private health insurers, and some of them also offer international cover and a free choice of doctor and hospital. Although such a local insurer usually represents the least expensive solution, it is rarely the best one. It should be stressed that practically all insurers with a local or national scope of activity in the relevant country will only accept policyholders who are actually resident in the country. Anyone who leaves the country again will normally lose his insurance cover, which can become an insoluble problem with increasing age. It is also difficult to obtain a truly international and unrestricted free choice of doctor and hospital in many places. So the ideal insurance policy will be independent of residence and duration of stay and will also guarantee fully comprehensive cover as far as possible. Most local insurers offer only unsatisfactory solutions if at all, and very few offer private health insurance which can be concluded or retained even when the policyholder lives abroad. So it is vital to check these important aspects, and in most cases it is worthwhile consulting an independent insurance advisor specializing in international health insurance.
Free choice of doctor and hospital, worldwide cover
Although an extensive choice of private health insurance schemes with an international scope is available worldwide, only very few can really be recommended. When comparing the