Changes to Expat Bank Accounts Across Borders
ProACT Sam discusses the challenges for expats maintaining a bank service across borders.
Expats more than most will have experienced the changing nature of banks over the last few years. Brexit has brought about another wave of changes affecting expats living and working abroad.
The tightening of bank account regulations along with the movement of money is all part of a long term international effort to stifle the money movements associated with criminal activity - be that terrorism, theft, drugs, tax evasion or not paying tax on property rental income.
The changes impacting bank accounts vary country by country depending upon the implementation of international tax and money laundering rules.
Individual banks can act in different ways to these changes in the law.
Bank by bank they make commercial decisions on what level of regulation they want for their business.
Dealing across border, or with business clients, or currency exchange all involves different regulations and requirements for the bank.
Banks making business decisions, across border is an additional service some will choose to offer.
Do they want overseas clients, overseas traders, big business, regulated business.
REGULATION
Banking is regulated per country and some will choose to focus in one country. The EU allows some cross border work, but still individual country regulation is the key.
Regulation across the EU is a next level some banks will choose to go to, others not.
So Expats relocating overseas, or with existing banking dating back many years, may need a new bank account.
NEW BANK ACCOUNTS
Opening overseas bank accounts can be tricky. You may need resident permits, minimum balances or be restricted in the type of banking facilities offered.
Following Brexit UK based banks have a clear choice. Remain regulated over the EU generally with second regulation in the UK through independent businesses.
Or stop trading in the UK or EU.
A bank will need regulation to cover operations in the EU, something a UK bank may do, setting up a subsidiary , or may choose not to do.
Even within the EU banks may decline expat clients from different EU states.
BUSINESS WORKING BANK ACCOUNTS
If you retain a bank account back in your home country, say the UK. Does that affect the tax position?
No. A bank account is a ‘movable asset’ and the cash that flows through it is taxable in the expat’s country of residence.
That bank account receives the income, but not the tax liability.
So it is possible for an expat business to retain a cross border bank account and enjoy the lifestyle and tax benefits of living and working abroad.
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