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Helping you help your employee moving overseas - the importance of expatriate financial planning

CompassPOINTS - September 2007

Simon de Ferrer is a private banker with Royal Bank of Canada Europe Limited. Based in London he makes regular visits to the Middle East where he advises expatriate Canadians and others on making the most of their time overseas.

Making appropriate financial arrangements when moving abroad is a daunting task for anybody.  Therefore having the full support and guidance of your employer is an important comfort factor when working through this process. The role of mentor will be filled primarily by the HR professional or manager within the company. Thus the depth of the HR practioner's knowledge of the procedure that needs to be worked through when someone relocates abroad is vitally important to the soon-to-be-expatriate employee.

This article seeks to provide an insight into the knowledge and financial information required to make an employee's move to a new country as smooth as possible.

An experienced international financial adviser can guide your employee through the financial logistics of moving abroad. If there is a current relationship with an international financial institution, the process can be much easier than using different banks in each country.

Planning Ahead

Relocating abroad can be fraught with difficulties but if the would-be expatriate employee plans ahead then most problems can be prevented.

It is important not to forget the simple financial necessities that we all need irrespective of whether we are at home or living in a new country such as depositing pay cheques, withdrawing or transferring money and making payments.

It is worthwhile getting the employee to check which of their existing banking services will 'translate' to the new country’s systems before they venture to their new home. Banking in a foreign country can be very different from banking at home – even when there are no language or cultural barriers it can still be difficult.

It is important to advise the employee that an hour spent arranging their international banking before they leave home could save them weeks’ of administrative headaches later on.

For example, money-laundering regulations may mean that to open a bank account abroad proof of address such as a utility bill, is often required.  That seems simple enough.

However, utility companies in the UK for example require a customer to have a bank account before they sign someone up. This can lead to a Catch 22 situation where banks will ask for a utility bill before they open an account. The result might be one of your employees many miles from home without power, hydro or access to their money.  

A wise move would be to advise the employee to open an international bank account with a reputable provider (someone the individual has 100 per cent confidence in) before they leave the country, and to take copies of passports and other documentation.

And what happens if they’re moving to a country where there are few if any street names and all mail is delivered to a PO Box?   If the international bank requires proof of residential address your employee could be in a potential bind. Be prepared to provide the employee with a certified letter stating their new residential address.

Sorting out tax

An expatriate may often be transferred to a low-tax or tax-free country, which may provide a golden opportunity to save money. But tax laws vary widely from one country to another and personal situation plays a key role in determining the most tax-efficient arrangement. With the right kind of tax planning, an individual's personal tax bill can possibly be reduced. Once again, it is easier to take tax advice and to sort out administration before leaving the home country.

You may want to advise your employee not to make the same mistake as one Canadian expatriate who worked in the Gulf for a number of years. He had not taken the necessary steps to register his non-resident status with Revenue Canada before he left. He thought his earnings were tax free, but actually faced a potentially a large tax bill on his return to his native country.  The moral of the story is to take advice on your tax status before you leave the country and to complete the necessary paperwork. Professional guidance is essential.

Making the most of the opportunity to save

Once your expatriate employee has the financial basics in place they can relax and settle in to their new life. However, as soon as stage one has been completed, it will soon be time to embark on the next stage of financial planning – how to make the most of their time overseas.

Depending on the destination, they may have an opportunity to accumulate wealth for later in life.

Enjoying the expat lifestyle, socialising and exploring a new country while failing to appreciate how much things cost can quickly erode even a tax-free salary. Living the high life can cost serious coin. 

There are instances where Canadian expats coming to the end of their stint in the Gulf who have a lot less to show for their time abroad than they expected. They’ll have great sun tans and a photo album full of memories but at the cost of the mortgage free life they were planning on back home. Financial planning, sticking to a budget and committing to making regular savings are important. Good financial advice is invaluable

Expats often live in low or no tax areas where the regulatory framework can be less stringent than in Canada and therefore investments may not be offered the same level of protection.  That’s an interesting combination, attracting the attention of banks, brokers, and financial advisors.  Many are professional, offering excellent advice and quality services.  However, there are some bad apples. 

It’s not uncommon to meet clients who have bought regular savings plans.  Drip-feeding money in to financial markets can be a very sensible approach to investing.  Unfortunately, what they didn’t realise was they were committing to an inflexible 10 year contract linked to a life assurance plan.  Depending on the provider the charging structure can mean that at the end of the first two years the investment is worth less than the amount than has been invested. 

In addition with large bid-offer spreads (5% is not uncommon), multiple layers of management charges and exit fees, the unwary investor can be paying a heavy price.  We met one potential client on a recent trip to the Gulf who had made a US$300,000 one-off investment into just this sort of plan.  Looking through the paperwork it appeared that over US$33,000 had been deducted to cover expenses including the sales person’s commission. 

It is sensible to warn your expatriate employee in advance.  Advise them to always seek credible advice from a professional and reputable company; not to invest in anything they do not understand, to know what the charges are and to always read the small print.

With good advice and financial planning an overseas placement should be a rewarding and relatively stress-free experience for an employee.  That can have a pleasant knock on effect, making them more likely to settle into their new role more quickly, making their lives, and yours, less stressful.

To find out more about RBC’s Global Private Banking’s services for international employees visit the website on  You can contact Simon in London
on +44 20 7653 4746 or at

This article does not constitute an invitation to buy or the solicitation of an offer to sell securities or any other products or services in any jurisdiction to any person to whom it is unlawful to make such a solicitation in such jurisdiction. Consult with your financial advisor before making your investment decisions.  You should note that the applicable regulatory regime, including any investor protection or depositor compensation arrangements, may well be different from that of your home jurisdiction. This article is intended as general information only and is not intended as taxation, legal, investment or other professional advice. You should always obtain independent professional advice particular to your individual circumstances.


Tel: (403) 531-2200 
Fax: (403) 263-1826

Suite 600, 1333 8th Street SW
Calgary, Alberta Canada  T2R 1M6

Tel: (403) 531-2200 
Fax: (403) 263-1826

Suite 600, 1333 8th Street SW
Calgary, Alberta Canada  T2R 1M6