Ready to Migrate
In general, moving overseas to work or live has become a norm as the world globalises. We have noticed recently that an increasing number of native Hong Kong persons holding a BN (O) passport planning to migrate overseas for a better quality of life, better living conditions, better career opportunity or better education for children.
Prior to any move, there are many considerations and each person will have their own objectives, whether temporary or long-term. For example, you may consider your take-home compensation or living standards if you are relocating for work. If the main purpose of relocation is for the family then the quality of education and living conditions may take priority. In any case, it is important to understand the tax residency rules of the country and how income will be taxed prior to the move as typically tax systems of overseas countries (ie. UK and US) are more complex than Hong Kong.
From a tax perspective, some issues to consider before migration:
- Are you moving out of Hong Kong permanently? Or do you have plans to return to Hong Kong after a couple of years, for example after obtaining a permanent resident status (aka green card for US residency)?
- Are you aware of the definition/rule of tax residency of that country? What issues (if any) are triggered upon obtaining permanent resident status?
- Will you be traveling frequently outside of that country after the move?
- Do you have assets with realized gains that could be sold after relocating?
- Do you own any real estate in Hong Kong and what plans do you have for when you move, ie. will you keep the property or sell? Are you planning to buy property in that country?
- What will you do to generate income following the move, where will you be performing duties of your employment or business?
- Do you have any succession plans, ie. to transfer assets to the next generation? Many countries, unlike Hong Kong, have estate/inheritance tax.
- Are you entitled to any kind of estate income from your parents?
- Are there any future tax compliance issues (ie. tax returns) after the move?
Conclusion - With careful tax planning prior to the move, it is possible to minimize any “surprises” that may come from a more complex tax system such as the UK or US which could lead to a negative impact on your family wealth. Seeking tax advice should be at the top of the moving checklist to allow sufficient time to plan and implement advice given.
If you are planning to relocate to the UK/US or would like to have basic understanding of its tax residency rules or require personal tax advice before relocating, please feel free to contact us at tax@zetland.biz or at +852 3552 9085.
