Bottom Line

In layman’s terms, here is what you should be aware of as you address your international tax planning agenda.

These are six things we wish someone had told us about international tax planning before we made our first international move:

1. Maybe you don’t need to do anything. Asset protection isn’t an issue until you’ve got assets enough to warrant the investment of time and money to figure out how to protect them. In some jurisdictions, yes, you’re wise to hold property in a local or an offshore corporation, but not all. Before you do anything, make sure you understand why you’re doing it and what the real benefit will be.
2. Whatever you do, it shouldn’t cost you tens of thousands of dollars. Okay, maybe if you’re Bill Gates or Warren Buffett, a big investment in managing your tax and asset issues is warranted. But for Average Joes, it’s not.

3. The Foreign Earned Income Exclusion (FEIE) may be the beginning and the end of the tax planning you require.

4. No attorney in your home country is going to be able to help you figure out what to do in your new country of residence. You need a local attorney in your new country of residence, experienced at working with foreign residents, to help you determine your local tax liabilities and obligations. Sometimes, for example, depending on your situation (if you’re running a business, for example) a local tax filing may be required even though no local tax is due.

5. No matter where you eventually decide to relocate overseas, the key to successful tax planning is to carry it out before taking up residence. Certain options for mitigating your local tax bill can come off the table once you’ve taken a local address. Again, you need local legal advice.

6. You can avoid any local tax issues altogether by being only a part-time resident. The particulars differ from jurisdiction to jurisdiction, but, generally, if you spend fewer than six months in a place, you are not considered a full-time resident for tax purposes. There are exceptions, so, again, you need personal advice.