FINANCIAL PREPARATIONS FOR GOING ABROAD
By Wade Dawson
Senior Partner
Austen Morris Associates
Now that you’ve decided to make the move to China, you’ll have to deal with some of the financial nitty-gritty that comes with it. Don't delay on this, and make sure you plan ahead. This is not the time to run short of funds, and you don't want to find yourself shelling out in bank penalties for late payment or getting hit by taxes you shouldn't have to pay. The good news is that people move to new countries every day, and as long as you get the advice you need in good time you shouldn't have any problems.
First things first: Don't take our word for anything. Once you're talking about something as important as you and your family’s finances, get professional financial advice about the implications of moving to China from your home country. Your firm may well provide some advice, but we highly recommend you talk to an independent advisor as well. Don’t leave anything to chance.
With that out of the way, here are some of the things you need to have on your mind. Think of this as a tool to help you know what you should be discussing with a professional financial advisor.
• Think about the payments you’re making, as well as the ones you will need to make.
Cancel any direct debits you have in good time. This includes mobile phone bills (unless you want to keep the service running in your home country for some reason), Internet and so on. (Not really financial, but as an aside, magazine and newspaper subscriptions should be dealt with at least a month ahead, since the request often takes a while to filter through the system. We suggest you put a hold on them until you are sure of your new address, and even then you should consider sending them to your office rather than home for convenience.) Of course,if there are direct debits you need to keep, such as mortgage payments, figure out how to make sure there's always enough cash in your account when they come due each month. You may also find you need to add new direct debits so that certain bills are automatically paid.
• Let your bank or banks know that you’re moving to China, and contact credit card companies separately if needed. The last thing you need right after you arrive here is to have a stop put on your credit cards because, from the bank’s point of view, mysterious overseas transactions are suddenly showing up. Once you’re settled,丨et them know your address - even better, have them provide statements through online banking rather than paper statements. It might be useful to tell them what bank you will be using in China in advance - ask your company if they choose a specific bank as a matter of course when helping new arrivals open an account.
• Related to the point above, make sure you have plenty of space in your credit limit and (ideally) a fair bit of available cash when you first arrive. Costs can be unpredictable in the first couple of months in a new country, and you certainly want to have emergency money handy. Get your company to help get you set up with a local credit card drawing on your RMB account as quickly as possible once you’re in place.
• Decide whether you want to keep your main home bank account open. This is recommended if you plan to return after just a few years, and will save you the rigmarole of opening a whole new account. It’s also good for your credit record. Talk to your bank and find out how much money needs to be in the account to keep it active.
• Set up online banking. Most banks offer this now, and if you’ll be moving money from your home account to China it will make life considerably easier. Moving money the other way is trickier - you can do it, but it will involve a trip to the bank and various forms, which is nice to avoid.
• Consider whether this is the time to set up an offshore bank account - i.e. an account that is neither in China nor your home country. There may be tax advantages and you should be able to use multiple currencies, as well as get a good interest rate for long-term savings. Discuss this option with your advisor.
• Get your tax situation cleared up. You’ll have to declare that you will be living and working in another country. For Americans, their income while living abroad is subject to US taxes; for most other countries, you will be taxed in China with salary deducted at source. No matter where you’re 什om, you need to find out if you should be filing a tax return every year while you’re away. However, perhaps you have income at home from property or investment; perhaps having no domestic income affects your deductions. Don’t delay on this one: not only do you want to make sure you fully comply with the law in both countries, but you also want to set things up in the most tax-efficient manner possible. You should discuss this with both your firm and an advisor - ideally one who specializes in international taxation as these issues are the most complex.
There’s nothing to worry about here if you get your ducks in a row as early as possible - let your financial advisor and/or tax expert do all the heavy lifting and follow their direction, and your time in China will be just as profitable as it is exciting.
THE AUTHOR
Wade Dawson has worked as a China-based financial adviser for the past ten years helping individuals and families achieve their financial goals. He is a Senior Partner at Austen Morris Associates and lives in Shanghai with his wife and two children. As a result of his insights, he has served as a seminar speaker, given numerous interviews, and written articles for multiple publications on a range of financial planning topics. He is dedicated to providing high-quality advice and creating integrated wealth management solutions that simplify his clients’ lives. Wade recognizes that there is no one-size-fits-all approach to private wealth management and thus designs investment advice that is unique to each individual client. He and his team aim to achieve returns and service that exceed their clients' expectations.
