Who is an Expat? - (Webinar - 1st November)
Join us every Friday (11am) on our Facebook page for a live webinar where we discuss the latest Expat issues relating to Brexit, residency, healthcare, tax and business.
Who is an Expat?
When does a holiday maker, a traveller, a migrant worker, an overseas property owner become an Expat?
Is someone always an Expat when Living and Working Abroad?
ProACT Sam says that an Expat is a transitional period in someone’s life.
Working Abroad
When working abroad on a temporary or short term contract, these people are referred to as Expats.
In the Middle East (e.g. Dubai, UAE), residency visas are only available to migrant workers. When the employment finishes, the visa expires and these workers must leave the country.
Likewise in these countries, any overseas investment in property or business usually has to have a local business partner.
Travel Abroad
People investing in overseas property may do so as a holiday home, or as a property rental investment.
Generally under international law people can take up to a 3 month trip to any other country. Some countries would still require a travel visa, but when supporting a regional tourist industry these are easy to obtain.
In the USA, even if a visa-free holiday travel arrangement exists between countries (this includes the UK), the USA still require that people who are travelling there register on the Electronic System for Travel Arrangements (ESTA).
The EU are introducing an EU-wide travel authorisation system. Not all EU members are part of the borderless Schengen area. The EU countries have 62 visa-free travel countries allowing people to travel to and from the EU for up to 90 days for holiday or business, but not to work or study.
After Brexit the UK would seek to be added as a visa-free country under the EU travel arrangements system.
Electronic Travel Borders
The USA and EU ESTA schemes allow governments to track and monitor people movement. This is with a view to countering terrorism, controlling migration and preventing/monitoring other criminal activities.
It will make passport checks quicker at borders, airports and ports, because the traveller’s passport, travel, destination address and contact details are registered.
A passport scan can be verified and checked online.
All those travelling to the USA and EU under visa-free agreements will need an ESTA for the USA or the EU-equivalent ESTA from 2021.
EU Expats Working Abroad
Any EU Citizen is free to relocate within the EU for study or working abroad.
Around the rest of the world a working visa may be required, however this is dependent on the circumstances.
A short business trip up to 90 days to conduct business on behalf of your company or employer in the home country does not require work visas or permits.
For any Expat to work abroad for a local employer and pay social insurance and tax, they may require a visa to work.
Even within the EU, the Expat has to register to live in that country, and register for tax, although they don’t call it a work visa.
The UK is unique in the EU as it does not have a residency registration or ID process for Expats under EU law. Common EU registration legislation was introduced in 2006, but this was rejected by the UK and not implemented in 2011.
Expat Journey
ProACT consider Expats to be family and business Living and Working Abroad: anyone registered to be Living and Working Abroad in their country of residence with a home, residency permits, tax residency, healthcare registration, and working or study visas (as appropriate).
A work or study contract may be required to allow a visa to be issued before travelling into a soon-to-be-Expat’s new country.
Travelling on holiday, then applying for a work visa can be a successful process in the EU for EU citizens, however non-EU citizens would need the work visa before travelling to the UK or any other EU country.
Gap-year travellers around the world generally organise their journey so that they do not spend more than 90 days in any country. This means that they are travelling abroad on a series of 90-day holiday visas for their year of travel.
Under international law the general principle is that residency status for Expats can change after 5 years.
We exclude people with historic family connections claiming the rights to an Irish, Cypriot, UK or similar citizenship.
We are also not including people who benefit from sovereign countries offering citizenship for ‘money’ - investments, business or otherwise.
Natural Flow
Once registered in their new country, Expats Living and Working Abroad start a process of naturalisation.
This allows Expats in their new country of residence to acquire the equivalent citizen’s rights to nationals of that country over time.
Different countries work to different timescales and requirements.
The outcome is the same: the Expat can acquire an overseas passport and legal citizen’s rights in that country, which is equivalent to those of nationals of that country.
Expats can acquire a permanent residency after 5 years of Living and Working Abroad in that country. Note: This is true for any Expat including non EU citizens in the EU.
This is a next step to naturalisation. It allows residency rights and visa-free travel between the Expat’s country of tax residence and their home country, subject to a minimum period of time. As an example, permanent residency in Cyprus is for a 10 year period.
Naturalisation can then be progressed by applying for citizenship after a period of Living and Working Abroad in that country. Again, each sovereign country has different qualification periods for this stage. In Cyprus it is 7 years. For FRANCE and the UK, citizenship can be applied for after 5 years.
Many countries allow for dual citizenship - but not all. Dual citizenship allows the Expat to hold citizen’s rights and passports for more than one country at the same time.
Domicile - Where is that?
Where you are from is a different matter for adults. Under-18 minor Expats generally acquire a domicile of their parents.
Everyone has a domicile of origin: where they are born combined with where their parents are from.
The UK use domicile to assess Inheritance tax (IHT) liability at 40% on worldwide assets of BRITISH people even if they die overseas.
The legal definition of domicile in Cyprus is ‘Expats Living and Working Abroad in Cyprus for 20 years, with 17 years as a tax resident.’
You could be a Cyprus Dual Citizen and still be domiciled in the UK for IHT.
This is the same us the UK principle of defining domicile but the UK won’t assess domicile until they do an IHT tax assessment - which is after you die. Better plan ahead!
If this is something which could affect you and you have not yet planned for it, please contact us.
EU Expats in the UK & Around the World
There are different types of expats in the sense we discuss. Let’s consider the differences:
First and foremost, people travelling on holiday or business for less than 90 days in a country are not ‘Expats’.
People who have family or business(es) and are Living and Working Abroad are Expats.
Expats live in a country which is different to their home country and they are registered for residency.
Expats may be working locally and registered for tax, social insurance and healthcare. Alternatively, they may be working as a contractor over the internet or in a 3rd country, whilst being tax resident in their country of tax residence ( which is not their home country ).
There are also ‘migrant workers’ who are relocating overseas from poorer countries for economic reasons. They are still Expats.
Expats could be living on investments or pensions in a dream retirement location, or close to family.
Students around the world generally are not Expats in the sense of Living and Working Abroad. Special rules oversee study and the rights to work.
EU Expats in the UK
There are 3 million EU Expats in the UK (i.e. resident, but not native to the UK). They might not enjoy the high salary of an Expat living in Dubai but for lifestyle, adventure, cultural or economic reasons they have chosen the UK for Living and Working Abroad.
For EU Expats, the UK Settlement scheme has been available since March 2018. This is the UK’s version of permanent residency and can be acquired after 5 years of Living and Working Abroad in the UK.
Once acquired, the EU Expat and his/her family then has the right to remain in the UK for their lifetime.
If the EU Expat arrives in the UK before Brexit day or any transition period ends, they can still apply for settled status after 5 years of Living and Working Abroad in the UK. Of course, after 5 years any Expat Living and Working Abroad in the UK can apply for citizenship by naturalisation.
Settled status protects and offers EU Expats the equivalent EU Citizen’s rights during their lifetime. It also protects Expats who have come from Netherlands, Germany and Austria - EU countries that don’t automatically allow dual citizenship. With settled status or permanent residency in the UK these Expats retain their home country passport and citizenship rights. They also retain their domicile.
Who is an Expat?
An expat is someone on a journey Living and Working Abroad.
Being an Expat is being someone who is doing more than just taking a holiday or a business trip in another country.
The Expat’s journey could be a journey to obtaining citizenship rights in their new country of residence, but this takes time, usually more than 5 years.
Expats can remain permanently resident abroad, without taking citizenship. Permanent residency or settled status allows residency rights while Expats retain their home country’s citizenship.
Some Expats’ journeys may end in dual citizenship, with passports for their home country and country of residence.
ProACT Know How
ProACT Expat Experts are here to help. if you need any help and assistance Living and Working Abroad, contact us for residency, tax registration, starting a business and protecting assets, plus the latest EU Brexit news for Expats, Contact us.
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