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Top 5 personal finance tips for expats in the UAE

The UAE has one of the best career packages in the world for expats. Before making the move, here are some key considerations when it comes to personal finance

Dubai, United Arab Emirates. The country is rated as one of the leading career destinations due to the excellent overall earnings potential on offer
Dubai, United Arab Emirates. The country is rated as one of the leading career destinations due to the excellent overall earnings potential on offer 

According to the latest edition of HSBC’s Expat Explorer survey, nearly three quarters (73 percent) of expatriates who live and work in the United Arab Emirates are better remunerated than in the country from which they originate. This, along with several other factors, sees the UAE ranked the fourth best place to work in the world when it comes to personal finance, local economics and career prospects.

The UAE is ranked the fourth best place to work in the world when it comes to personal finance, local economics and career prospects

The UAE is rated as one of the top career destinations thanks to both its overall earnings potential, as well as the associated benefits packages on offer from employers. Such benefits include return flights home and generous healthcare allowances. That said, properly planning for your immediate, as well as long-term financial needs, can be crucial to feeling settled and comfortable in your new surroundings.

We list the most important personal finance factors to be considered by new or prospective expat arrivals in the UAE.

Companies in the UAE do not provide pensions. As a result, expats can end up with retirement pot shortfalls as they lose out on pension contributions. The reality is, it is up to the individual to use their increased income wisely in order to maintain any pension accumulation they require. There are other considerations as well. Living abroad, or working for an employer that is based overseas, should not necessarily limit the amount paid into your home-based pension scheme.

Nonetheless, the tax relief available may be limited or not be available at all. It may be possible to transfer pensions to a pension arrangement overseas if the pension plan in your home country is a Qualifying Recognised Overseas Pension Scheme. This is also dependent on your intentions to retire and continue living in the expat destination.

Inheritance and tax laws differ from country to country, and as different countries have different rules around inheritance, property and tax, the importance of ensuring a valid will is in place cannot be overestimated. The amount of inheritance tax to which your estate would be liable on your death could be subject to different domicile and tax regulations in different territories.

Understanding the implications of your residency status in your country of domicile overseas is important as it has an impact on any how any will would be executed. It is advised expats confirm that their will is recognised in the jurisdiction in which they are living. It is sensible to have a will in place for every country in which the individual holds assets.

Offshore bank accounts
It is important to be aware that, should anything happen while living and working in the UAE, there is a possibility that your bank accounts could be frozen. It is therefore important to keep any emergency money in an offshore bank account. In addition, having your earnings from overseas employment paid into an offshore account will mean that you are likely to earn gross interest earlier.

Similarly, if you move any money you already have on deposit with a bank in your home country, you could accumulate tax-free interest even earlier, but it is important to remember that offshore accounts should be closed before returning home so that interest is paid while outside the tax net. Expats may also need to prove that they are a non-resident in their home country in order to avoid taxation there while domiciled overseas.

Many insurance policies will not cover you if you move abroad. Typically, an insurance policy taken out in one jurisdiction (e.g. your country of origin) will be void if you become resident in the UAE. Adequate alternative insurance arrangements should be made to cover you in your new jurisdiction.

Specific expatriate insurance policies are available, which are designed to cover financial and other losses incurred by expatriates while living and working overseas. This is important to address before relocating to a new destination.

Many expats would like to use their extra income and tax-free salaries to buy property back home. However, it is important to bear in mind that getting a mortgage in your home country may become somewhat harder if you are domiciled overseas. Having a credit history in your home country can be helpful if you are looking to apply for an expat mortgage, as can retaining some form of financial association within your home territory.

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