The adventure of a new country, challenging job, more money and a completely different lifestyle - for a few years anyway - is a dream which many people are fulfilling.
The increasing mobility of the workforce, particularly in the IT sector, means it's easier than ever to work abroad for a time and then return home to settle down.
However, before taking the plunge, it is vital to think carefully as hidden expenses may eat away more of a salary and benefits package than expected. Impulsively embracing the romantic notion of a foreign job without number crunching, examining the career implications for both partners and educational needs of the children is a formula for disaster. A Family Money reader Ms C works in the IT sector and asks which issues one should consider when contemplating a move abroad. Besides visa requirements, healthcare, accommodation concerns and moving expenses the most significant concerns are those relating to taxation and long-term benefits.
You should compare taxes, social welfare, pensions and property prices in Ireland and the country to which you are moving says PricewaterhouseCooper's Global HR Solutions director, Mr Mark Carter.
Most firms consult people such as Mr Carter on such issues before an employee is transferred abroad. Demand is so high that an entire new industry - long-distance movers, international recruitment firms, specialised banking facilities and intra-company transfer consultants - now caters to the specialised needs of expats.
Although it is easier to work abroad if a company is sponsoring you for the move, you can research the facts and figures with a little determination. "It requires a lot of digging around but it behoves the company and individual to do it because it may save them loads of money," says Global HR Solutions consultant, Ms Anna Volinkaty.
Some basic sources of information include the Internet, the Revenue in country of relocation, the chambers of commerce in the area, embassy of the country and consulting company websites.
Tax Considerations
Although Irish income tax is high, other countries may impose a range of taxes - state, city, local, church - unheard of here. If a worker moves to the Silicon Valley in California they may pay federal income tax at 30 per cent, state income tax of 9 per cent, Capital Gains Tax at 20 per cent and property tax of 1 per cent. Estate and gift taxes are also liable in the US. Taxes deducted directly from payroll are: social security at 6.2 per cent of salary up to $68,000 (€65,066); Medicare 1.45 per cent on all salary and in California disability of 0.5 per cent on the first $32,000 according to US-based relocation consultants Murdock & Associates.
US sales tax varies from state to state ranging from 5 to 10 per cent. All these taxes erode take-home pay but salaries tend to be higher in the US than in Ireland.
Timing is everything when it comes to taxes. As the Irish tax year runs from April to April, specific dates of departure may provide tax breaks for PAYE workers for that year. If a person leaves in September/October, they will be able to utilise the unused tax credits for the remaining six months.
If you work abroad long enough, those earnings abroad are not liable to Irish tax whether you bring the money back home with you or not. Unfortunately, the situation becomes more complicated for the self-employed and those with investment income.
Foreign investment income is not liable to Irish tax when you are non-resident unless it exceeds £3,000 (€3,809), says Mr Carter. If it exceeds £3,000 in any of the first three years after you leave, you are technically still liable to tax. This is unless you are paying tax in a country with an Irish tax agreement. For example, if someone is working in the US or Canada they may have as many investments as they like even if it's over £3,000. Investment income taxes are not liable in this State because the Republic has a tax agreement with both countries, says Mr Carter.
Tax on investment income is not automatically collected by Revenue. The onus is on the individual to pay tax on this type of income in the Republic. In general, the treatment of investment income depends on how much it is, what country the individual is living in at the time and the length of time they have spent away, says Mr Carter.
If you have been away for three consecutive Irish tax years when you become resident in the State again there may be special tax breaks for the three years following your return.
If living and working abroad, there are different rules for VAT when bringing items back into the State. Normally the tax officials will only look at big ticket items like cars and boats.
Pensions
Before departing, it is extremely important to examine the ins and outs of both state pension and private pension schemes. Individuals should particularly examine the rules relating to transferring the pension back to this State when moving home.
Irish people who have lived and contributed abroad and then move back may receive a prorated pension from the Government. In the end, an individual should get pensions from the two countries if they qualify.
"When coming back from abroad make sure to get a record of the social security contributions that you have paid from the local social security authorities. In 2030 years time when you retire you may have no proof that you paid contributions in Denmark unless you have filed a receipt for it," says Mr Carter.
Individuals "going global" on their own should seriously consider talking to their accountant or consulting with an expert in this area. Several booklets that provide basic information on the areas to consider are available.
Enterprise Ireland just published Starting Up in the USA, a booklet for technology companies considering opening a US office, but it includes a few sections on employee issues like recruitment, personal and home issues.
PricewaterhouseCoopers has information for expats moving back - Foreign nationals working in Ireland and Tax Facts 1999/2000 - which are available in paper form or on the Web at www.pwcglobal.com/ie.
