European Cities ‘Dominate’ Mercer’s Quality of Living Report
The annual Quality of Living Report has just been published by global consultancy Mercer, ranking 450 of the world’s cities according to their desirability for expats. The Mercer report takes many factors into consideration, so the overall rankings are based on a range of 39 criteria, such as air quality, safety, health and education. However, we’re focusing on the cost of living.
First on the list – the city with the highest cost of living – is Zurich, followed by:
2. Vienna, Austria
3. Geneva, Switzerland
4. Copenhagen, Denmark
5. Auckland, New Zealand
6. Amsterdam, Netherlands
7. Frankfurt, Germany
8. Vancouver, Canada
9. Bern, Switzerland
10. Basel, Switzerland
Swiss cities dominate this ranking, unsurprisingly, as Switzerland is known for its high cost of living. Singapore and Hong Kong appear further down the ranking, as some of the most expensive places for expats. London comes in at no. 8 on the ‘most expensive’ index, with New York featuring at no. 7 and Nassau, the Bahamas at no. 9, followed by Los Angeles (10), Honolulu (12), and San Francisco (13) for the USA.
Mercer reports that inflation and exchange-rate fluctuations have directly impacted the income and savings of international employees. Meanwhile, an increase in economic and geopolitical issues, such as wars and natural disasters, plus the ongoing aftershocks of the Covid pandemic, have led to price hikes in accommodation, utilities, education and other areas. In cities such as Hong Kong, Singapore and Zurich, Mercer reports, rises in housing costs, transportation, goods and services have all generated an inevitable increase in the cost of living, too.
Thailand: Impact of Personal Income Tax
The managing director of Integrity Legal, Bernard Hart, has some reassuring news for expats in Thailand. Contrary to recent claims in the press, he says, income tax reforms are unlikely to affect most expats, who are, however, being unnecessarily encouraged to sign up for a Tax ID number (TIN).
Hart states in a recent video that most retirees won’t be impacted in any way by recent memoranda from the Thai tax department and that “nothing has fundamentally changed.” Thai tax law itself has not altered, and the majority of expat retirees won’t be affected – this is not a ‘one size fits all’ situation. Anyone who is concerned needs, he counsels, to consult a qualified professional with knowledge of the Thai tax arena and expat finances.
UAE: Financial Safety Net
We have reported before on the pension gap looming for expats in the UAE, and it now appears that expats in the region are seeking to plug that gap themselves by engaging with digital investment platforms. The latter are seeing an unprecedented amount of use by the expat community, as expats turn to trading apps in an effort to secure funds for their retirement. Apps such as eToro, which has partnered with the Dubai Financial Market (DFM), and UAE-based asset manager Kamco Invest, allow expats to develop their investment portfolios in the absence of local pension schemes.
Expat Loophole for Inheritance Tax?
If you’ve been paying attention to the UK news, you will be aware of the escalating row over inheritance tax for farmers in Britain following Chancellor Rachel Reeves’ latest budget. Whilst you may have little interest in agriculture, you may not be aware of some potential loopholes in inheritance tax for you as an expat.
If you have lived abroad for 10 years and die there, from April 2025, your heirs won’t have to pay inheritance tax to HMRC on your overseas assets, just on those held in the UK, although you need to be aware that you may still be liable for inheritance tax locally, to the tax authorities in your nation of residence. However, some countries, such as Malta and New Zealand, don’t have inheritance tax at all.
“A lot of people who are expats don’t really appreciate what’s happened and may not be paying much attention to the non-dom rules, so wouldn’t realise they are the unexpected beneficiaries,” says Chris Etherington at accountancy firm RSM.
Some financial experts have expressed fears that this will see a mass exodus of the wealthy from the UK, but the Office for Budget Responsibility predicts a leaving rate of around 12%. HM Treasury has told the press that:
“Replacing the outdated non-dom tax regime with a new internationally competitive residence-based system addresses unfairness in our tax system, attracts the best talent and investment to the UK.”
However, The Times has shone a spotlight this month on thinktank The Resolution’s suggestion that the government should charge capital gains tax on the assets of Brits moving abroad. There are pros and cons for this: the Centre for the Analysis of Taxation says that research shows that ¾ of British business owners who move abroad do so to countries which don’t charge CGT, such as Australia, Canada and Spain. But some of those countries, like Australia and Canada, charge an exit tax on their own citizens who move abroad. Italy and the UK are the only G7 nations which don’t charge exit taxes.
However, some tax consultants believe that the imposition of exit taxes leads to comparatively limited economic gains and could, moreover, accelerate the exodus of investors from the UK. They also question whether, on a practical level, an overstretched HMRC is in a position to execute and administrate such taxes. Vanesha Kistoo from accountancy firm Blick Rothenberg told The Times that she thinks that “the government and the tax office’s time would be far better spent finding new ways to incentivise and attract investment.”
Italy Reintroduces €1 Home Initiative
The Italian government has recently reintroduced its scheme to revitalise abandoned rural communities, offering homes for the very reasonable price of €1. The scheme has been popular, and has had an impact on neglected Italian villages, although buyers must consider the bureaucratic challenges and the potential need for substantial investments into the properties.