- Bank accounts, investments, and mutual fund portfolios must be summarized and cleaned up before moving abroad.
- A person must be given the power of authority to manage fixed assets like property that must be rented out.
- Bank accounts must be converted to non-resident accounts.
When you are moving abroad, you have to think about more than just air tickets and finding a new house to live in. You must also think about how to manage your finances and know about taxations of the country you are planning to move in. Read on to know more about the ultimate moving abroad checklist.
Moving Abroad Checklist – Top 7 Things To Remember
Moving abroad can be exciting but before you do, you must put your domestic finances in order. Whether your move abroad is for a year, a few years or permanently, your assets at home should be set so that they are easy to manage from afar. Here are 7 things to do before moving abroad:
1. Summarize Investments
Your assets should be organized such that they can be monitored online. There are many investments that cannot be monitored in this way. You might have to close those investments.
You may move the money to other assets that can be monitored online. You should also ensure that you do not make new contributions to saving schemes such as PPF, post office schemes or government saving schemes.
2. Check Insurance Policies
Many companies abroad cover their employee’s medical expenses. Similarly, the terms of your current medical insurance may not allow you to benefit from the insurance overseas.
In such cases, you no longer need to pay a premium for your medical insurance in India. Similarly, you may have insurance against theft, fire, etc. You will thus need to review all your insurance policies and close the ones that will no longer be needed.
There are other insurance policies you may want to keep active. For these policies, you may want to pay the premium as a lump sum to avoid defaulting against future payments from bank accounts that may get de-activated. This is one of the important things to do before moving abroad.
3. Review Employment Benefits
You may have been making investments towards your PF and other funds associated with your current job. If you do not make any further contributions to these investments, it will not earn interest. The terms of these PF trusts can vary depending on whether they are being managed by the company or a central EPFO.
4. Convert Bank Accounts to Non-Resident Accounts
If you are going to be living abroad for an extended period of time, all your bank and trading accounts must be consolidated and converted to non-resident accounts. Countries such as India require you to close the normal bank account (Ordinary Resident) and open a Non-Resident bank account
This includes savings account, mutual fund portfolios, trading, and demat accounts. Converting these accounts to nonresident accounts will ensure that you have continual access to your income records and tax records.
It is important to note that the status of these accounts can be fully updated only after you complete your move and have proof of your new address.
5. Clean Up Your Portfolios
The laws and regulations that are followed by banks and other financial institutions vary from country to country. For example, in the USA, banks and mutual funds are governed by FATCA regulations. According to these regulations, some mutual funds may not accept investments from NRIs who move out of the USA.
There may also be specific requirements to be met before the bank can accept new investments. Thus, you must consolidate all defunct accounts and mutual funds before you leave the country.
You must also provide your new overseas address to your existing NRE and NRO bank account and update your KYC forms.
6. Make Arrangements For Physical Assets
Assets like property cannot be moved just because you are moving out of the country. The rent from these assets may still act as income even after you leave so you might not want to sell them just yet.
However, you will have to make arrangements for how you will manage them from afar. One of the important aspects of this is to authorize someone to act as a power of attorney on your behalf. You may also want to look into the taxation regulations associated with the incoming rent.
7. Familiarize With Taxation Regulations
The taxation regulations in your home country and country of residence may be different. Since you will be using facilities in both countries, you will need to keep your income tax returns compliant and current at all times.
If you are accruing income in India through rent, dividends from stock, interest on investments and capital gains, you will have to file taxes as a non-resident assessee.
Make sure that you do these 7 things before moving abroad and lead a peaceful life.