Moving to another foreign country is a significant life transition for NRIs. Whether your move is driven by a new job opportunity, starting a business, or retirement plans, ensuring your financial affairs are in order is crucial. While you may have fewer financial ties to India, it’s essential to address all your financial matters in your current country of residence before embarking on your journey to the next destination. In this blog, we’ll delve into eight critical financial steps that NRIs should consider when moving from one foreign country to another, from a financial advisor’s perspective.
1. Managing Bank Accounts
Typically, NRIs may have one or two bank accounts in their current country of residence. Before your move, assess your need for these accounts. If you plan to return or have ongoing financial transactions, it’s wise to retain one account. However, consider closing the others. If you don’t anticipate returning, transfer or withdraw your funds and close all accounts to avoid any future complications. This is a fundamental step in your financial transition.
2. Handling Credit Cards and Digital Payments
Ensure you inform your credit card company about your relocation plans, allowing for authorization of transactions in your new country. NRIs often have multiple credit cards, and you may want to cancel those that don’t offer benefits in your new destination. It’s advisable to close local digital payment accounts in your current country to prevent any potential issues with your funds in the future.
3. Evaluating Assets and Investments
Review your current country’s assets and investments and decide whether to keep or liquidate them based on the ease of managing them from abroad. For instance, assess the accessibility of funds from bonds post-maturity or early redemption conditions. If you own real estate, consider the management of property-related bills, utilities, property tax, and EMIs from a distance. You can enlist a property management firm or rely on friends and relatives to handle these tasks. If you foresee rental income or substantial appreciation, holding onto the property may be beneficial. However, if you prefer a hassle-free transition, selling the property before your move might be the better choice. Ensure you understand the processes and taxation regulations for property sales, as these may vary for non-citizens.
4. Managing Liabilities
Determine how you plan to service any loans in your current country of residence. Verify whether loans are tied to your visa’s validity and whether you are allowed to leave the country while having active loans. If you aim to pay off the loan ahead of schedule, be aware of any associated costs. Properly document your loan closure, ensuring that you have all property-related documents in hand to prevent complications down the road.
5. Understanding Taxation in the New Country
Learn about the taxation laws in your new country and how they differ from your current residence. Many countries have Double Tax Avoidance Agreements (DTAAs) in place with India. Understand how your move will impact your tax liability, particularly if you will continue to earn returns in your current country after relocating. Be prepared to manage taxation and documentation while residing outside the country.
6. Ensuring Access to Funds in the New Country
A move to a new country involves both excitement and anxiety. You may face unforeseen expenses, lifestyle adjustments, and differences in the cost of living. To address these challenges, it’s essential to save up enough funds before your move. Financial experts recommend having 3-6 months’ worth of expenses saved. Check if your bank in India has branches or affiliations in your new destination, enabling you to access your funds seamlessly. Opening a bank account in your new country as soon as possible is advisable for smoother financial transactions.
7. Securing Healthcare Coverage
Examine whether your existing insurance policies will cover you in your new country. Retaining life and health insurance policies from India can be beneficial, as they may come in handy upon your return. Keep in mind that most health insurance policies have waiting periods. You should also explore health insurance options in your new country, which may be provided by the government, your employer, or available for purchase.
8. Addressing Financial Matters in India
Once you relocate and establish identification and an address in your new country, remember to update your Know Your Customer (KYC) information in India. This step is crucial to prevent any financial complications in India. Update personal information in relevant Indian institutions, including banks, investment accounts, and Demat accounts.
In conclusion, relocating to a new foreign country as an NRI is a life-changing event that necessitates careful financial planning. It’s essential to tie up all financial loose ends in your current country of residence to ensure a smooth and successful transition. Seeking guidance from a financial advisor can be invaluable in this process, helping you navigate the complexities and optimise your financial well-being in your new destination. With proper financial planning, you can embark on this exciting journey with confidence, knowing yourfinancial affairs are in order.