Moving abroad for work? Here are 7 things you must do

Managing wealth across multiple countries is easy for the very wealthy. For ordinary investors, it needs a good amount of groundwork before planning a move abroad.

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It is vital to follow processes correctly when moving abroad on work.
By Uma Shashikant

Our friends were leaving Mumbai. The husband had got posted abroad and the family was moving with him. The wife had to quit her job in India, but she had a work permit for the overseas location. They wanted to know how to organise their Indian assets before moving.

When a household moves abroad, they manage two identities—citizenship of one country and residency at another. They manage two currencies in which their incomes and wealth are held. They do not know if their move is temporary or permanent, and how well they would settle into the new country. There is usually a good amount of procedural aspects to take care of, and there is the task of managing and investing the new income in the new regime.


First, they should clean up the assets in India for easy access and management. For example, they cannot make fresh contributions into government and post office schemes such as the PPF. Some of these investments need closing. Some do not have online monitoring facilities. It is a good idea to close these investments and move the money to other assets.

Second, they should check their insurance policies—life, non-life and medical—so they do not end up paying premium for facilities they may not use. If their medical expenses are covered by the new employer, and if the terms of their medical insurance do not allow them to use the facility for illnesses at overseas location, keeping it alive does not make sense. They may have burglary, fire and other general insurances. They should review and close policies no longer needed. They can also pay their life and other insurance premia as a lump sum to avoid drawing from bank accounts that may no longer hold adequate balance.

Third, they should review and collect all employment benefits. The provident fund account will not earn interest if there is no contribution for over three years. These terms can vary depending on whether the fund is managed by the company’s own PF trust or by the central EPFO. If they have an NPS account, they should understand the terms of holding their Tier 1 and Tier 2 accounts. They should avoid letting these accounts become dormant.

Fourth, they should be prepared to convert their bank accounts, mutual fund folios, demat and trading accounts into non-resident accounts, to have continual access and correct tax and income records. The updating of the status of these accounts from resident to non-resident can happen only after they have moved, and are able to produce proof of their overseas address. The fees of non-resident broking accounts is higher, and it is important to consolidate before conversion.

For example, equity holdings in the trading account with the brokerages will now be subject to the regulations applicable to Portfolio Investment Scheme (PIS). The brokerage has to report the holdings by nonresidents periodically to the RBI. The holdings acquired in India, and funded by IndianRupees will be classified as non-PIS and held along with a NRO bank account. The holdings acquired while living abroad, and funded by foreign currency will be classified as PIS and held along with an NRE bank account. These apply for every combination of holding in a demat account. They should be consolidated and reorganised, so that direct equity holdings can be easily managed.

Fifth, applicable regulations and restrictions may vary from country to country. If they are moving to the US, FATCA regulations will apply. These rules require that institutions like banks and mutual funds that accept investments from US residents report the holdings to the revenue authorities in the US. In order to avoid the operationally intensive reporting requirements, many mutual funds do not accept investments from NRIs based out of the US. Some have specific process requirements before accepting investments. All investors have to make a FATCA declaration before they can make fresh investments in mutual funds.

Redeem all defunct holdings, and consolidate and clean up mutual fund holdings before leaving India. NRIs have to provide overseas address and link their holdings to an NRO or NRE bank account. The TDS applicable to them on redemption of mutual fund units is also different. Nominations in favour of non-resident nominees need more process. Cleaning up folios before leaving, and updating the KYC forms later after acquiring NRI status is a better idea.
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Sixth, processes for managing physical assets in India have to be in place. There are property management firms that maintain residential properties for non-resident owners. However, tax provisions in their resident overseas location may differ depending on whether they have engaged a property manager. After looking up such regulations, arrangement to rent the property in India should be completed before leaving.

Power of attorney authorising someone trustworthy to manage the paperwork relating to renting the property can also be created. However, such PoAs have to be drawn up after becoming a non-resident.
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Seventh, familiarity with tax provisions in the home country and the country of residence is important, and keeping the income tax returns current and compliant is vital while applying for many facilities in both countries. Taxes in India can be filed as a non-resident assesse who declares interest, rent, dividend and capital gain incomes accruing in India. If the new country has a DTAA with India, that would offer respite from double taxation.

Managing wealth across multiple countries is easy for the very wealthy. For ordinary investors, it needs a good amount of ground work before planning a move abroad.

(The author is Chairperson, Centre for Investment Education and Learning)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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