In this article, we’re answering “What is an expat?” We will also be covering the expat banking opportunities and taxation requirements along with a potentially controversial difference between expats and foreign workers.
This article is part of our free series on opening an offshore personal bank account online, which expats often find helpful in managing their cross-border banking needs.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- What Is an Expat?
- What Is an Expat vs Foreigner?
- What Are the Banking Requirements for Expats?
- What Are the Tax Requirements for Expats?
- Frequently Asked Questions
- Do You Want Help Opening Bank Accounts?
What Is an Expat?
An expat (or expatriate) is an individual who has actively chosen to live overseas on a temporary (or undefined) basis for purposes related to lifestyle or career advancement.
Many expats start the expat lifestyle after accepting a foreign assignment, international relocation package, or overseas job opportunities with large multinational corporations.
When moving abroad, it is not uncommon for expats to face challenges with cross-cultural adaptation and culture shock, visa and immigration, international housing considerations, language barriers, taxation for expats, and much more.
As a result of these challenges, international expat communities have emerged, investment services for expats exist, specific expat support services have been introduced, and companies to help people seamlessly move to a foreign country while obtaining a job abroad now exist.
Needless to say, there are benefits to expatriate living. And, this movement of global mobility has been further propelled by the push for remote work arrangements and the desire for international living.
What Is an Expat vs Foreigner?
There are a number of differences between an expat and a foreign worker. However, it’s important to start by sharing that the term “expat” or “expatriate” has garnered negative attention in recent years following claims that it is unjust or discriminatory towards foreign workers.
However, it’s important to point out that the term expat is not necessarily a statement of social class and is instead a reflection of other qualifying factors, such as affluence, education level, and catalysts for moving to a country.
With this in mind, the main differences between an expat and a foreign worker include motivations for moving, type of employment, country of citizenship, and earning power.
Importantly, there is no hard rule for what is an expat or a foreign worker. However, based on our team’s experience, the following criteria provide a general framework for differentiating between expats and other foreign workers.
Additionally, it’s important to note that financial institutions that cater to expats tend to follow a similar framework for determining which clients suit their banking products and services.
Motivations for Moving
Expats tend to move to a specific country in order to pursue career advancement or lifestyle enhancement while foreign workers tend to move out of economic necessity.
Type of Employment
Expats tend to hold senior management and executive-level roles with large corporations while foreign workers tend to participate in the service industry.
Country of Citizenship
Expats tend to originate from developed countries or countries with advanced economies while foreign workers tend to originate from developing or emerging countries.
Earning Power
As a result of their employment opportunities, expats tend to have higher earning power which generally results in higher levels of affluence than foreign workers.
Again, there is no hard rule for what constitutes an expat or a foreign worker. However, it’s important to differentiate between these two groups in order to understand the specific banking and financial services that both groups require in order to identify the best financial institutions that can serve both.
What Are the Banking Requirements for Expats?
The specific banking products and services that expats require depend on their expected time in a given country, their level of personal wealth, their ongoing commitments in their home country, and more.
That said, at a basic level, expats require domestic banking services in order to support their local financial requirements in addition to international banking services in order to support longer-term savings and investments.
With this in mind, we typically suggest considering opening accounts with both domestic and international banks in order to fully cover their financial requirements.
What Are the Tax Requirements for Expats?
The tax requirements of expats vary widely, depending on the specific tax systems in their country of citizenship and the host country where they are working.
With this in mind, expats should consult tax advisors that are fully aware of the reporting and taxation requirements in both countries in order to ensure that they are compliant with all relevant tax laws.
However, it’s important to note that most tax professionals cater to local tax residents. So, make sure you are speaking with a tax professional that understands the nuances of living overseas and taxes prior to following directions.
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Frequently Asked Questions
Below are a few of the most common questions we receive from people looking into this topic. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
What Qualifies as an Expat?
An expat is usually an individual who has chosen to move to a foreign country for career advancement or lifestyle improvement. They are usually in a foreign country on a temporary (or undefined) basis. Additionally, they tend to hold skilled positions, often in managerial or executive roles.
Is an Expat Still a US Citizen?
Yes, an expat is still a US citizen if they are no longer living in the United States. This is because in order to no longer be a US citizen, an expat would need to go through a very specific process of renouncing or relinquishing their citizenship.
Do Expats Pay Taxes?
Expats may or may not pay taxes, depending on the tax systems of their home country and the tax system of their host country. Additionally, it’s important to note that in order to not be liable for taxes in many countries, an expat needs to confirm themselves as a non-resident. Of course, each country has different requirements for non-resident status.
What Is a Foreign Worker?
A foreign worker is an individual who moves to a country out of economic necessity. They tend to participate in the service industry and generally do not have high-paying jobs or hold management positions.
Do You Want Help Opening Bank Accounts?
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