As someone who wants to be financially independent, I have done many things throughout my life to help get me there (whether I knew it or not!). I am not from a wealthy family, so all that I have has been earned by yours truly. However, I want to share what could be the biggest life hack to getting you to FIRE: Live and work abroad.
At the moment, making a move to live and work abroad is anrather tricky affair with COVID 19. However, this is a time to think and reflect, and let’s face it, moving overseas is a big deal that requires an element of planning. So let’s ignore Covid for now and look at countries you can get a real tax cut from.
A number of countries want people to come and work so offer great tax incentives.
- British Virgin Islands
- Cayman Islands
- Norfolk Island
- Pitcairn Island
- St Kitts and Nevis
- Saudi Arabia
- The Bahamas
- The United Arab Emirates
- Turks and Caicos Islands
- Wallis and Futuna
- Western Sahara.
There are some fairly random countries there to be fair. I’d say it’s very unlikely you’d get a job on Pitcairn Island for example. Norfolk Island is one of the most remote on the planet, so not for the faint hearted. Other places like Somalia are just downright dangerous, so they are out.
The most favourable seem to be the Carribbean countries and the Gulf countries like Bahrain, Saudi Arabia, Qatar, Oman and UAE. All these places have varying levels of jobs. When I was in Qatar, construction, finance, and oil jobs were the in thing. They are trying to diversify but I would say those jobs are very much still in vogue.
If you are British, you have to stay overseas for an entire tax year to get the benefit, so you must be committed to the process. Otherwise you might have to pay tax in the UK too. The UK government has some guidance on the topic. The tax year begins on 6 April. That means if you leave in April 2021, you will have to stay out of the UK until April 2023. But if you left in March 2021, you’d only need to stay until April 2022. You can’t come back to the UK for more than 3 months either.
Who should do it?
I would to anyone to give living and working abroad a try. If you are under 30 then go for it as you’ve nothing to lose. If you have a family, it can be harder, but lots of people do it and haven’t looked back.
To live and work abroad is at least a great life experience. You can make good money and see the world. What’s not to like?
If you don’t like it, then you can leave, and come home. You’ll have earned more hopefully, so will have lost nothing.
Even if you don’t want to go to a tax-free country, there are 190-odd other countries to choose from, and many skills common in the UK are valued in developing countries, so opportunities to make big bucks exist.
Australia for example has lots of opportunities for in demand jobs like construction, medicine and teaching.
The easiest way to go is if you can get a visa easily. Now the UK has been cut out of the EU, that process is considerably harder for Europe.
In the tax free countries above, they want people to come, so companies will usually sponsor you and arrange a visa.
Arranging your own visa is really tricky, so I’d advise getting a suitable migration agent to help you. Make sure they have all the right qualifications before you go with them though.
Do you work for an international company? Often they will have postings overseas, and will arrange everything for you. Ask around and express an interest in going. You’ll probably get a promotion too as companies like it when people go and work for them on profitable assignments.
My experience living and working overseas
In my twenties, I graduated from university with my degree in civil engineering and landed a job at an international construction company. It was a big deal, and it served two of my ambitions at the time: to earn money after 5 years of university, and to travel the world.
My first assignment was in London, which was actually unusual as most graduates ended up getting shipped out somewhere overseas. I was there for 18 months. When my project ended, I was offered two choices: Albania, or Qatar.
Trying to be bold, I said Albania; however, I think my manager probably read me well and said, ‘I don’t think you actually want that.’
He was right. It was a hard placement, and I’d have to live in a camp in the mountains, 8 hours from the capital city. The company was building a motorway through the mountains.
The other option was to move to Doha in Qatar. Back in 2008, it was a relative back water in comparison to its sister cities of Dubai and Abu Dhabi. I took the plunge, and moved there on my own, leaving my home, friends and family in the UK.
On the face of it, I got a good deal by going out there. I got a 5% uplift on my hourly rate, and the hours increased to 48 hours a week. The company paid for an apartment for me, I got a car allowance to rent a car, 3 return flights home a year, and 36 days leave. I also got the usuals like private medical and life insurance etc.
The icing on the cake is that Qatar charges 0% income tax. Yes, you read it right. No tax at all. That makes a very big difference.
There were a few drawbacks. My hours were 7am until 6pm minimum. Qatar was a very strict Islamic culture back then, and there was a level of culture shock that I experienced almost immediately upon landing. And finally, the climate is harsh. Temperatures in the summer could hit 50C, but usually averaged 45C during the day, and 30C at night. Oh and the humidity was unbearable. Qatar is in the desert, but next to the Gulf of Arabia.
The sponsorship system also meant I had to get ‘letters of no objection’ from my company to buy a car, buy alcohol, and leave the country.
Was it worth it?
I learnt a great deal about the world, travelled, and met people from so many cultures. Whilst I saw the best and worst of humanity, I also learned a lot about myself too. The best thing was I saved a lot of cash with out really trying.
As an expat you get sort of propelled to a high status in society. In Doha I was able to gate crash the Tribeca film festival after party, where Robert de Niro was. That as a good laugh. We also got to go out for nice brunches with friend to pass the time. I also went from a shared house in London to my own 2 bed flat. However, it wasn’t all glam and glitz.
I would say at the time, there were days when I was utterly miserable due to home sickness. However, there were times when I loved the freedom that earning so much gave me. I used my air fares to travel to India, Sri Lanka, Malaysia, California, Germany, Scotland, Paris, and UAE. I basically got a free holiday because my company gave me the airfare as if I bought the flight on the day. That was in case they decided to cancel my leave (which never happened) and I would get a flight for half the price.
Although I’m happy to share the details of what I earned, it was a while ago (2008), so take these with a pinch of salt as I don’t know if you’ll be able to earn a similar amount.
Looking at the table, you can see the pay rise I got for moving to Qatar was actually fairly derisory on the face of it. I was on the graduate scheme so was probably being stiffed salary wise, but the company provided much needed security and credibility in a country where rule of law was absent. You needed to have contacts, and the right Sheikh as a sponsor or you were completely screwed.
You can see that having no tax deductions, paying no rent, or transport, means you pretty much don’t have any other expenses. That means that all the money I got, I kept.
My disposable income was nearly 3 times what it was in the UK. To get a similar amount of disposable income, I’d have to earn £78,000 in the UK. Not many 24 year olds will get a salary that high.
Over the years I was there, and as my salary rose, the difference in earnings mounted up.
If I had stayed there longer, I would have been FI in a much shorter time. However, I personally realised and experienced the old adage that money can’t buy you happiness. I eventually hated living in the country. Indeed, the day I flew out of Qatar in Qatar Airlines business class was one of the best days of my life.
So I had my experience of living in an open prison (albeit a highly compensated one). I used the money for a deposit on my flat in London. All good. Would I do it all over again? Yes I would actually as the experience was really enriching.
If you are dedicated, I estimate you could save enough to retire on in a few years by working overseas. Avoiding the lifestyle inflation is tricky, and many an expat has come home empty handed, but with care, you can save much quicker than at home.
However, with some dedication, an adventurous spirit, and a positive attitude, you can accelerate your path to FIRE.