More frequently now, according to local social media, and anecdotal commentary, individuals and families have already left Bermuda or are contemplating moving to other jurisdictions. While actual relocations numbers are not quantified, a substantive drop in the resident population has been noted by local industries: health, retail, entertainment, real estate, insurance and others.

Globally, people are more mobile than ever before. Bermuda residents are no exception. One can only speculate on the various reasons for temporary or permanent relocation, such as: schooling, work permit termination, career development, eg secondment, individual and family opportunities, cost-of-living challenges, and a comfortable retirement.

All relocations, particularly permanent ones, are a wrenching decision process, an emotional, exciting, overwhelming experience for anyone, but particularly for Bermuda residents detaching permanently from generations of left-behind family members, the community they have always known and their beloved island home.

An illustration of a homesick Bermuda islander springs to mind. On one memorable occasion when working at a local Bermuda investment firm, I placed a call inquiry to a United States bank’s investment department. The analyst answering the phone had our distinctive Bermuda accent.

Before there was a chance to state the inquiry, he said: “You’re calling from Bermuda. Oh, my wife and I are Bermudian — we here on a three-year secondment. We miss Bermuda so much!”

At that his voice broke as he choked up (this is a true story, no exaggeration). Then, he said: “We get so homesick sometimes that we play recordings of tree frogs after work days to remind us of home.”

Relocation emotions aside, realistic move planning should be at the forefront. There are many, many decisions to be made practically, and financially to assure that the family emigration is as stress-free as possible. This series will focus on the financial planning aspects.

Regardless of where (and when) your new lives in a new country will begin, there are numerous primary items that when planned pre-move will provide a smoother passage. The alternative of no planning, say, just walking in and overstaying in your new country, has the potential to torpedo any pre-planning protective measures.

Why?

Let’s say, for example, that a family has decided to emigrate abroad. Their choices are: United States, Canada, or the United Kingdom. The defining factor for all three countries are significant income tax regimes, administered by each country tax and revenue agencies. Resident individuals are mandated to file and pay tax liabilities on their domestic income as well as, in most instances, on their worldwide income, meaning income on assets derived from Bermuda.

Understand that this is a very simplistic version of the tax complexity of the three countries mentioned above.

Bermuda does not have an income tax regime, nor do most Bermuda islanders understand tax legal responsibilities. Further, there are no Bermuda tax treaties for income, estate or gift tax with other countries.

Oh, yes, Bermuda taxes her residents, more so than ever before, but generally, these taxes or stamp duties do not constitute an income tax regime. The closest the Bermuda Government came to that idea was the introduction of a rental income tax, that was not implemented — to the relief of every homeowner relying upon a studio apartment income to manage the home mortgage.

Consider that this Bermuda family group has worked hard for many years to acquire a home, savings, investments, pensions, insurance and the like income tax-free will possibly face taxes imposed by their new country on their Bermudian-based income and assets — all that was earned (and saved long) before moving abroad.

Hardly seems fair, does it, to have to face the financial dilemma of allegiance between two (or even more) countries. However, a planning review implemented prior to an emigration move, or an application (say a US green card) and the like before the family is considered resident and subject to tax in another country can mitigate these consequences. Such a review will detail every aspect of you and your family’s legal, tax, and financial positions.

The Cross Border Data Discovery Checklist was developed by me from a culmination of 30 years of client domestic and international financial planning. Even so, this list is not all-inclusive and does not (or cannot) address individual positions. The CB Checklist is meant as a guide for emigrating families to start the process of planning — before they walk into taxation surprises.

The primary review and decision factors: the rest are contingent on the first two:

1, Residency, domicile and citizenship

2, International and domestic tax compliance

3, Immigration and customs

4, Duelling economies, trade & business

5, Cash, income and personal assets management

6, Investments, international and domestic allocations

7, Insurance and risk management

8, Retirement and pension constraints

9, Country connections and familial relationships: social, emotional, cultural and physical ties to two or more countries

10, Estates/wills/trusts of multinational families in more than one jurisdiction

11, Regulatory quagmires, conflicts of laws, and inadvertent planning traps

Where are your residency, domicile and citizenship(s)?

A person’s residency (and domicile), or a business or trust entity’s place of central control and management, is the most critical attribute because where a person is considered resident is where the person will be subject to taxation. Residency determination will override citizenship, generally, except for the US model.

Residency is defined in taxation terms by the OECD Model Treaty that is used by most countries in the world today; it is based upon the number of days of residence, generally 183 days or longer in a year. Residency may also be defined by facts and circumstances test, and reference specific country residency definitions: the US Internal Revenue Service: HMRC — the UK definition of residency and domicile; Canada Revenue Agency residency regulations, and the legal definition of a Bermuda resident — different again.

Caution: any country with a tax regime imposes tax law regulations that can be complex, rigorous, interlinked, have significant long-ranging consequences and are subject to change without notice. If you are contemplating a move to any tax regime jurisdiction, you are advised to consult with a qualified international tax professional with experience in cross border jurisdictional tax issues.

Next week: Part 2, we review the next components.

• Martha Harris Myron CPA CFP JSM: Masters of Law — international tax and financial services. Dual citizen: Bermudian/US. Pondstraddler Life, financial perspectives for Bermuda islanders and their globally mobile connections on the Great Atlantic Pond. Finance columnist to The Royal Gazette, Bermuda. All proceeds earned from this column go to The Reading Clinic. Contact: martha.myron@gmail.com