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Why the tax year matters more than the calendar year
Most families think of the move year as the year they physically arrive. The tax authorities think of it as the year their residency status changed. In some jurisdictions these are the same; in others they are different by months or quarters. The mismatch creates the most common single mistake in cross border family moves, which is filing the move year incorrectly in either or both countries.
The pattern. A family physically arrives in the new country in late August, in time for the September school start. They are tax resident in the home country until that date, and in the destination from that date onwards (in jurisdictions with split year treatment). They are therefore liable for a partial year return in the home country, covering the pre move period, and a partial or full year return in the destination, covering the post move period. Get either wrong, and you either overpay or face a future reconciliation request.
Compounding the issue, the income mix often shifts at the move. Pre move salary, post move salary, severance, bonus and equity vesting can each be taxable in different jurisdictions depending on when the work was performed and where the family was tax resident at the time. Each of these is a planning opportunity, or a planning failure. The single best return on tax advisory spend in a move is on the move year filing, usually 6 to 9 months ahead of the move date.
How tax residency actually works
Three core tests are in use globally. The first is the day count test: more than 183 days of physical presence in a calendar year typically triggers tax residency. The second is the centre of vital interests test: where is your spouse, where are your children at school, where is your primary home, where do you spend most of your time. The third is a citizenship or domicile test: applies in a small number of countries, notably the US, which taxes citizens on worldwide income regardless of residency.
For most families, the day count test and the centre of vital interests test are aligned. The children's school is the strongest single anchor; once a child is enrolled in a new country's school for the academic year, the tax authority will generally treat the family as having transferred their centre of vital interests, even if the day count is borderline. Trying to keep the children in international schools that admit September starts while claiming the family is not yet tax resident is a strategy that rarely survives audit.
Several special cases. The UK uses the Statutory Residence Test, which combines day counts with ties tests (family, work, accommodation, country tie); some families remain UK tax resident for a transitional year despite physically moving. The US taxes citizens and green card holders on worldwide income; the move only changes the calculation if green card surrender is involved. Australia uses an ordinary residence concept distinct from the day count. Confirm with a local specialist before assuming.
Exit taxes and the leaving country
Several major jurisdictions impose exit taxes or accelerated taxation on departure. The mechanics vary, but the principle is consistent: the leaving country wants to crystallise unrealised gains on assets you take with you. Knowing whether your home country has exit tax rules is a critical pre move check.
The US imposes the most aggressive exit tax. Long term green card holders (more than 8 of the last 15 tax years) and US citizens who renounce face an exit tax on the unrealised gains on their worldwide assets if their net worth exceeds USD 2 million or their annual tax exceeds set thresholds. This is rarely an issue for green card holders surrendering before the 8 year mark; it is a major issue for long term holders and citizenship surrenders.
France has a 30 per cent exit tax on unrealised gains for significant shareholders. Germany operates an exit tax on substantial stakes in companies. Spain has introduced one for high net worth departures. The UK does not have a formal exit tax but does have specific anti avoidance rules around departure year sales and pension transfers.
The mitigations are mostly about timing. Some assets are best sold before the move (in lower marginal rate jurisdictions), others after (in jurisdictions that taxes them lightly). A pre move review with a cross border accountant is the right investment 6 to 9 months before departure. Read our family money transfer piece for the operational side.
Free download
Our family tax pack bundles a country specific overview of move year filing rules, the special regime summary for new arrivals, and the school fee tax treatment by jurisdiction. Visit the Relocate hub for the full set.
Arrival year taxation
The arrival country will typically tax you on income earned from the date of tax residency onwards. The big variables are how worldwide income is treated, whether there is a remittance basis option, and what specific regimes are available for new arrivals.
Worldwide vs source basis. Most major jurisdictions tax residents on worldwide income (US, UK, Germany, France, Australia, Canada, Singapore). A smaller group uses a territorial or source based system (Hong Kong for most income, Costa Rica, Panama, some Gulf states). The UAE has no personal income tax at all. For families moving to a worldwide income jurisdiction, foreign source investment income (dividends, capital gains, rental income) becomes taxable on arrival.
Special features. The UK offers a remittance basis for non doms (though this has been substantially reformed and the remittance basis as a long term option is now being phased out). Singapore exempts foreign source income for most resident families. Switzerland operates a lump sum taxation regime for wealthy non residents who do not work in Switzerland. Each of these can radically change the family's tax bill in years two and three.
Special regimes for new arrivals
Several countries actively court new resident families with favourable tax regimes for a defined period. These are the planning opportunities that can substantially lower the headline rate.
| Country | Regime | Key benefit | Duration |
|---|---|---|---|
| Portugal | IFICI (successor to NHR) | 20% flat tax on qualifying activities | 10 years |
| Italy | Non dom flat tax | EUR 200K per year on foreign income | 15 years |
| Greece | Non dom flat tax | EUR 100K per year on foreign income | 15 years |
| Spain | Beckham regime | 24% flat tax on Spanish income up to EUR 600K | 6 years |
| Switzerland | Lump sum taxation | Based on cost of living, not income | Indefinite |
| UAE | No personal income tax | Zero income tax | Indefinite |
Each regime has eligibility rules and trade offs. The Italian and Greek non dom regimes work well for high net worth families with substantial foreign income; the flat tax is a fixed annual cost regardless of actual income. The Spanish Beckham regime works for high earning skilled workers with primarily Spanish source employment income. The Swiss lump sum applies to families who do not work in Switzerland and pre negotiate the lump sum with the canton.
The strategic implication. The destination country choice should weight the available tax regime alongside the school inventory, cost of living and family preferences. A family with USD 500K of foreign passive income would face wildly different tax bills in Lisbon (under IFICI), Athens (under non dom), Singapore (foreign source exempt) and London (worldwide taxable). The regime can be the difference between a comfortable post tax position and a stretched one. Our Portugal family visa and Spain digital nomad visa pieces cover the country specifics.
School fees and tax
International school fees are generally not tax deductible in most major jurisdictions. The exceptions are partial and conditional, and the mechanics often disappoint families who hoped to recover meaningful sums.
Belgium allows a partial deduction for childcare expenses at certain registered schools, capped at modest amounts. Germany allows deduction of 30 per cent of fees, capped at EUR 5,000 per child per year, for certain qualifying schools (recognised private and EU equivalent). Italy allows a 19 per cent tax credit on school expenses up to EUR 800 per child per year. The Netherlands offers a deduction for school related extraordinary expenses under specific medical or special needs conditions.
The US offers section 529 plans for higher education savings, but these do not generally cover international schooling before university. The UK offers no general deduction for private schooling and introduced 20 per cent VAT on UK private school fees from January 2025. International schools outside the UK are unaffected by the UK VAT change.
The single most useful structure for families is an employer paid school allowance. The employer pays the school directly, and in some jurisdictions the payment is exempt or partially exempt from employee income tax as a benefit in kind. The treatment varies by country and by the specifics of the contract. Get the employer's tax adviser to confirm the treatment in writing before relying on it. Read our negotiate employer school allowance and tax deductions for international school fees pieces for the country detail.
Investments, pensions and equity
The investment and pension dimension of an international move is rarely simple. Three areas demand attention.
First, investment accounts. Most home country brokerage accounts will not accept clients with a foreign address. Plan to transfer or close accounts before the move. The transfer itself can trigger capital gains crystallisation in some jurisdictions; the timing matters. ISAs (UK) and IRAs (US) have specific rules around residency that can affect long term planning.
Second, pensions. Cross border pension contributions and access have complex rules. UK pensions are taxable in the country where the holder is resident at the time of drawdown, modified by double tax treaties. US retirement accounts have specific rules for residents of treaty countries. QROPS transfers (qualifying recognised overseas pension schemes) can be useful but have tightened substantially since 2017. Take advice before transferring.
Third, employer equity. Vesting and exercise of stock options, RSUs and similar plans can be taxable in the country of work at the time of grant, vest or exercise, depending on the plan and the jurisdiction. A move that crosses a vesting cliff can create surprise tax in either or both countries. Where possible, time the move outside major vesting events. Where impossible, plan the tax filing carefully and budget for the cash tax liability.
Double tax treaties
The vast majority of major country pairs have a double tax treaty, which prevents the same income from being taxed twice and allocates taxing rights between the two countries. The treaty is the legal framework that makes cross border family life workable. Two practical points.
First, treaties typically require filings in both countries to claim the relief. Not filing in one country and assuming the other will handle it usually leads to double taxation in the short term and a reconciliation request later. File in both. Second, treaties have specific tiebreaker rules for residency disputes, usually based on permanent home, centre of vital interests, habitual abode and nationality, in that order. In disputed cases, the tiebreaker rules are the framework you will be tested against.
Where there is no treaty, the picture is more complex. Bilateral and unilateral relief mechanisms exist in most jurisdictions, but the outcomes are less predictable. Families moving to or from a non treaty country should expect higher advisory costs in the first three years and longer filing timelines.
The order of decisions
Most tax decisions in an international move are time sensitive. The right order:
- Month 9 before move. Engage a cross border tax adviser with experience of your specific country pair. Brief them on the move plan, household income mix and asset profile.
- Month 6 before move. Decide on disposals: which investments to sell before move, which after, which to hold across the move date.
- Month 4 before move. Confirm tax residency end date in home country. File the necessary notifications.
- Month 2 before move. Address pension and employer equity events. Time any RSU vesting or option exercises around the move date.
- Arrival month. Register tax residency in the destination. Apply for any special regime (IFICI, non dom, Beckham) within the application window.
- Year 1 after move. File partial year returns in both countries. Claim treaty relief where applicable.
- Year 2 after move. Review the position with both advisers. Adjust the long term structure based on actual income data.
Two cautions. First, do not assume your home country accountant can handle the foreign side. Cross border families almost always need two advisers, one in each country, coordinating with each other. Second, the cost of bad advice in this area is high and the cost of good advice is moderate. A cross border family tax review typically costs USD 3,000 to USD 8,000 in the first year and saves multiples of that across the first three years.
For the operational money side, see our how to transfer money abroad as a family guide. For the school fee dimension specifically, see how to save money on international school fees.
FAQ
Most jurisdictions use a 183 day physical presence test, with secondary tests based on family ties, primary residence and centre of vital interests. A family that physically moves the children to a new school in September generally becomes tax resident in the new country from the move date.
Rarely in full, but partially in several jurisdictions. Belgium, Germany, Italy and the Netherlands offer modest deductions under specific conditions. The US and UK do not allow general deductions. Most savings come from employer paid school allowances structured as tax efficient benefits.
Almost always, yes. The move year typically requires a partial year return in the home country covering pre move income, and a partial year or first full year return in the destination covering post move income. Double tax treaties prevent the same income being taxed twice, but only if filings are made correctly.
Correct. The UAE imposes no personal income tax on residents, regardless of source. Corporate tax was introduced in 2023 at 9 per cent for most companies, but personal income remains untaxed. This is one of the major draws for high earning families considering Dubai or Abu Dhabi.