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Global Cost-of-Living Insights: Rent Surges, EV Trade Wars, and Tax Shifts

Written by Meleah Paull | Jul 10, 2024 @ 05:49 PM

Every quarter AIRINC provides a useful data points update on our cost-of-living research including housing, goods & services, tax and research locations. This quarter’s cost of living research was conducted primarily in Europe, Asia, and mainland Southeast Asia.

Highlights from AIRINC’s in-depth research

RENTAL MARKETS AROUND THE WORLD

Belgium, Brussels [RISING]

Rents are up significantly due to higher demand from would-be buyers who have turned to the rental market in the face of high interest rates, making purchasing at this time unaffordable.

Moscow, Russia [RISING]

The rental market has turned. After several years of price declines, rents are now up. Our research confirmed that a spike in demand from both Russians and expatriates has pushed asking rents up. Vacancy rates are relatively low, estimated at 3 percent.

The Netherlands [RISING]

Rents in Rotterdam, Amsterdam, and the Hague are all up with low supply and high demand. Owners are selling off their rental properties in advance of new government regulations which may move many properties from the private to the social rental market.

GOODS AND SERVICES UPDATE

An Electric Vehicle Trade War?

There are ongoing concerns of another trade war on the horizon this summer as China and the EU meet to negotiate tariffs on electric vehicles. Chinese manufacturers have been able to create electric vehicles at significantly lower costs than their western counterparts. Citing concerns for US industry and security this past May, President Biden announced a startling 100% import tariff on Chines EVs, quadrupling the pre-existing rate. Canada has signaled it will follow suit in raising tariffs, announcing the opening of an investigation into Chinese EV trade practices. Meanwhile, the EU was set to apply a provisional 38.1% import duty as of early July.
 
China had hoped to persuade the EU in particular to abandon those plans, however, and negotiations with the European Commission took place in early July. Despite concerns that China will impose its own increased tariffs on European imports should they fail to reach a satisfactory agreement during the talks, the EU recently announced it will indeed be applying significant tariffs of up to 37.6% on Chinese EVs, though the exact figure will vary by manufacturer. Interestingly, these tariffs do not have to be paid until November, if and when the EU government confirms the rates. Consumer markets may experience some tumultuous pricing in the coming months as China considers its response.

COUNTRY TAX UPDATE

Australia:

The 2024/2025 budget for Australia was delivered on May 14th, 2024. Australia enacted tax relief for individuals for 2024/2025. The tax rates and brackets were adjusted. The employer-paid superannuation rate increased from 11% to 11.5% for the 2024/2025 tax year, and the maximum annual superannuation contribution increased from AUD 27,399 to AUD 29,932. The superannuation rate has been increasing incrementally by 0.5% every year and the final announced rate will be to 12% by July 1, 2025. The family allowances (Family Tax Benefits Part A and Part B) increased. The net effect of these changes is a decrease in tax for all taxpayers and an increase in employer social security contributions.

Italy:

  • Lower income employment credits and family allowances (subject to phase-out) increased slightly, and the tax rate schedule was adjusted. The net effect is a small decrease in tax at lower incomes and for families with children.
  • Effective January 1, 2024, the expatriate exclusion of 70% was reduced to 50% and is capped on a salary of EUR 600,000 (previously uncapped). To qualify, the employee must:
    • Be a tax resident in Italy for at least 5 years, and
    • Have been a tax non-resident in the previous 3 tax years, and
    • Work in Italy for at least 183 days in each year applying for the regime, and
    • Qualify as an executive, highly skilled employee, or other qualifications for EU citizens, or citizens of countries with Double Tax Agreements.
  • If Italian tax residency is not maintained for 5 years, the benefit is disapplied, and the tax agency will seek to recover the excluded amount with interest and penalties. Individuals previously granted the 70% exclusion (or 90% in certain southern regions), are eligible to continue using the higher amount.

United Kingdom:

  • The U.K. Spring Budget was delivered March 6, 2024. This included an announcement of a reduction in the employee's Class 1 National Insurance Contributions (NIC) by 2% effective April 6, 2024. The annualized savings in NIC will be GBP 754 per year. Employer contributions to NIC are unchanged. The formula for the High Income Child Benefit Charge has changed, resulting in a more generous phaseout of the Child Benefit. Tax rates, brackets, and the personal allowance are unchanged. The net effect of this change is a reduction in social security contributions and an increase in the family allowance. Tax is unchanged.
  • Other changes were announced in the Spring Budget that affect individuals. Most notable is a repeal of the Non-Domicile regime that limits the remittance basis of taxation for qualifying foreign nationals. The Non9Dom changes are effective in 2025 and will be replaced with a residence-based system applicable to Foreign Income and Gains, with complex transition rules. The Spring Budget also announced a simplification of the Overseas Workday Relief regime, provisions restricting the transfer of assets abroad to avoid tax, a new Individual Savings Account (ISA) scheme, a consultation on implementing the OECD Crypto-Asset Reporting Framework (CARF), and plans to regulate tax advisors and preparers.

 

 

 
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