Relocating to Saudi Arabia: What American and British Expats Should Know

Stringent visa requirements, cross-border taxation, and local regulations necessitate meticulous planning, particularly since expatriation conditions can vary significantly between countries.

To accommodate such variations, this article will examine the specific aspects of expatriation to KSA for American and British residents, highlighting where their tax and financial obligations differ, and providing comprehensive guidance that will serve as the foundation of your expatriation strategy.

What Type of Visa Do Expats Need in Saudi Arabia?

To be able to reside and work in Saudi Arabia, you must secure a work visa and residency permit (Iqama) through a local sponsor. Your Saudi employer or host organisation must invite and sponsor you for both documents.

Saudi Arabia has retained a sponsorship-based residency system, but much of the former “Kafeel” (Kafala) framework has been replaced by the Labour Reform Initiative (LRI).

Most private-sector expats can now request job changes and exit/re-entry or final-exit visas directly through government platforms such as Absher and Qiwa, provided contractual conditions are met.

Attempting to work on a visitor or business visa is strictly prohibited and may be grounds for legal escalations, such as:

• Financial penalties.
• Deportation.
• Imprisonment.
• A ban from returning to the Kingdom.

To obtain a work visa and residency permit in Saudi Arabia, you must undergo an extensive background check and a medical exam. A crucial aspect of medical examination is screening for infectious diseases, considering that Saudi Arabia will not grant permits to individuals with diseases such as:

• HIV/AIDS.
• Hepatitis.
• Active tuberculosis.

You must have an approved visa prior to entering Saudi Arabia, with your sponsor managing the application on your behalf. All the relevant documents necessary for a Saudi residence must be authenticated before arrival, so you need to ensure their validity to deter any issues.

Since Saudi Arabia joined the Hague Apostille Convention, most UK and US documents must now be apostilled in the country of origin before they can be used in Saudi Arabia.

US and UK embassies in Saudi Arabia generally do not legalise or authenticate home-country civil documents; only limited notarial services are available.

Rights and Responsibilities of Saudi Sponsors

The sponsoring employer or host organisation assumes legal responsibility for the expat’s status and conduct in Saudi Arabia. Under the Iqama system, they may be held legally responsible for various scenarios, such as:

• Employing an expat on a visitor visa
• Sheltering visa overstayers
• Failure to report runaway employees

Although sponsorship remains part of the residency system, employer control has been reduced under the Labour Reform Initiative.

Changing employers no longer universally requires the sponsor’s consent; eligible employees may request a transfer through Qiwa if notice periods and contract conditions are met.

Similarly, most private-sector expats can request exit/re-entry and final-exit visas directly through Absher without employer approval, unless there is an active labour or legal dispute.

You may still need to complete certain administrative steps before exiting the Kingdom, which can involve:

• Settling all outstanding debt and/or fines.
• Cancelling all phones, credit accounts, and vehicles in your name.
• Closing all Saudi bank accounts.

Due to the regulatory significance of sponsorship and its practical implications, it is crucial to thoroughly examine all the applicable laws before commencing the expatriation process.

Sponsoring Family Members and Dependents

Upon obtaining your work visa and residence permit, you may apply for dependent visas for your immediate family members (spouse and children). Dependent visas are facilitated and approved by your sponsor as per your contractual agreements.

Although dependents are able to expatriate with you through dependent visas, they are not automatically eligible to work in Saudi Arabia. They are required to pursue their own job opportunities and sponsors who will convert their status to an independent work visa.

Dependants cannot work in Saudi Arabia without obtaining their own work authorisation, even in sectors such as healthcare or education.

They must secure an approved employment contract, any required professional licensing, and—if applicable—a transfer of sponsorship before beginning work.

Any temporary work arrangements still require formal approval through the relevant Saudi platforms and are not automatic.

Alternatives to Standard Work Visas for Expats

Saudi Arabia provides a Premium Residency programme that enables certain categories of expats to work and live in the Kingdom beyond the standard work visa. The programme offers seven products:

1. Special talent residency: Suitable for healthcare, research, science, and executive leadership professionals.
2. Gifted residency: Available to highly gifted professionals in the sports and cultural sectors.
3. Investor residency: Granted to individuals who wish to invest substantial funds (a minimum of 7,000,000 SAR or around $1,866,000) in the Kingdom’s economic activities.
4. Entrepreneur residency: Suitable for entrepreneurs and start-up founders who wish to conduct business in Saudi Arabia.
5. Real estate owner residency: Available to individuals who own property worth at least 4,000,000 SAR (approximately $1,066,000) in the Kingdom and that property must be mortgage-free, residential, and valued by a TAQEEM-accredited assessor.
6. Limited-duration premium residency: May be granted to expats working on short-term projects, endeavours, or assignments and requires an annual fee of 100,000 SAR.
7. Unlimited-duration premium residency: Available to qualifying individuals at a one-time fee of 800,000 SAR (approximately $213,300).

Each programme contains additional eligibility criteria that depend on the specifics of your relocation. For instance, entrepreneurs can be classified into two categories according to several conditions:

What Are the Tax Implications of Relocating to Saudi Arabia?

Expatriation to Saudi Arabia exposes you to cross-border taxation. It is essential to ensure a complete understanding of your obligations by examining both the local tax regulations and those related to your home country. To outline the key considerations, we will discuss:

1. Saudi Arabian taxation system
2. US expat tax obligations
3. UK expat tax rules

Saudi Arabian Taxation System

Saudi Arabia does not impose personal income tax on wages and salaries, making it an appealing location for expats who wish to maximise their income. The Kingdom also does not impose forms of taxation common in Western countries, such as:

• Capital gains tax on most purely personal investment income (although gains on certain Saudi assets – for example, shares in Saudi companies or real estate held as part of a business activity – can be taxable at 20%)
• Inheritance tax
• Wealth tax

This rule primarily applies to individuals earning a salary through employment. If you are self-employed, or otherwise earning Saudi-source business or professional income, you may be subject to income tax at 20% under Saudi Arabia’s Income Tax Law rather than a separate “corporate” tax, which is currently 20% of your net profits.

Corporate income tax or income tax on business profits may apply to several categories of individuals, such as:

• Expats who own shares in Saudi companies
• Non-residents conducting business in Saudi Arabia through a permanent establishment (PE)
• Non-residents who provide services without a PE (e.g., consultants)

Even with the above exceptions, the tax system in Saudi Arabia is highly favourable for expats, enabling the growth of disposable income and savings potential. However, it is crucial to also consider your tax obligations to your home country.

You should also factor in Saudi Arabia’s 15% value-added tax (VAT) on most goods and services, and Real Estate Transaction Tax (RETT) on many property transfers, as these can affect your overall cost of living and investment returns.

US Expat Tax Obligations

American citizens are subject to US taxes on worldwide income, so expatriating to Saudi Arabia does not exempt you from taxation. The reason is the citizenship-based taxation system, stating that as long as you are considered a US citizen, you must pay taxes regardless of where you generate revenue.

Specifically, you must continue filing the Form 1040 annually to report your Saudi income (or any other global income) as long as it exceeds the IRS minimum filing thresholds.

Another unfavourable circumstance is the lack of a double tax treaty (DTT) between the US and Saudi Arabia. However, the absence of income tax in Saudi Arabia significantly reduces the risk of double taxation, which is common among countries without bilateral tax agreements.

Despite having tax obligations to their home country, many Americans can reduce or eliminate US income tax on Saudi employment earnings through the Foreign Earned Income Exclusion (FEIE) and, where applicable, the Foreign Tax Credit. However, high earners and those with significant investment or US-source income may still have US tax liabilities.

Eligibility for FEIE is determined through two types of residency tests:

1. Physical presence test
2. Bona fide residence test

The physical presence test has a specific criterion. If you reside outside of the US for over 330 days in a 12-month period, you may qualify for FEIE. However, bona fide residence is determined on a case-by-case basis and takes into account several factors, such as:

• Having an established residence outside of the US
• Having no immediate plans to repatriate to the US
• Residing outside of the US for a complete tax year

Passing either test makes you eligible for an exemption that is adjusted annually for inflation. The exemption amounts to $126,500 per person for the 2024 tax year and increases to $130,000 per person for the 2025 tax year, which means many mid-level professionals may owe little to no tax after it is applied.

In addition to income tax, US citizens and green-card holders must usually comply with foreign asset reporting rules, such as FBAR (FinCEN Form 114) if their non-US accounts exceed $10,000 in aggregate at any time during the year, and FATCA Form 8938 where foreign financial assets exceed IRS thresholds. Penalties for non-compliance can apply even if no US tax is ultimately due.

UK Expat Tax Considerations

In contrast to the US, the UK determines an individual’s tax obligations based on their residency. Upon relocating to Saudi Arabia, you may or may not maintain a UK tax residence, which is determined by the Statutory Residence Test (SRT).

The SRT factors in the number of days within a tax year that you spend in the UK. If you have resided in the UK for 183 or more days, you are considered a resident and taxed accordingly. Otherwise, the test will assess other residency factors, such as:

• Potential full-time work in the UK
• Domestic home ownership
• Sufficient ties in the UK (e.g., family, accommodation)

If you are a non-resident expat, your Saudi earnings will not be taxable in the UK, although you must still settle your tax obligations regarding any UK-based income (e.g., from investment properties).

By contrast, UK tax residency makes your worldwide income taxable in the UK, which encompasses your Saudi salary and other earnings.

Many UK expats who relocate full-time to Saudi Arabia and limit their days and ties in the UK will meet the non-resident criteria, but this is not automatic and depends on the detailed SRT rules.

In the year of departure, Split Year Treatment may apply so that only part of the tax year is treated as UK-resident, which can reduce exposure to UK tax on overseas income.

This advantage is reinforced by the fact that the UK and Saudi Arabia have a double tax treaty, which helps prevent the same income being taxed twice but does not, by itself, guarantee that employment income will only be taxable in Saudi Arabia.

If you remain UK-resident, the UK can still tax your worldwide income, while Saudi Arabia does not tax employment income.

The only notable consideration for non-residents is capital gains tax (CGT). The UK has a temporary non-residence rule stating that capital gains realised while abroad may be retroactively taxed if you return to the UK within five years.

You should take the rule into account if you own any UK assets that may generate income and plan to repatriate within this period.

In broad terms, many gains realised while you are non-resident can be brought back into charge if you resume UK residence within five full tax years, whereas gains on UK land and property are generally taxable regardless of your residence status.

Since 6th April 2025, the UK remittance basis for non-UK-domiciled individuals has been abolished and replaced by a residence-based 4-year Foreign Income and Gains (FIG) regime.

This mainly affects individuals who are, or become, UK-resident; it is still essential to take specialist advice if you expect to return to the UK after working in Saudi Arabia, as the new regime and temporary non-residence rules can interact in complex ways.

What Pension and Retirement Options Are Available in Saudi Arabia?

Saudi Arabia does not offer pension schemes for expats, although it mandates an end-of-service benefit (EOSB) for all employees, including expats.

The EOSB is a lump sum received upon contract termination with the employer. The conditions of the termination and time spent with the employer determine the exact sum. If the contract is terminated by the employer without any misconduct on your part, the EOSB is determined as follows:

Employees who voluntarily resign receive more restrictive benefits:

EOSB calculation may be complex as it also considers specific circumstances outlined in the Saudi labour law. For accurate assessments, you can use the official EOSB calculator.

Although the EOSB is beneficial, it may not replace your pension. You will most likely need to rely on domestic pension schemes for retirement planning.

UK Pension Schemes and Retirement Options

British expats remain eligible for the UK State Pension upon relocating to Saudi Arabia, as long as they continue paying (or have already paid) sufficient National Insurance (NI) contributions. The amount of the pension depends on the number of qualifying years of NI contributions, with the current threshold for the full pension being 35 years.

Considering that you will not be on the UK payroll upon expatriating, your NI contributions through an employer will likely cease. Fortunately, you can still make voluntary contributions to maintain your State Pension eligibility.

By default, the pension you will receive increases annually according to whichever of the three factors is the highest:

• Average growth in UK wages
• Price growth as measured by the Consumer Prices Index (CPI)
• The baseline 2.5%

However, these increases are only available to expats living in specific countries that support uprating through reciprocal agreements (e.g., EU countries), of which Saudi Arabia is not a part. If you draw a UK State Pension while in Saudi Arabia, it will be frozen at the initial rate without growth that would account for factors like inflation.

Regarding any private pensions, you retain full rights to them and can maintain your schemes upon expatriation. You can also draw from the pension pot upon reaching the eligible age (55 as of this writing, but set to increase to 57 in 2028).

Since 6 April 2025, the UK’s long-standing “non-dom” regime and the remittance basis will be abolished and replaced with a residence-based Foreign Income and Gains (FIG) regime.

This change mainly affects individuals who later return to the UK, as pension withdrawals, foreign investment income, and gains may be taxed differently under the new rules.

Expats planning to repatriate should seek updated UK tax guidance before crystallising pension benefits or selling foreign assets.

US Retirement Plans

US expats will most likely maintain their pension focus on Social Security and personal retirement plans (e.g., 401(k) or IRA). Unfortunately, the US does not have a totalisation agreement with Saudi Arabia, so your work in the Kingdom will not count toward Social Security credits.

There are two ways to circumvent this limitation:

1. Assess your accrued credits to ensure you have at least 40 (10 years of work) before expatriating.
2. Devise a repatriation plan that will allow you to work in the US before retirement to gather the remaining credits.

Provided that you meet the eligibility criteria, you can withdraw Social Security benefits in Saudi Arabia without restrictions.

You may also maintain any retirement plans, such as a 401(k) or IRA, upon expatriation, although you will need to consider future contributions. Your Saudi employer will likely not offer any retirement plan, so you cannot contribute to the account from your previous employer.

A potential solution is to roll over your contributions to an IRA and keep contributing up to the allowed amount. There are no IRA contribution limits for rollovers, although the annual contributions cannot be higher than:

• $7,000 ($8,000 for those over 50)
• Your annual taxable compensation (if lower than the above)

These are the limits for 2024, and they will likely keep increasing each year.

For contributions to a traditional or Roth IRA while living in Saudi Arabia, you must have US-taxable “earned income.”

Salary earned in Saudi Arabia and fully excluded under the FEIE does not count as taxable compensation for IRA contribution purposes, which may limit or prevent contributions unless you have US-taxable income from another source.

Due to the variety of available options, pension planning can be challenging for both US and UK expats. Titan Wealth International can help you develop an effective retirement strategy that maximises your returns and minimises tax liability.

What Is the Cost of Living in Saudi Arabia?

The absence of personal income tax on employment income in Saudi Arabia, combined with the affordability of essential living conditions, makes the Kingdom favourable for UK and US expats.

Although lifestyle factors significantly impact the cost of living, expenses vary meaningfully between major cities such as Riyadh, Jeddah, Dammam, and NEOM-associated regions, but it is generally lower compared to many metropolitan areas in the US and UK.

The table below outlines some of the crucial costs:

Saudi Arabia’s 15% VAT applies to most goods and services, which can affect everyday expenses, especially imported products and dining out.

These are only general references, so it is essential to conduct diligent research that accounts for your desired living standard.

Prices fluctuate based on location, inflation, exchange rates, and whether expats choose local or international lifestyle standards (e.g. imported groceries, international schools, Western housing compounds).

What Should Expats Know About Healthcare in Saudi Arabia?

Saudi Arabia has a comprehensive healthcare infrastructure, although expats can primarily access it through private clinics. Public healthcare is almost exclusively available to Saudi citizens, so you will obtain the necessary health services through the network of private facilities.

However, this does not mean you will be subject to significant medical expenses. Saudi Arabia mandates health insurance for all employees under the Cooperative Health Insurance Law, and employers must provide at least a basic health insurance policy for expatriate workers and their dependants.

Coverage levels vary by employer, and not all plans are comprehensive. Some employer-provided policies may have limits on dental, maternity, chronic conditions, or international emergency treatment.

Your insurance scope will dictate the available facilities, although you can also purchase additional insurance should the employer’s plan fail to meet your needs.

It is increasingly common for expats—especially those in senior roles—to obtain supplementary international medical insurance for wider provider access or coverage outside the Kingdom.

Regarding service quality, the Saudi health care system provides various advantages, such as:

• English-speaking staff in many facilities
• Modern equipment and treatments
• Broad over-the-counter availability of many prescription drugs

Certain medications that are available over the counter in the UK or US may require a local prescription, and some controlled medications may be restricted or prohibited from being brought into the Kingdom.

It is essential to review your health insurance with your employer before making the final expatriation decision.

Doing so enables you to estimate the out-of-pocket costs you may encounter and confirm whether family members are fully covered under the employer’s policy or require additional insurance.

Which Schooling Options Are Available to Expat Children in Saudi Arabia?

The vast majority of US and UK expats prefer international schools for their children as they cater to expat communities by accounting for:

• Cultural characteristics
• Expat-specific curricula
• English medium of instruction

Although local schools are technically available to expat children, they are less commonly chosen, as they are primarily suited for long-term residents who wish to completely immerse themselves in Saudi culture.

Note that public schools in Saudi Arabia enforce gender segregation, offering programs typically in Arabic and focusing significantly on Islamic studies.

International schools in major cities such as Riyadh, Jeddah, and Dammam offer a range of recognised curricula, including the British Curriculum (IGCSE/A-Level), American Curriculum (AP), and the International Baccalaureate (IB). Tuition fees vary widely and can be a significant component of an expat family’s budget.

If you wish your children to attend international schools in Saudi Arabia, it is crucial to apply in advance. Waiting lists are common due to limited availability, so it is necessary to plan your children’s education accordingly.

Some schools conduct admissions assessments, require prior school records, and may prioritise families with employment packages that include education allowances.