Repatriation

The word repatriation means the currency conversion or currency exchange into the currency of the country where a person is at the moment. Most commonly the word refers to the fact of returning home. For example, someone emigrated and eventually came back. The process is called repatriation as well. Moreover, repatriation also refers to the money that the emigrated person converts into the home currency at home after returning.

The financial sector is full of cases, which involves repatriation. For instance, it's all kinds of business transactions, investments that imply money transferring from one nation to another, or foreign investments, etc. However, it should be remembered that some losses may happen. Also, repatriating currency implies risks.

Repatriation process by organizations and individuals

Generally, repatriation refers to a process of coming back to the home country from a foreign country. Usually, it happens after a period of living or working abroad. The common example is a person who gets an offer from another country, goes there for work and then after several years working abroad he or she makes the decision to go home. The last thing, which is returning, is called repatriation.

The financial industry is deeply connected with repatriation as well. The term may be applied to the conversion of offshore capital back to the currency of the country where an organization is located. It’s common for companies situated in one country to produce earnings in other countries. The process of repatriation in such a case includes four steps. The first step comprises share repurchasing, the second step is loans, the third step consists of dividend programs and the last but not the least step is repayment of capital.

Not only organizations are allowed to repatriate. Individuals are entitled to repatriate funds as well. For instance, a Canadian returned from Europe and now there is no place to use the left amount of euros, thus, the person needs to convert the euros into the Canadian dollar. The amount of dollars he or she may get depends on the exchange rate. Moreover, the person has to consider the exchange rate of both currencies.

Special cases

It should be also remembered that in some countries every part of income is subject to taxation. Thus, income earned abroad is subject to taxation as well. It applies to the money earned abroad and to the repatriation as well.

For instance, U.S. taxpayers are obligated to pay taxes from all taxable kinds of their income. Once the number was quite high, it reached 35%. After 2017, when the Tax Cuts and Jobs Act (TCJA) was enacted, the number of taxes decreased to 15.5% for foreign income that is held in cash and 8% for income of other categories. Thus, companies’ revenue is likely to grow exceedingly.

What risks repatriation involves

It’s common for companies that have business in several countries to regard the local currency as the currency for business transactions. Thus, their future income will definitely incur conversion or exchanging. This is the moment in which foreign exchange risks are involved. Currency fluctuations aren’t rare cases, due to them the income may fall or grow. In case of falling, it’s necessary for businessmen to be careful.