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How Safe is your Bank?

By Pauline Bowden - Topics: Banking, Costa Blanca, Costa del Sol, Inflation, International Bank Accounts, Saving, spain
This article is published on: 24th August 2017

24.08.17

Which bank? Which jurisdiction? As more amazing stories come out about the world’s banks, we have seen a shift from Deposit Accounts being a low risk investment, to a much higher rated risk. So what exactly does each jurisdiction offer as security against your bank going bust?

Isle of Man Personal Account 50,000GBP
EU €100,000
UK 85,000GBP
Jersey 50,000GBP
Guernsey 50,000GBP
Gibraltar €100,000

 

Many people in this area of Andalucia have bank accounts in Gibraltar, Isle of Man or The Channel Islands. Of the above list, the Isle of Man and Channel Islands have the least protection for the account holder.

I often write about spreading your risk, by investing in different asset classes. Perhaps now we should also spread our bank accounts and have smaller deposits in more banks, in more jurisdictions.

It can make life a little more complicated, but it makes financial sense not to put all your eggs in one basket. At least then, if one egg gets broken, you do not lose all of them!

Holding cash as an asset class is no longer a “safe bet”. With interest rates so low now, the real value of the capital is being eroded by inflation. People that relied on the income from deposit accounts have seen their disposable income fall drastically, especially if they are sterling investors in receipt of sterling pay or pensions. Many are having to eat into their capital to maintain their lifestyles.

Alternative investment strategies need to be considered in order to protect the wealth that you already have and maximise the returns from that wealth.

Residents in Italy with Swiss bank accounts

By Daniel Shillito - Topics: Automatic Exchange of Information, Banking, Exchange of Information, International Bank Accounts, Italy, Offshore Disclosures Facility
This article is published on: 2nd August 2017

02.08.17

These clients deposited a total of 6.7 billion euros in the country, according to an article from Reuters newswires.

The police said in a statement this action concerns Italian residents holding 9,953 financial positions in Switzerland.

The police declined to provide many details, however this move follows an investigation that last year led to a tax settlement deal between Italy and Credit Suisse AG, whereupon the Swiss bank agreed to pay a settlement amount of 109.5 million euros.

That tax investigation was started in 2015 over an alleged fraudulent system used by the bank to transfer money offshore.

“Credit Suisse considers the investigation by the Italian authorities into Credit Suisse’s cross-border business as closed,” the bank told Reuters in an emailed statement. “The court approval marked the end of the investigation by Italian authorities into Credit Suisse AG’s Italian cross-border business for the period from 2008 to 2015,” the statement added.

Switzerland’s Federal Tax Administration declined to comment, pointing to a confidentiality clause that applies to mutual requests for assistance on tax matters.

Voluntary Disclosure
The authorities also advised that through the Voluntary Disclosure scheme 3,297 people had already been identified holding undeclared savings and investments abroad and had received immunity from prosecution upon declaration under the scheme.

If you have any queries about declaring offshore savings and investments or the Voluntary Disclosure scheme in Italy please contact the author.

Common Reporting Standards

By Derek Winsland - Topics: common reporting standards, Exchange of Information, France, International Bank Accounts, Le Tour de Finance, Residency
This article is published on: 27th July 2017

27.07.17

Over the last few weeks, I’ve witnessed the application of the Common Reporting Standards initiative in action. Firstly, from my bank HSBC requesting information to be transmitted to the tax authorities both here in France as well as in UK. This week, I received an email from a client who has also received a letter again from HSBC enquiring about his residency.

It’s clear that the sharing of financial information between tax authorities of different countries is now in full swing. Annual reporting by every financial institution into its own tax authority was introduced in January 2016 and I’m seeing more and more examples of this in operation. For the tax authorities, residency is the main focus – where has the individual declared residency, and where are that person’s assets held.

We’re at the stage now where that information is being studied by local tax offices and enquiry letters being sent. But what information is being shared? Overseas bank accounts are the most common example, hence HSBC and others enquiring about an account holder’s residency status. Other examples include investment bonds held overseas, ISA accounts, unit trust and investment trust portfolios, share accounts, premium bonds…. the list goes on.

With investments held outside of an insurance-based investment bond, any change of fund either through switching or closure could be liable to capital gains in the hands of the investor, so your local tax office is sure to be interested in learning about this. Income drawn from certain, non-EU jurisdiction investment bonds are viewed very differently here in France. And remember, ISAs carry no tax advantages here, so any switches, partial encashments, or sales of funds made by a UK financial adviser or investment manager could have repercussions for the investor resident in France.

If you’re tax resident in France, you are obliged to list all overseas investments and accounts on your annual tax declaration; non-disclosure can result in fines ranging from €1,500 per account up to €10,000 depending on where the account is held. These fines are also per year of non-disclosure.

Quite often we see situations where doing nothing has proved to be an expensive mistake so if ever there was a time to get your financial affairs in order, it is now before the Fisc comes calling. If you’re resident in France, your local tax office can look back through previous years as well, so long forgotten ISAs cashed in can potentially appear on its radar.

If you would like information on how best to re-organise your investments to make them tax-compliant, we are staging the latest in our series of popular Tour de Finance events in the Limoux area on Friday 6th October. Open to everyone, the event, held at Domaine Gayda in Brugairolles is now in its ninth year. Always a popular event, you are urged to order tickets well in advance. There will be a series of short presentations during the morning, culminating with lunch and an opportunity to sample the local wines. If you would like to attend, please email me for your tickets, numbers are limited, so I urge you not to delay.

Subjects covered during the morning include:
Brexit
Financial Markets
Assurance Vie
Pensions/QROPS
French Tax Issues
Currency Exchange

If you have personal or financial circumstances that you feel may benefit from a financial planning review, please contact me direct on the number below. You can also contact me by email at derek.winsland@spectrum-ifa.com or call our office in Limoux to make an appointment. Alternatively, I conduct a drop-in clinic most Fridays (holidays excepting), when you can pop in to speak to me. Our office telephone number is 04 68 31 14 10.

Planning for the yachting season ahead

By Peter Brooke - Topics: Banking, International Bank Accounts, Residency, Saving, Uncategorised, Yachting
This article is published on: 22nd February 2016

22.02.16

You spend much of your professional lives working hard for other people; this season I want to challenge you to do one thing for you and your future every month.

MARCH (i.e. now):
Consolidate your bank accounts – you don’t need them all.Have an account in the currency in which you are paid and another in any other currency you regularly use. You don’t, need lots of accounts, but make sure your total balance is below the compensation limits for the jurisdiction in which you hold the account .

April:
Don’t spend money just moving it around, open a currency broker account. If you need to move money from one currency to another, don’t use your bank, your currency broker can save you a small fortune on exchange rates and fees.

MAY:
Invest in yourself! What are you going to do at the end of the season? Consider now what your next set of exams will be and when you can do them. Put money aside for fees and living costs. Check your visas and passports if you are crossing to the U.S. later in the year. And start a diary (see November…).

AUGUST:
This is the really busy time; stop and consider your longer term future. How long do you want to stay in yachting? What do you want to do after yachting?What do you want to get from yachting (personally and financially)?

SEPTEMBER:
The season is calming down – are you really covered? Time to check exactly what health insurance you have on board and if there is any accidental injury or even death in service protection for you and your beneficiaries while you work. When you know, tell someone at home so they can claim on your behalf if necessary.

OCTOBER:
Cash is no longer king. At the end of your season you may have a pot of cash that you can’t get into your bank (due to strict money laundering rules). Negotiate to have tips paid directly with your salary into your bank account, keeping only the petty cash required. Many Captains will do this.

NOVEMBER:
Tax residency is a matter of fact. Get organised and keep a diary of your travels. Yacht crew are “approached” by various tax authorities that believe you might be a resident. It’s not down to them to prove that you are a resident in their country, it’s down to you to prove you’re not. Understand the residency laws of the countries where you are most likely to become a resident, then keep a diary and flight ticket stubs, to support your case.

DECEMBER:
If you’ll be in the yachting industry for more than two or three years, seriously consider saving for your future, Your friends on land are paying tax and social security, which will give them something at retirement – are you? It’s up to all crew to put something aside (I suggest at least 25 percent of salary) while they’re in the industry to try and secure their financial wellbeing. The million dollar rule – to retire on an income of $/€3,OOO per month in 15 years, you will need approximately $/€1.1million in assets.

Offshore Disclosures Facility

By Peter Brooke - Topics: Income Tax, International Bank Accounts, Offshore Disclosures Facility, Residency, Tax, Uncategorised
This article is published on: 25th May 2015

25.05.15

This month I had the opportunity to sit down with Patrick Maflin from Marine Accounts for a Q&A session on the Offshore Disclosures Facility.

Patrick, Firstly what is the Offshore Disclosures Facility?
The Offshore Disclosures facility is an amnesty for UK citizens who have undeclared offshore earnings. It is directly aimed at targeting offshore tax evasion. The G20 have now opted similar schemes such as the Offshore Disclosures Program (ODP) in the US & Project Let’s Do It in Australia.

What is offshore evasion?
Offshore evasion is using another jurisdiction’s systems with the objective of evading UK tax. This includes moving, not declaring or hiding (via complex offshore structures) any income, gains or assets out of the site of HMRC.

When does the amnesty end & what happens if I do not declare?
The UK disclosure facility ends on 30th September 2016. Individuals who choose not to declare their earnings can face fines of up to 200% of the tax evaded and possible imprisonment as it is now a criminal offence. Project Let’s Do It in Australia came to an end in December 2014 and the IRS have not stated when ODP will end.

How can I declare my earnings through the facility and what are the benefits?
UK seafarers can declare their earnings under the Seafarers Earnings Deduction (SED) providing that they spend more than 183 days out of the UK and work onboard a ship. If you declare now before becoming subject to investigation you will not face fines and will not have to pay tax on your earnings. However if you owe tax through work days in the UK or not qualifying for the SED exemption you will only pay 10% on top of your tax bill as opposed to 200%.

What happens if HMRC contact me first?
If they do contact you first you are faced with possibility of a tax investigation into your financial affairs and will not qualify for any penalties at the lowest rates and will have to pay the taxes you owe for up to 20 years. You could also face criminal prosecution.

What if I move my funds to the Cayman Islands, surely it is safe there?
The UK signed ten more automatic exchange agreements in 2014 including many of the classic ‘offshore centres’. The new global standard developed by the OECD has been endorsed by the G20 and now 44 jurisdictions in total. This will lead to greater tax transparency and the ability for governments to clamp down on those who evade tax.

What exactly will the new global exchange mean? What type of information will the G20 access?
The 44 jurisdictions are going to share if you have a bank, investment or custodial account and will be able to see your name, address, account number, balance and income.

When I browse the yachting forums I still see crew asking where the best place is to open an account to avoid paying tax! What do you think of this?
It surprises me that people choose to openly broadcast that they are looking to avoid paying tax and that they believe that today with the open exchange of information that this is still possible and the right course of action.

HMRC contacted over 20,000 people in 2013 about their offshore assets. In 2014 offshore banks in the 44 jurisdictions started collecting information about UK & US residents. This information will reach HMRC by the start of 2016.

Are Offshore accounts still permitted under the Offshore Disclosures Facility?
Of course, there is nothing wrong with having offshore accounts & investments as long as you declare the income and gains on your tax return. This is not designed to stop people banking offshore, but to allow individuals to bring their tax affairs up to date if they have worldwide undeclared income. The principle benefits of using an offshore account is currency flexibility.

This article is for information only and should not be considered as advice.

The end of banking secrecy

By Daniel Shillito - Topics: europe-news, International Bank Accounts, Italy, Switzerland, Uncategorised
This article is published on: 26th February 2015

26.02.15

Swiss tax Info-sharing agreement signed on Monday

Matteo Renzi has tweeted how “billions of euros” can now return to the Italian State, thanks to his signature on an agreement with Swiss authorities on Monday February 23.

Italy and Switzerland have now formally agreed to exchange taxpayer information, as is already the case today between many other countries. This will effectively take Switzerland off Italy’s blacklist from last Monday, and end Swiss bank secrecy for Italian residents.

It is believed that around 85% of assets held by Italians outside of Italy, are in Switzerland (source: Il Sole 24ore)

The agreement comes after the announcement of a new Voluntary disclosure program applying from January 1st for Italian taxpayers.

As part of the new Voluntary Disclosure Program, Italian residents with Swiss bank accounts can voluntarily disclose their accounts and pay outstanding past taxes due related to the last 5 years, incurring less penalties than they otherwise would, and potentally relieving them of obligations to tax, related to the years 2005 to 2009. These concessions can only be obtained if disclosure is made via a commercialista before the deadline in September 2015.

Financial seminar for expats in Catalonia

By Chris Burke - Topics: Catalunya, International Bank Accounts, QROPS, Residency, Tax, Uncategorised
This article is published on: 25th February 2015

25.02.15

The Spectrum IFA Group’s Chris Burke spoke at a recent financial seminar alongside Spanish Lawyer, Nuria Clavera Plana, in Llafranc. The event was attended by 30 people and was followed by a Q&A session and a chance to meet the speakers over coffee.

Chris’s presentation covered:

  • Currency forecast, thoughts and ideas to implement for 2015.
  • UK Government Pensioner Bonds – 2.8%-4% per annum for anyone holding a UK bank account and debit card.
  • UK Pension & QROPS changes – Is your pension being managed effectively and is it in the right place?
  • Spanish Life Assurance Bonds/Investment – potentially Tax efficient, historically good returns (Prudential) and potentially succession planning friendly.

Chris ran through the concept of ‘the magic bank account’ for over 65’s in the UK, and many people were surprised to find out that you do not have to live in the UK to benefit from these – you just need a UK bank account and debit card and can achieve between 2.8% to 4% per annum with the savings also government backed. He discussed predictions and thoughts on currency, which highlighted last year’s most successful currency forecaster, stating that the Euro/Dollar will be at parity at 1-1 by the end of 2015. Still just as unnerving for those living in Spain, was the prediction that the Euro would reach 1.42 by the end of 2015 against the pound, particularly if the EU have to keep printing money to solve the crisis.

The new rules on UK pensions and QROPS were also highlighted. QROPS is a UK pension that has been moved overseas to benefit from EU rules (please note your pension should be evaluated by a qualified pension evaluator before you consider doing this) and although the new UK rules give much more flexibility, everyone acknowledged that hefty tax could have to be paid to access these. Qrops still has benefits over and above leaving your pension in the UK depending upon your situation, and from April 2015 should have nearly all of the benefits a UK pension will be entitled to, and potentially more.

Tax efficiency was perhaps the most popular subject Chris presented on, with most people interested in saving money on taxes both on their savings and with succession planning. In fact, passing on their money tax efficiently was the main interest over coffee after the presentations.

Presentation From Nuria Clavera Plana (Lawyer):

  • New income tax for Catalonia 2015 and what are the exemptions.
  • New Capital gains Tax for 2015 in Catalonia.
  • What assets need reporting.
  • Pension income from sources outside of Spain Amnesty.

Nuria as ever gave a very interesting presentation on what you now have to pay in taxes throughout Catalonia, the reasons why and how this works. By far the most popular conversation was the changes to Inheritance tax rules now in Catalonia, which in essence are the same now for Spanish Nationals and Foreigners residing here. This incorporates a big reduction in tax compared to before. It was also surprisingly good news for those leaving behind assets up to €1,000,000 with potentially limited tax to pay.

There were many questions surrounding what does and doesn’t need reporting for the Modelo 720 overseas asset declaration, ranging from classic cars to items not reported before. This topic always throws up major questions as always!

This year in Spain it is now a requirement to report any overseas pension income you are receiving up until the 30th June 2015. This generally would not have been taxed in most cases in the respective overseas countries due to the amount in question. However this should be reported in Spain and could therefore be subject to Spanish tax laws. It was discussed that this new law has been brought in mainly to find those Spanish Nationals who have been receiving pensions from working abroad previously and have not been declaring them or paying the relevant tax.

Nuria as ever gave everyone detailed analysis on these changes, so everyone left the event with a better knowledge of their own personal situation.

If you would like more information on this or any other questions you may have regarding Tax advice, please do not hesitate to contact Nuria on nuriaclavera@icab.cat or Telephone 972305454.

Chris and Nuria would like to thank all the attendees for asking such pertinent questions and joining in, making the event such a success.

Chris will also be presenting at future seminars in the coming months. Please feel free to contact him on chris.burke@spectrum-ifa.com or telephone him on 936652828 if you would like to know more about these, or wish to discuss any of the above details.

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Should I open an International bank account today?

By Daniel Shillito - Topics: International Bank Accounts, Italy, Uncategorised
This article is published on: 31st January 2015

31.01.15

There are many and varied reasons why you might find an international bank account attractive right now.

If you travel between countries for business you may already know that an international account can provide great flexibility and various options for managing your finances.

Today, because the international banks have removed previous eligibility criteria, these accounts have reduced in cost and are available to more people.

You may be aiming to generate more income from your interest or thinking about opening an international bank account for safety reasons. Using an international bank account means having the ability to keep your cash and investments in more than one country. This could be an attractive strategy to reduce any perceived risk associated with the government or banking industry of the country in which you live. Your international bank will not be exposed solely to the Italian economy.

Alternatively, your strategy could be to invest in an alternative currency or simply just saving for the future in another country, thereby removing the temptation of withdrawing and spending your savings every month at your local bank!

Many people set up international bank accounts to exist alongside or in addition to their local bank accounts for one or more of these features, and for other reasons.

Accessing your money
Your money can be accessible in your home country (eg. Italy) by use of a Debit card linked to your international bank account. Your account may be in Euro, USD, GBP or another currency, and you may have different currency accounts. Today your international bank account provider can usually set up separate accounts for each currency you request, at little cost.

Holding multiple currency accounts is usually difficult or costly at your local bank. However this is not the case for an international or offshore bank account. This is quite useful if your business charges, bills or your clients are in a different currency to your home country; if you receive a pension or investment income in a foreign currency; or when you receive transfers from family or savings in different currencies.

Leaving your money in the account can help avoid the frequent international transfer fees and the risk of a poor exchange rate upon transfer in the short term.

A word on currency transfers: although all banks provide this service, most are not interested or willing to be competitive in providing it! Hence it usually pays to use the services of a specialist money transfer company. We have been using and recommending money transfer companies for several years as a cost-effective and convenient alternative for all of your foreign currency transfers.

You can control when to transfer money between currencies (for example when the exchange rate is more suitable or has recovered from any recent weakness). Your money can also be transferred online between your different currency accounts whenever you may need to re-balance or rearrange your accounts (for larger transfers you usually should consider a money transfer specialist).

Also, payments can be arranged in different currencies from the same accounts, for example when you travel for business or pleasure.

You can obtain a debit card for each currency you need, for the country where you are travelling or wherever you need it.

Bank accounts and taxes
Often what is important to consider, aside from interest rates and the features of international bank accounts, is the following:

Your international bank provider is not subject to the laws and rules imposed by your local (Italian) government upon local banks ie. to deduct taxes immediately from your investment income.

This is a significant benefit. A common misconception however is that having an international bank account prior to coming to Italy means you can avoid declaring your account or overseas income to the tax authorities. This is clearly not the case as you are still required to report annually on all your interest and other investment income as part of your annual taxation form lodgement.

In April 2014, Italy proposed to introduce an automatic tax deduction of 20% on international money transfers into the country. Essentially this law aimed to turn your local Italian bank into a tax collector by forcing Italian banks to withhold this tax from every amount transferred from abroad into your Italian bank account (this would have only applied to the bank accounts of individuals resident in Italy and not to corporate accounts or to non-residents).

Holding an international account in the currency you need and using that account to draw funds periodically as you need them (e.g. by debit card or credit card) can avoid the need to make transfers directly to an Italian bank. Although this proposed law to immediately tax money transfers was not implemented in 2014, as previously planned, managing your money held abroad in the above way, means one never needs to be concerned about the prospect of tax being deducted immediately from money transferred into Italy.

International accounts used to be quite expensive and hard to obtain, plus it was more difficult to understand the strength and safety of the banks providing them. Times have changed however, and now such accounts are more convenient, cost a lot less and are accessible to almost everyone.