Le Tour de Finance – autumn 2015
By Spectrum IFA
This article is published on: 25th September 2015
We have been proudly taking part in ‘Le Tour de Finance’ which has now completed nearly 100 events.
The 100th event is in November taking place at the stunning Grand Hotel in Dinard. During 2015 we have already covered events in Italy, France and Spain that proved to be a huge success. The events are fact filled sessions followed by an opportunity for an informal questions and answers session over complimentary refreshments and a buffet.
The relaxed and open forums are a chance to expand your knowledge of personal finance as an expat resident in France. The panel of speakers are experts in their respective fields and are on-hand to answer questions you may have about protecting and strengthening your personal financial situation while a resident in France.
We welcome you to join us for these autumn events in France.
• St. Endreol (Provence) – 7th October register now | more info
• Aix en Provence – 8th October register now | more info
• Gayda (Languedoc-Roussillon) – 9th October register now | more info
• Avrillé, Loire – 11th November register now | more info
• Dinard (Brittany) – 12th November – OUR 100th LE TOUR DE FINANCE EVENT! register now | more info
The objective of Le Tour de Finance is to provide expatriates with useful information relating to their financial lives. We try and cover frequently asked questions that we receive from our clients. It would be helpful for us to know what your particular areas of interest might be.
Send us your questions and the event you will be attending and we will try and cover them on the day:
Cogs4Cancer 2015 – The new kit has arrived
By Spectrum IFA
This article is published on: 10th September 2015
Check out the new Cogs4Cancer 2015 team colours !!!
The Spectrum IFA Group are for the second year running sponsoring Lee Mutch, Director at Inter-Nett Monaco.
Starting in 2013, Cogs4Cancer has grown year on year with over €563,000 raised so far. A truly spectacular event, this year is proving to be even bigger than last years ride with the total amount raised just for the 2015 event reaching €164,058.91 (as of 9th September).
Starting on Monday 5th October in Barcelona, the Spectrum team will be at the starting line to wish all the riders the very best of luck on their heroic journey covering 850KM in 5 days.
Impending changes to French inheritance laws
By Graham Keysell
This article is published on: 17th August 2015
In England, we are used to being able to decide who should inherit our assets when we die. However, once you are considered a French resident, the ‘Code Civil’ stipulates that a set proportion should go to your ‘protected heirs’ (i.e. your children).
For example, if you have two children, they are entitled to 2/3 of the value of your estate. It is only the remaining proportion that you have some control over. If you are not married, and there is no will, the entire estate will pass to the children.
Whatever your will might say (e.g. leaving 100% to your spouse or a friend), these ‘protected heirs’ can insist on receiving their percentage. It is possible to insert a clause in a will whereby your spouse has lifetime ‘use’ of the matrimonial home. They can also continue to receive income from any investments for life, but they cannot sell any assets, (or spend any money), destined to go to the children (e.g. money in a bank account).
Unmarried couples face a tax bill of 60% of any inheritance, after an allowance of the first 1,594 euros. The same applies to anyone you are not directly related to.
‘PACS’d couples have the same rights as husbands and wives and are not liable to pay inheritance tax.
Recent changes in legislation have improved the rights of the spouse to a certain extent, but the situation is still far from ideal.
The good news is that France has signed up to a recent EU law under which citizens of other countries will be allowed to opt for the inheritance laws of their country of birth. This is due to take effect from 17th August 2015.
Providing you have written a will stipulating that your estate should be disposed of under English law, you are at liberty to leave your assets to anyone you want (and in any proportion). This will take precedence over the Code Civil and completely eliminate the question of ‘protected heirs’.
It is worth mentioning that Scottish inheritance law has some similarities with the French ‘Code Civil’. Anyone born in Scotland would still have some restrictions on whom they could leave their estate to (although the limits are far more generous for spouses and it would almost certainly be preferable to take advantage of the new laws).
For reasons best known to themselves, the UK and Irish governments have not signed up to this EU legislation. Nevertheless, this in no way prevents UK citizens living in France taking advantage of the new rules.
If you have any assets (e.g. a bank account) in the UK, it is usually advisable for you to have both English and French wills. Whilst not compulsory, it does make the winding up of the estate far simpler (and cheaper!).
Wills do not need to be complicated and it is quite likely that a standard version for both English and French wills would suit your purposes. Anyone who would like to discuss this with me can contact me on graham.keysell@spectrum-ifa.com.
There are other factors to bear in mind before deciding whether it is in your interests to take advantage of the new legislation. If you have a ‘classic’ French will and are on good terms with your children, they can simply sign away their rights to the inheritance. Mentioning the new law may confuse the notaire in charge of winding up the estate.
Also, you could lose the valuable tax-free limits that your children would otherwise be able to take advantage of.
Personally, I believe the people most likely to benefit from the change in legislation are those who have children from previous relationships, those who want to leave money to their beneficiaries in unequal shares and those who want to leave money to people other than their direct descendants.
You should bear in mind that this new ability to leave your money to anyone you wish in no way affects the inheritance tax rates. As previously mentioned, there is no inheritance tax between spouses. However, after an allowance of €100,000, children will pay a sliding scale of tax (usually with the majority of the excess being taxed at 20%). If you leave your money to third parties, or charities, they can expect to pay 60%.
Assurances Vie policies are frequently used to avoid inheritance tax. Providing these are set up before age 70, each named beneficiary can inherit up to 152,500 euros, totally tax-free, and it is not considered part of the estate. Any sum in excess of this is taxed at a flat rate of 20%. This is particularly beneficial if you were leaving money to an unmarried partner, a charity, nieces and nephews, etc where they would avoid paying the 60% tax!
This is one of the reasons that these policies account for the majority of the investments in France (as well as being the nearest thing the French have to a UK ‘tax-free ISA’).
This report is intended simply as a summary of some aspects of French succession law and inheritance tax. It is based on my understanding of current legislation, which may be subject to change. No liability can be accepted for any change of interpretation or practice relating to any tax or legislative measure that may affect the accuracy of the content.
The EU Succession Regulations
By Spectrum IFA
This article is published on: 20th July 2015
What a month it has been since I wrote my last article. The Greek crisis has waxed and waned and as the prospect of increases in UK interest rates comes closer, now the Sterling Euro exchange rate has hit new highs. All of this while the temperatures continue to soar in France and the effects of the canicule are felt!
August is almost upon us and this means that the long-awaited EU Succession Regulations will come into effect. From that point, as French residents, we will be able to opt for the succession rules of our country of nationality to apply (whether or not that country is within the EU). If you do nothing, the default position is that the succession rules of your country of habitual residence will apply. However, regardless of which country’s succession rules are to apply, this will not change the tax situation. French succession taxes will still be due, which can be up to 60%, depending upon your relationship to your beneficiaries.
I am not going to go into the detail of the EU Succession Regulations here, as I have done this before and so I invite you to read my article on this at: spectrum-ifa.com/eu-succession-regulations-the-perfect-solution
As the months have passed since writing that article, I have discussed the implications of the Regulations with several legal professionals who operate at an international level and so they are already highly experienced in dealing with cross-border succession situations. Unfortunately, the further clarification on the practical application of the Regulations that we were hoping for has not appeared and so still we can only wait for the results of actual cases.
What is clear though is that if you elect the succession rules of your country of nationality, then your French property and any other assets that you own would be administered by a French notaire trying to apply another country’s law and this is likely to cause complications, delays, additional expenses and delays. So I, like many other professionals, hold the view that if there is a tried and tested ‘French way’ to achieve your objectives, then this should still be used. The ‘French way’ is another subject that I have written about in detail and the full article can be read at: spectrum-ifa.com/inheritance-planning-in-france
There will be cases where the EU Succession Regulations will be welcome for some couples. Typically, this might include situations where children are estranged from parents or step-children just will not accept the step-parent, regardless of the length of the relationship. The Regulations will be a relief for couples in such situations, as they will be able to circumvent the French forced succession rules, but they will still need to address the taxation issues that may occur. As concerns financial assets, this is an area where we can help.
Everyone’s situation is different and this is why it is very important
to seek professional advice on this subject.
Are you concerned about the EU Succession Regulations and how this affects you? If you would like to have a confidential discussion about this please contact me from the contact box below.
Remember our old friend the Assurance Vie?
By Spectrum IFA
This article is published on: 10th July 2015
In last month’s article I maintained that you can’t please all of the people all of the time. Whilst that met with general agreement, it did provoke some interesting responses; mainly exploring the ‘Should I stay or should I go?’ theme so loved by fans of The Clash. Here is an excerpt from a mail I received from a regular critic of my articles. I left the first line in, out of vanity:
Just for a change, I rather liked your piece in the A&A. Very sensible.
Although for me this is home. Eventually cremated here and ashes scattered over France. It’s in my last wishes. But here’s a thought for another piece for you, progression from your current article. Although I myself have no intention whatsoever to return to the UK – I intend to die here – I read that one of the things that can go, as you get really old, is your ability to speak a second language. If that happens, and should I finish up in a care home, it will be difficult both for me and my carers. In that case my family, most of whom do not live in the UK, might reasonably consider I would be better off in the UK………….
And so be it; let’s explore this theme a little. I’m sure Charles Green (not his real name) would never be packed off back to the UK by uncomprehending carers and uncaring children, but it is an important point. I for one would not relish spending my bath chair days in what I perceive to be the alien environment of a French care home. Coincidentally, I met a couple last week who have retired from UK care home ownership to live in France. I put it to them last week that if they were to open a home in France solely for UK elderly clients, they might be very successful. Unfortunately my idea was shot down in flames. They retired from the business due to increasing bureaucracy and paperwork in the UK, and certainly wouldn’t dream of trying to recreate the same nightmare in France. Can’t blame them I suppose, but it still sounds like a nice idea to me, from a future consumer point of view.
For obvious reasons, I need to steer this article towards financial concerns. I talk to virtually all my clients about retirement provision. It’s not uncommon to hear that actually people would quite like to spend all of their money before they ‘shuffle off’. The problem, I always point out, is timing. It’s one thing to put in place a programme of concerted spending that will exhaust your funds when you reach the age of say 85, but most inconvenient to yourself and others when you last until you are 103. Life can of course be great fun, and we should always enjoy it while we can, but let’s be under no illusion here; none of us gets out of this alive. Money comes in very useful while you are living, and my view is that if there is any left after you die, it might be put to good use elsewhere.
My average client couple; Mr. E. and Mrs. X. Pat, have worked hard during their lives and have garnered enough cash to see them through to the bitter end. I use the word ‘bitter’ deliberately, as I don’t think life has many happy endings. Some of my clients take a rare and altruistic view of their legacy. They may not have children or close relatives, or maybe they just don’t like them. They feel totally at home with the concept of their residual wealth being assimilated into the French national coffers as their contribution to society. Thankfully, to my mind anyway, this approach is rare, and could even be a sign of approaching mental frailty. The vast majority of the people I talk to would much rather that anything left be put to somewhat better use; any use in fact that doesn’t involve the word ‘tax’.
Without any tax planning at all, anything you leave to your spouse will be free of succession tax, and your children will get a moderate allowance before paying the tax, but can end up paying 45% on large sums. Pretty much everyone else need a tin hat to protect themselves from the onslaught from ‘le fisc’. Step children; your best mate; your ex-wife (?), they will all pay 60%. In anyone’s language, that’s a lot of tax.
There is a better way. Remember our old friend the Assurance Vie? He keeps your investments away from the prying eyes of the tax man, and when you eventually need to draw income, he may be able to get you a very good rate on the tax you will then pay. He also happens to come in pretty handy with succession tax. In theory even the richest of investors could manage to pass on all of the invested wealth free of succession tax; all he would need would be a lot of beneficiaries. Each one of them could take away €152,500 without paying a centime in tax. For we mere mortals, this sort of tax generosity should solve the problem quite easily. All you have to do is get your act in gear in good time. You must set up your policy before you get to 70 to get the full benefit.
A bit more thought needs to go into how you pass on property, but it can be done. For now though, I’m just going to concentrate on the ‘spare’ cash. Bank accounts; premium bonds, ISAs; PEPs; National Savings, your old Pru bond that you’ve had since Adam was a lad… They are all manna from heaven to the French succession tax system, and it will swallow them up. Only Assurance Vie has that nasty tasting Teflon coating that it doesn’t like, and spits out again.
And all you need to do to get an assurance vie is talk to your financial adviser…
In the few days since I wrote this article I have learned of the tragic death of one of my earliest clients; a good and kind man, fallen victim of the carnage so often seen on French roads. This sadness only reinforces my view that life rarely has a happy ending.
Do I need help planning my finances in France?
By Amanda Johnson
This article is published on: 12th June 2015
If you are not sure whether you want or need a financial review at the moment, why drop into one of my financial surgeries for a coffee and an informal chat?
Financial Surgeries July-September 2015
What are they?
An opportunity for you to speak to me locally and informally about your personal situation. I can answer any questions that you may have about tax efficient savings and investments here in France, as well as helping you understand your pension options since the UK pension changes. We can also cover Inheritance tax planning and an update regarding the new laws taking effect in August 2015.
Where they are?
Café du Cour, Vouvant Wednesday 9th July 11.30 until 14.30pm, Wednesday 9th September 11.30 until 14.30pm
Brasserie Vue du Chateau, Bressuire Friday 24th July 11.00 until 1pm, Friday 25th September 2015 11.00 until 1pm
Do I need to make an appointment?
Whilst there is no need to make an appointment, however, if you do let me know you are coming in I can ensure that I am not double booked.
Why not pop along for an informal chat?
Whether you want to register for our newsletter, attend one of our road shows or speak to me directly, please call or email me on the contacts below & I will be glad to help you. We do not charge for reviews, reports or recommendations we provide.
You can’t please all of the people all of the time
By Spectrum IFA
This article is published on: 11th June 2015
It’s a sad but true fact that you can’t please all of the people all of the time. While most of us dance a little jig each time the sterling pops its head over the 1.40 mark (however briefly!), others wince and reach for their calculators, working out how much less they are now worth in sterling terms. For various reasons, as we have discussed before, people decide to ‘go home’. The very fact that they describe it in those terms probably makes them all the more likely to take that decision in the first place, but the fact is that the older we get, the more compelling the argument can become to return to our roots.
There are currently two main problems for those who come to that decision today. The first is the exchange rate, and the second is the housing market. How unfair is it that many of us came to France on the back of a strong pound, then congratulated ourselves when it collapsed, only to find that when we need it to stay weak, it bounces back to bite us where it hurts? And, to compound matters, our cherished piece of French real estate turns out to be worth a fraction of our own valuation. I don’t think this is particularly a French issue though, unless we (surely not?) were persuaded to pay more than the property was worth in the first place. I learned many years ago that if you think you might want to move home at some time in the future, plan ahead. Don’t wait until you want/need to sell and bide your time. Advertise early, and wait for that elusive buyer who really wants to buy your home. Easier said than done though, I must confess, although I have in the past been successful in selling a ‘quirky’ house on this basis, and buying a much more sellable property, purely to put myself into a more flexible situation where I knew I could move quickly if I needed to. Even then some ego inflated politicians started a war and held up our move to France for quite a few months.
No, you can’t please all the people all the time, but what you can do is try to give them the best advice at all times. If you get that right, then major upheavals such as moving back ’home’ can be made less of a trial. A good example is investment advice. I estimate that currently around 5% of my clients are in the process of moving back to the UK, or are thinking about it. I know for a fact that all of them are happy that they took my advice to invest in what I class as ‘Expat Assurance Vie’ policies. I call them this because I know full well that they are designed for and aimed at the expatriate market in France. One major advantage is that they are completely portable. It is easy to convert the policy to a standard UK investment bond. You could even have stayed invested in sterling, but if you had switched to Euro, you can switch back. If the current exchange rate deters you, there is nothing to stop you going back to the UK with your investments still in Euros, to be converted when the rate goes back down (as it surely will).
In part I blame social media for this new type of expat existence. Originally, when you moved abroad, you kept in touch by mail. Good old fashioned post. If something of note happened, either abroad or in the UK, you would write to your family and tell them about it. If it was very urgent, you’d phone, but that was expensive. Nowadays little Jimmy in Tonbridge Wells starts teething and the whole world knows about it in minutes. Don’t get me wrong, I’m not a complete dinosaur when it comes to these matters. I have a Facebook page! But I don’t really know how to use it though. I’ve never found my ‘Wall’, and I’ve never enjoyed being poked. As for Twitter, I’ve never understood the rationale behind it, never mind how to use it. I thought retweeting was military code for a strategic withdrawal.
I suppose it all has its uses, but it makes the world a more volatile place. Sometimes you can just have too much information. Sometimes it’s better to let someone else take over and do ‘stuff’ for you.
Maybe a financial adviser for example…
Le Tour de Finance 2015 in France
By Spectrum IFA
This article is published on: 8th June 2015
Le Tour de Finance has just completed its final stage of the spring 2015 events, after travelling through France, Italy and Spain. For those who are not familiar with these events, this is a series of seminars, where we bring ‘experts to expats’. Now in its sixth year and due to the popularity of ‘Le Tour’, the events take place in both spring and autumn. For the local events, we had some ‘’old and new faces’ presenting.
SEB Life International and Prudential International presented on the topic of assurance vie, explaining the tax-efficiency of this type of investment, both personal and for inheritance planning. Each of the companies outlined the unique features of their own products and it could be seen that the products complement each other, one or the other being more suited to a client, for example, depending upon attitude to investment risk.
Momentum Pensions, which is a multi-jurisdictional pension provider based in the UK, Malta, the Isle of Man and Gibraltar, presented on the highly topical subject of the UK pension reform that has taken place. The presentation outlined the ‘freedom and choice’ options now open to people, but also covered the UK tax consequences for those who decide to flexibly access their pension funds. The alternative of transferring benefits to a Qualifying Recognised Overseas Pension Scheme (QROPS) and the advantages that this can provide for expatriates was outlined.
Currencies Direct presented on the various options open to clients who wish to exchange currency, whether this is for regular payments or for ad-hoc exchanges, for example for property purchase. It was very interesting to see how much could be saved by using Currencies Direct, rather than a retail bank, particularly in the light of the current strength of Sterling against the Euro.
There was a presentation on French succession planning from Heslop & Platt, which is a firm of UK solicitors that are specialists in French law. Various possibilities that already exist under French law to put in place successful inheritance planning were outlined. In addition, the forthcoming EU rules on succession were covered and the fact that if a French resident elects the succession laws of their country of nationality to apply, the estate would be administered by a French notaire trying to apply that country’s rules. What seems clear now is that this is likely to cause complications, delays, additional expenses and uncertainty, whilst French inheritance taxes will still apply. As such, the opinion was that if there is a ‘tried and tested French solution’ that achieves the objective that someone is seeking, then this should be the first choice to use, rather than relying on the EU Regulations.
New to Le Tour this year was Leonetti Business Services, a firm that can help you with some of the French bureaucratic issues that we are all faced with from time to time, which undoubtedly can help to get rid of the frustration that these things can create.
Martignole Huzé Associés, a firm of chartered accountants based in Carcassonne, presented on the services that they can provide in English, including the completion of French tax returns, having regard to the conditions of Double Taxation Treaties.
Also new to Le Tour this year was Tilney Bestinvest, which presented on the range of investment management services that this company can provide. The choices range from Mulit-Asset Portfolios, where clients pick the one most suited to their objectives and leave the company to take care of the investment management, through to the more actively managed full Discretionary Fund Management services for larger portfolios.
For The Spectrum IFA Group, we presented on our processes and the products and services that we provide to clients, as well as highlighting the importance of our independence and how we are regulated in France by the French authorities. We also outlined client concerns, for example, tax-efficiency, inheritance tax planning, securing pensions and protection of capital. In addition, in view of the topical issues that we are facing this year, we presented the French tax and social charges consequence of cashing-in UK pensions and for inheritance planning, we used assurance vie to demonstrate the potential inheritance tax savings, providing examples of two scenarios – the ‘French Way’ and the ‘EU Way’. Assurance vie was also used to demonstrate personal tax-efficiency.
As always, the feedback from many people attending these events has been very positive and if you were not able to make it this time to Le Tour de Finance, keep in mind the next local events which will take place in October. On the other hand, if any of these subjects are of interest to you now and you would like to have a confidential discussion about your financial situation, please contact me directly or by using the form below.
Offshore Disclosures Facility
By Peter Brooke
This article is published on: 25th May 2015
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.