Brandeaux Suspended Funds Update
By Chris Burke
This article is published on: 19th February 2014
The following is an extract from Brandeaux on the latest update of their suspended funds. In many cases we will be able to help you if you have money frozen in these funds, please contact me below to find out more:
Chris Burke
Partner
Office; 34 936652828
Mobile; 34 689915730
chris.burke@spectrum-ifa.com
Ground Rent Income Fund Limited, The Ground Rent Portfolio Limited Ground Rent Portfolio Plus Limited (the “Ground Rent Funds”)
Brandeaux Dual Asset Fund (Sterling) LimitedBrandeaux Dual Asset Fund (US Dollar) LimitedBrandeaux Dual Asset Fund (Euro) Limited(the “Dual Asset Funds”)
Brandeaux Student Accommodation Fund (Sterling) LimitedBrandeaux Student Accommodation Fund (Multi Currency) Limited(the “Student Funds”)
(and together the “Brandeaux Funds”)
The Ground Rent Funds
Update on sales The Brandeaux Update of 26 September 2013 reported that the Ground Rent Funds were in negotiations on sale transactions representing approximately 80% of the total value of the ground rent properties.
Brandeaux is pleased to report that property sales to release approximately £173 million of liquidity available for shareholders have now been achieved representing approximately 37% of the total remaining assets of the Ground Rent Funds. The sale prices for these properties are in line with the directors’ expectations as communicated in our last Brandeaux Update of 26 September 2013 and therefore there is no change to the current share price of any of the Ground Rent Funds.
The potential buyer for the remaining properties that we reported in our September Update as being at an advanced stage failed to complete the purchase in the agreed time frame. This was unexpected and disappointing, but the continuing interest that has been shown in these properties is very positive and a reflection of their inherent value. Brandeaux has recommenced marketing of these properties and will report progress as it develops. In addition, Brandeaux is actively marketing two remaining portfolios and has received significant interest.
Future of the Ground Rent Funds Given the desire that has been expressed by investors in the Ground Rent Funds to realise liquidity, and following the positive results achieved in property sales so far, the directors of the Ground Rent Funds have resolved to market and sell all the remaining properties within the Ground Rent Funds. Once completed, the intention is to wind-up the Ground Rent Funds.
The directors do not wish to wait until winding-up the Ground Rent Funds is completed before releasing to shareholders the proceeds of the sales achieved thus far and so, after allowing for ongoing operating cash requirements and transaction costs, it is intended that the net proceeds will be released to shareholders as quickly as possible. It is presently anticipated that this will take place early in the New Year.
In view of the intention to wind-up the Ground Rent Funds, the directors consider that the best way of ensuring that all shareholders benefit fairly from the liquidity created by the sales is to make compulsory pro rata share redemptions to all shareholders. The effect is that every shareholder will
receive a proportion of the available liquidity based on their current percentage shareholding. The directors have written separately to all shareholders in the Ground Rent Funds to provide further details of the arrangements, process and timing of the redemptions.
The directors will keep under review the progress of further sales and whether further redemptions can be made as further property sales are achieved prior to the commencement of the winding-up process. It is not possible to say definitively when further property sales will complete and, therefore, when the winding-up process will commence. However, the directors are taking steps to progress these matters as quickly as possible while at the same time preserving shareholder value.
The Dual Asset FundsThe Dual Asset Funds, which are shareholders in Ground Rent Income Fund Limited (as well as in Brandeaux Student Accommodation Fund (Sterling) Limited), will receive their share of the net proceeds of the Ground Rent property sales as these are distributed. The Dual Asset Funds will distribute their share of the proceeds of each redemption to their own shareholders on the same basis as the Ground Rent Funds, namely by way of a compulsory pro rata share redemption to all shareholders. It is intended that this will be carried out promptly following the share redemptions by the Ground Rent Funds. The effect is that every shareholder will receive a proportion of the available liquidity based on their current percentage shareholding.
The directors have written separately to all shareholders in the Dual Asset Funds to provide further details of the arrangements, process and timing of the redemptions.
Future of the Dual Asset Funds The Dual Asset Funds were created to give investors exposure to both the Ground Rent and Student Accommodation asset classes within one fund. Once the Ground Rent Funds are wound-up, the Dual Asset Funds will no longer be invested in both asset classes. The directors therefore intend to wind-up the Dual Asset Funds in due course. In order for this process to be completed it will be necessary for the Dual Asset Funds to first realise their investment in Brandeaux Student Accommodation Fund (Sterling) Limited and then distribute the proceeds to shareholders. Accordingly, it will be necessary for liquidity to be achieved in the Student Funds before the Dual Asset Funds can be wound-up.
Important information for IFA’s who have clients invested in The Ground Rent Funds and the Dual Asset Funds through institutional platformsThe shareholders of the Brandeaux Funds are the institutional platforms that hold Participating Shares in these funds. Brandeaux does not have details of any underlying investors (neither their names nor bond numbers) and are unable to identify their individual holdings. IFA’s should contact the relevant platform for information concerning queries from their clients, and the process and timing of distributions from the platforms over which Brandeaux has no control.
The Student Funds The directors are actively continuing the process for the creation of liquidity for shareholders through property sales and other means, although the timeframe remains, at present, uncertain. A number of discussions have taken place over the past six months and the directors are actively looking at various alternative ways to create liquidity for investors but at this time there is nothing further to report.
A further update will be sent when there is information of significance to report.
16 December 2013
This Update is for information purposes only and is not intended as an offer or solicitation to anyone in any jurisdiction in which such an offer or solicitation is not authorised, or to any person to whom it would be unlawful to make such an offer or solicitation. Persons who receive this Update are required to inform themselves about and observe any such restrictions and should seek professional advice. This Update should be read in conjunction with the Funds’ Articles of Association and Private Placement Memoranda. Information and representations herein are based on information available at the date hereof, and are, therefore, subject to change. In particular, past returns are not a guide to future returns and the value of shares may go down as well as up. Moreover, returns in non-sterling denominated shares classes may increase or decrease subject to currency fluctuations. Brandeaux calculates its returns net of Brandeaux charges. This Update is distributed on behalf of Brandeaux Managers Limited by Brandeaux Administrators Limited, Brandeaux House, 13 Upper Mount Street, Dublin 2, Ireland, which is authorised and regulated by the Central Bank of Ireland under the Investment Intermediaries Act, 1995.
Investing for a higher Income
By Gareth Horsfall
This article is published on: 18th February 2014
Investing for a higher Income
Investing for income, rather than capital appreciation, is as old as investing itself but its relevance becomes more noticeable in times of low bank interest rates. (Or historically low as the media likes to keep reminding us).
It offers an additional lifeline for those who need to live from the interest from their savings and not just accumulate for a point in the future. The relevance is bigger for those who are not working and do not have a regular income due to ill health, out of work or in retirement.
To elaborate this theme, I have written in the past how an investment should be considered to behave like a garden. It should be well cared for, maintained, trimmed, fed and watered otherwise it becomes out of control and the weeds take over. In no time the tendered beauty and joy of a well cared for garden, diminishes.
Well, I would like to expand on that concept further to explain the purpose of investing for income.
For most of our working lives we try to accumulate capital, save from the very money that we earn to amass the assets that we will one day live off in retirement. But during this time, you may be unaware that you are actually investing for income as well. Its just that the income is being reinvested back into your account to make the capital appreciation quicker. The difference is that when you reach the point when you want the income, you invest in those assets which pay the better levels of interest and have it paid out instead of reinvested.
If we think about it another way, it is the equivalent of the garden. A beautiful cottage style garden that you cultivate from seed and over many years that you carefully tend to. The flowers bloom each spring, and you diligently tend to the plants as they grow, check for problems, apply pest control methods, trim the flowers to put on your kitchen table and enjoy the joy that it brings for you and the family over the years. During this time you may have a small vegetable plot. (the equivalent of an income). But during your working years you have to invest in earning a living and this may prevent you from expanding the vegetable plot, after all you earn enough money to buy vegetables from the supermarket instead of growing them. The garden provides joy and pleasure but only a small amount of income.
When you finish working and your income level may drop, you now have more time to spend on the part of the garden that can provide you with more of the supplemental income.
But, there are 2 types of vegetable plot, those that provide and those that don’t. The difference relies heavily on the soil. The fertility of soil in which you plant those veggies. If your soil becomes too abused it will stop producing. (Note, Westernised economies and the reason for low interest rates). So you have to look at either changing the type of vegetables you plant (crop rotation) or changing the soil. Both can be as effective as one another.
This is the basic concept of investing for income. If one area is not providing sufficient rewards, then it is time to look elsewhere. (Note, bank interest rates are so low that to maintaina standard of living it is necessary to look at other forms of income producing assets)
Example
I would like to talk about Vodafone for a moment and in particular shares in Vodafone. We all know the name but you may not know the significance of Vodafone as an income producing share.
The talk of shares in companies scares alot of people, but Vodafone is a good example of a reliable company that rewards it shareholders with good dividends (income) for being an investor. At the time of writing, if you invested in Vodafone stock today, you would be rewarded with an interest rate of 5.13%. And Vodafone also has a long history of paying income to its investors and more importantly a rising income.
See the table below for the facts
|
Year ended 31 March |
Interim Dividend |
Final Dividend |
Total Dividend |
Growth % |
| 2010 | 2.6600 | 5.6500 | 8.3100 | 6.95 |
| 2009 | 2.5700 | 5.2000 | 7.7700 | 3.46 |
| 2008 | 2.4900 | 5.0200 | 7.5100 | 11.11 |
| 2007 | 2.3500 | 4.4100 | 6.7600 | 11.37 |
| 2006 | 2.2000 | 3.8700 | 6.0700 | 49.14 |
| 2005 | 1.9100 | 2.1600 | 4.0700 | 100.00 |
| 2004 | 0.0535 | 1.0780 | 2.0315 | 20.00 |
| 2003 | 0.7946 | 0.8983 | 1.6929 | 14.99 |
| 2002 | 0.7224 | 0.7497 | 1.4721 | 5.00 |
| 2001 | 0.6880 | 0.7140 | 1.4020 | 5.01 |
| 2000 | 0.6550 | 0.6800 | 1.3350 | 4.95 |
The thing to note is that from the 10 years till 2010 Vodafone increased its dividend 231.98%. If this were the equivalent of bank interest, assuming bank interest started at 3% in 2000, then you would be receiving 6.959% interest on your bank interest in 2010. (The dividends have also been increased through 2010 to 2013 as well !!, so the rate today would be even higher). All this through 2 stock market crises (the tech boom and bust of 2000 and more recently the financial market collapse of 2008/2009). It should be noted that the underlying stock price has increased during this time as well.
I am not recommending that you go online today and buy Vodafone stock. With all investments of this type it comes with risks, management of the business, future profitability of the business and ability to continue to pay dividends, profit warnings, market sentiment, to name a few. However, you can minimise your risk of investing in this way by investing through a fund that specifically invests, manages the risk and can pay out the income.
The point of this blog post is to reiterate the point that if you feel that bank interest is not satisfactory for your living requirements, or you have a tax bill because of being resident in Italy and need supplementary income to pay it, or you just need some more income to make life easier then there are alternatives to leaving the money in the bank or investing in Government Bonds (the historical investment choice of type for the ‘average’ Italian).
If you would like to know how to build a portfolio of income producing assets or would like to discuss any other ways of improving your current financial situation then you can contact me on gareth.horsfall@spectrum-ifa.com or call me on 3336492356.
Aude Flyer
By Spectrum IFA
This article is published on: 14th February 2014
Another busy year is under way; at least it’s certainly started that way. I can’t believe that March is on the horizon already. January saw the gathering of most of the Spectrum clan in Davos for the Financial Forum. This is our annual conference; a time to gather together to discuss the last year and to ponder what might await us in the coming months. As it transpired, 2013 was a fabulous year for Spectrum, with business up a massive 51% over the previous year, which had in itself been a record year.
We are joined at these events by market experts from leading financial houses to offer their input on various financial topics. These sessions are always informative, and often entertaining. The ‘most entertaining’ title clearly went to a Swiss lawyer, who took us through the demise of the famous Swiss Banking Secrecy era, a subject very pertinent to Daphne’s article two weeks ago. Amazingly tax fraud, or ‘frode’ as it became for the session, is not illegal in Switzerland. It is a civil infringement of course, and subject to fines, but the genteel Swiss still recognise that to err is human. Anyone can forget a few tax details here and there, can’t they? Not if you live in France or the UK you can’t, so please bear that in mind.
It is amazing to me how administratively far behind you can get when you take a five day break from the office. Despite keeping in email contact and handling any urgent items by phone, my in-tray was overflowing when I returned from Davos. This was partly because of my policy of sending out policy statements to all my clients just after the end of each quarter. I find this can tend to focus the mind on investments, and helps both me and my clients to keep on top of things. Anyway, the two factors combined to ensure that any leisure pastimes I might have had planned were put aside for a while.
Since then of course a more normal timetable has been restored, and it is largely business as usual, albeit still busy. Meeting new clients for the first time; writing up reports and then arranging follow-up meetings; executing (hopefully) the ideas presented in the reports, these are only a part of a day’s work. Monitoring existing business on a regular basis is vital, hence the quarterly reporting. Then there is also the financial ‘agony uncle’ side to the work, which I find extremely interesting. E-mail enquiries generated from any number of sources covering all types of financial questions land in my in-box every week. Sometimes I read them and have no idea what the answer is (such as ‘where can I source bulk volumes of ice cream for my new business in Carcassonne?’ or ‘can I use my UK credit card on motorway petrol pumps on national holidays?). Yes, really.
Life as a financial adviser is fairly consistent. There are only so many mainstream subjects (not ice cream) that can crop up in my daily routine, so it is refreshing when something out of the ordinary comes up, and recently I had a very interesting time doing some research for a new client who wanted his money to be invested in SRI funds. I doubt that many readers will have heard of SRI, but it stands for ‘Socially Responsible Investing’, perhaps better known as ethical investments. This is not new to me of course, but it isn’t something that crops up in many client meetings. I tend to think of new clients in investment terms along the scale of carnivores or herbivores; meat eaters or vegetarians. Meat eaters will invest in most things, and tend to assume that they are not consuming, or indeed investing in, anything toxic. Vegetarians are more complex. A normal Veggie will need reassurance that he is not eating any meat or meat derivative products. In other words he doesn’t want to invest in any of the bad people who pollute our world physically or morally. Then there are the Vegans, who are not satisfied by the Veggie approach. No occasional fish or eggs or milk for them; they are straight down the line. No meat. Period. The Vegan investor isn’t satisfied with avoiding the bad guys; he’s out to find the good guys and invest in them. He wants to support irrigation projects; AIDS and Cancer research; sustainable energy sources and the like. Vegan investors can be difficult to please, as to some even ‘profit’ is a bad word, but trying can be a rewarding experience.
Back to more mundane matters next month, but until then, keep the calls and mails coming!
If you have any questions on this, or any other subject, please don’t hesitate to contact me, Rob Hesketh:
By phone on 0468 247758 or mobile 0631 787647
Or by mail at rob.hesketh@spectrum-ifa.com You can find out more about Spectrum on spectrum-ifa.com
Is my Assurance Vie flexible?
By Amanda Johnson
This article is published on: 14th February 2014
How flexible is my Assurance Vie, should my needs or circumstances change in the future?
When you take out Assurance Vie it is not only important that the money you put in is invested properly for your requirements and attitude to risk today, but that it can be managed, reviewed regularly and changed should your circumstances alter in the future.
Here are several questions you may want to consider when you when choosing or reviewing your Assurance Vie:
How do I change how the money is invested within my assurance vie?
During your annual review or should your circumstances change, it is important to be able to review your Assurance Vie and understand how it is performing. If it is not matching your requirements the mechanism for changing or swapping how your money is invested should be simple and not cost prohibitive.
How often can I change the contents of my assurance vie?
Flexibility to change how money is invested within your Assurance Vie, simply and inexpensively is important. You cannot predict when you may wish to change how your money is invested or encounter an unexpected need to withdraw some of it at short notice, so having a local financial planner who can manage this process simply and efficiently is a good idea.
How flexible is an Assurance Vie should I decide to leave France and live somewhere else?
It is important to ensure you are Assurance Vie portable should you wish to change your country of residence?
Do I understand the charges applicable to my Assurance Vie?
Whether you already have an Assurance Vie or are looking to take one out it is important to understand your obligations regarding applicable charges, taxes and social charges. It is worth noting that where & how your money is invested can have impact on social charges you are liable to incur.
At The Spectrum IFA group we firmly believe that your free financial health check is just the start of our ongoing commitment to your financial well-being. If you want to understand more about the options you have with an Assurance Vie, 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.
Amanda Johnson
tel : 05 49 98 97 46 or 06 73 27 25 43
e-mail : amanda.johnson@spectrum-ifa.com
web: https://spectrum-ifa.com/amanda-johnson
March Financial Surgeries:-
- Thursday 13th March Café des Belles Fleurs, Fenioux 10.00 – 12 noon.
- Tuesday 25th March Pause Café, L’Absie 10.00 – 16.00
- Thursday 27th March Café Cour du Miracle Vouvant 11.00 – 15.00
- Friday 28th March Open Door Library, Civray 10.00 – 12 noon
France’s Fight Against Tax Evasion
By Spectrum IFA
This article is published on: 3rd February 2014
As part of France’s continuing efforts to combat fiscal fraud, a new piece of legislation was enacted into law on 6th December 2013. This has far-reaching effects, including:
Criminal sanctions for serious cases of fiscal fraud are to be increased to a maximum of seven years imprisonment and a fine of €2 million, when the fiscal fraud is facilitated by:
- the use of foreign bank accounts or foreign life assurance policies;
- foreign entities, including trusts, set up outside of France;
- the use of false identity or false documents; or
- artificial or fictitious tax residency.
Undeclared monies held outside of France, whereby the taxpayer cannot prove the provenance, to be taxed at 60%.
If, as a result of failing to declare assets outside of France, a taxpayer does not make a wealth tax return because the ‘none inclusion’ of the assets indicates that they are under the wealth tax threshold limit (currently €1.3 million), the penalty is to be increased from 10% to 40% of the tax due.
The period during which the tax authority can take action to prosecute is to be increased from three years to six years.
As concerns trusts, legislation was already introduced in 2011, which has required the trustees to declare to the French tax authorities the existence of the trust with at least one of the following:
- French resident settlor;
- French resident beneficiary; or
- French situated assets – even if the settlor/beneficiaries are not living in France.
Since 2011, failure to declare the existence of a trust has resulted in a penalty of the greater of 5% of the value of the total assets of the trust, or €10,000. The new law increases the fine to 12.5% of the value of the total trust assets or if greater, €20,000.
In addition, a public register of trusts is to be established by the Minister of Finance. This will require full details of the trust to be published, including the name(s) of the trustees, the settlor and all of the beneficiaries, as well as the date of establishment of the trust. Therefore, the text of the law is wide and in effect, requires information concerning non-resident beneficiaries to be made public and may also require the names of potential beneficiaries to be published.
France, like many other countries, is targeting tax evasion more and more. Banks and insurance companies are required to report information to tax authorities about their clients and tax authorities around the world are exchanging information. The EU is also proposing to amend EU Directive 2011/16 to expand the field of the mandatory automatic exchange of information between tax authorities to include capital gains, dividends, bank account balances. Banking secrecy will clearly become a thing of the past!
It’s a fool’s game to try to hide assets and pretending not to be resident is not a good idea. One way or another, the taxman always finds out and the penalties can be very costly. It is much better to seek regulated advice from professionals who are registered here in France.
Does any of this concern you? Would you like to ensure that you and your potential beneficiaries do not pay any more tax on your financial capital and investment income than is necessary? If the answer to either of these questions is yes, then please contact me for a confidential discussion.
We are also now planning for our Spring Client Seminars. As always, there is no charge for any of our seminars and the speakers’ presentations are followed by a buffet lunch, so places must be booked in advance. The planned dates for the next local events are:
- 21st May at Castelnaudary
- 22nd May at Perpignan
- 23rd May at Montpellier
As the seminars are always very popular, early booking is recommended.
If you would like to discuss your financial situation, in confidence, or if you or you wish to attend one of the seminars, please contact me or by e-mail at daphne.foulkes@spectrum-ifa.com or by telephone on 04 68 20 30 17.
The Spectrum IFA Group advisers do not charge any fees directly to clients for their time or for advice given, as can be seen from our Client Charter at https://spectrum-ifa.com/spectrum-ifa-client-charter/.
20% withholding tax on all transfers from abroad into Italy
By Gareth Horsfall
This article is published on: 1st February 2014
As of February 1st 2014 banks in Italy will be obligated to withold 20% of the amount relating to transfers coming into personal accounts from abroad. The 20% will be witheld at source, by the bank, unless an exclusion has been applied to declare that the money is not profit from financial transactions being made abroad.
The witheld tax will be assumed to be an advance tax on ‘profit from investment’ and that the tax will need to be declared and paid on it anyway on the end of year on the RW form. The tax will be witheld every 16th of the month following the transfer and the accumulated amount can be used as a deduction against your end of year tax bill.
(Profit from investment includes ‘interest from savings, income from property (i.e rentals, gains from the sale of property etc. This is what they are trying to target!!!)
Even if an exclusion is filed for and granted (at the bank) your name and details will be submitted to the Agenzia delle Entrata. In addition, you have until the 28th February following the year of the deduction (28th February 2015) to apply, to the bank, for an improper application of the witholding tax and request a refund.
The exclusion will be granted by production of a self certification in the form of a letter sent to the bank. It is likely that this self certification will cover a full tax year, in which the remittances were made, but as yet the rules are unclear.
As you can imagine the banks have been caught a little bit on the hop and are not really ready for the implementation of this little piece of legislative wonder. However, if you are remitting funds into Italy in the form of pensions, bringing cash in to renovate a house, income from running a business abroad etc then you must go and speak with your bank manager about how to self certify that the funds have not been generated from profit on investments abroad.
The main aim of the witholding tax is obviously to flush out those who are avoiding paying tax on assets overseas. The government is very cleverly avoiding the necessity of tax collection through third party intermediaries and instead going directly to the source of remittances into the country, the banks and other financial institutions. Since the banks are wholly unprepared for this it could mean a messy period whilst it gets sorted out. The banks are likely to be inundated with self certifcation letters and the hope is that they can administer this without problem.
As an example of the chaos, it is unclear at the moment whether remittances under a SEPA transfer will be subject to the witholding tax although it is just a matter of time before that is resolved.
The whole idea seems rather counter productive to me, in that 20% on an amount remitted into Italy is not the same as 20% on the interest on funds that have been legitimately held abroad as savings. Ultimately, the funds being remitted into the country are less than before and hence less funds to spend and use in the economy. I have my sneaking suspicion that this is merely a way to generate more information for the Agenzia. For those who are declaring their assets and incomes correctly and are ‘in regola’ it will be mostly a form filling exercise, lodging these forms with the bank and ultimately, the legislation will be of little concern. The only benefit being that the Agenzia has more ways of matching assets held abroad versus remittances from abroad and amounts declared on the RW (end of year tax declaration) and ensuring that 1+1+1=3
If you would like to contact me to discuss possible financial planning opportunities around this, or any other matter you can do so on gareth.horsfall@spectrum-ifa.com or call me on +39 333 6492356.
Property rentals in Italy – goodbye cash 2014
By Gareth Horsfall
This article is published on: 29th January 2014
From 2014 owners of properties in Italy, which they rent, will be expected to have the rent paid only through track-able methods of payment.
The money will need to be paid by bonifico / bank transfer. (I assume that means Italian or overseas banks as long as it is track-able) Penalties of sanctions against both parties (renter and owner) can be made if they are not adhered to and subsequently found out. The only thing that seems to be excluded is public buildings, such as Case Popolare or other similar public buildings.
Obviously, this move is intended to ensure that all monies from rentals (holiday or long term rentals) are being declared properly in Italy How it will be policed is another matter, but if the last 2 years are anything to go by they will surely find a way, or at least target a select few which will create a panic that will bring the masses into line.
If you are concerned about this or another other financial planning issues regarding the latest taxes in the Legge di Stabilita 2014, then you can contact me on gareth.horsfall@spectrum-ifa.com or call me on *39 3336492356
Buying a second home as a summer retreat
By Tim Yates
This article is published on: 27th January 2014
You don’t have to be a millionaire to get in on the game. In Southern Europe, particularly in Italy, Spain and France, it is very common for people with ordinary incomes to buy second properties. “They [the French] use them as holiday homes and rent them out when they are not using them,” said Tim Yates, a financial adviser with the Spectrum IFA Group in Valbonne, southern France.
Minimum reporting threshold for funds held abroad – clarified
By Gareth Horsfall
This article is published on: 27th January 2014
If 2013 was the year for confusion about how to report assets held abroad then, at least, in 2014 the Italian Government is offering some further clarity.
As of 2014, there will no longer be any minimum threshold when reporting assets held abroad. Previously, any amount below €10000 in investments and €5000 in cash deposits was not expected to be reported. From 2014 all amounts, no matter how large or small, will be expected to be reported on the RW form as of 31st December.
If you would like to know about this or, other taxes that apply to Italian tax residents, how to plan to reduce your own Italian tax liabilities, or want to know how you can find new sources of revenue to supplement that which the Government keep stealing away, then you can contact me on gareth.horsfall@spectrum-ifa.com or call me on +39 3336492356. We are here to help.
QROPS and EURBS – Common questions asked
By Chris Burke
This article is published on: 23rd January 2014
As a specialist in UK and Irish pensions, here is a list questions I’m often presented with on QROPS and EURBS. If any of these apply to you, do not hesitate to get in touch for a consultation, free of charge. chris.burke@spectrum-ifa.com
UK Pension Transfer or ‘QROPS’ – what does it mean?
A Qualifying Recognised Overseas Pension Scheme (QROPS) is a pension scheme transferred or opened outside the UK that meets requirements set by HMRC in the United Kingdom
If I eventually plan to return to the UK, what would this mean for my Transferred Pension?
If you intend to return to the UK permanently or to work, your Transferred Pension will become subject to the same regulations and tax treatments as a UK domiciled pension. It may then make sense to move it back to the UK as a ‘Self-Invested Pension Plan’ (SIPP) for efficiency.
However, if it is your intention to move back to the UK in the future then it is usually inappropriate to transfer your UK pension to a QROPS.
I might want to change location, will this affect my Transferred Pension?
If you live or work in another country, for example you move from Spain to Switzerland, your overseas pension will stay in the jurisdiction it was set up in. You can continue to make contributions regardless of what country you are living (remember though that if you move back to the UK, your pension will be bound by UK pension regulations). You can receive income and contribute to your Transferred Pension in any currency; so even if you move to several different locations, you can still use your Transferred Pension (QROPS).
If you are taking income and then move to another country, the amount of income tax you pay would vary from country to county.
What currencies can I have my UK Pension in once it is transferred?
Your plan can be denominated in Sterling, Euros, US Dollars, and many other currencies on request. Should it be beneficial to you, the currency can be changed at any stage cost effectively.
I have a UK state pension scheme, is it possible to transfer this also?
It is not possible to transfer a UK state pension overseas – UK transfer applies to your corporate and private pension schemes only.
If I have already taken an annuity, can I still transfer my UK pension overseas?
No, it is no longer possible to transfer your UK pension if you have already taken an annuity.
Do I still need to purchase an annuity once my UK pension has been transferred overseas?
No, you do not need to purchase an annuity once you have transferred your pension overseas.
How much does it cost to transfer my UK pension and set up a Qualified Recognised Overseas Pension?
QROPS costs differ depending on the scheme, location and the service level that you require. The main costs you will be looking at are the initial set-up fee and an annual management fee. They are generally slightly more expensive than a UK pension for the first 5 years and then on a par.
Can I manage the assets within my Transferred Pension myself?
It depends on the provider you decide on – some allow you to manage your own assets, while others insist on managing them for you. We suggest you use a financial adviser for guidance, even if you wish to manage your pension assets yourself. Contact us for more information.
What assets can be transferred to a QROPS?
Most UK pension schemes, and the underlying assets, other than the UK State pension can be transferred overseas (as a QROPS). We recommend an independent evaluation of your schemes to find out which are eligible. Contact us for more information.
Can I keep the same pension funds in my UK pension?
Potentially yes, it is possible to transfer your funds ‘In Specie’ meaning you keep the existing funds and investments from your UK pension.
Can I transfer more than one UK pension overseas into a QROPS?
There is no limit on how many pension transfers a QROPS may receive provided that each scheme relates to the same member. Overseas pensions are a good way of consolidating and managing several schemes in to one.
Is there a minimum transfer value to transfer my UK pensions?
We generally suggest that the combined value of pensions transferred into an overseas pension (QROPS) should exceed £50,000 as an absolute minimum for the scheme to be beneficial to the member. However in the majority of cases it is more appropriate for the final transfer value to exceed £75,000.
When can I access my UK pension?
The retirement date for a transferred pension can usually be any time between the member’s 55th and 75th birthday. Different QROPS jurisdictions may have slightly different age limits, ie Malta’s top age limit is age 70.
Can I still contribute to my transferred pension?
You can receive income and contribute to your Transferred Pension in any currency; so even if you move to several different locations, you can still use your Transferred Pension (QROPS).
How much of the fund can I take as a lump sum?
At the member’s nominated retirement date it is usually possible to take up to 30% of the value of the fund as a lump sum. The lump sum must precede the pension and is a one off payment. For members who have been non-UK resident for less than five full, consecutive tax years the maximum will be 25% of the fund transferred from the UK.
How is my pension calculated?
The basis for the pension withdrawal is calculated using the limits defined by the UK Government Actuaries Department (GAD) tables. . The GAD rates are dependent on your age and the 15 year Gilt rates. Then the maximum income allowable is 120% of this GAD rate. This is in line with the UK drawdown rules. In all cases, the maximum pension level will be reviewed at least every three years and after the maximum age of 70 or 75, depending on juridiction, it will usually be reviewed yearly.
How will my pension be taxed once outside the UK?
As long as there is a Double Taxation Agreement the income is paid Gross and then you are taxed in the country that you are resident in via your tax declaration, again each QROPS jurisdictions rules will vary slightly. In essence you should be no worse off than if you were receiving the pension in the UK or maybe even better off.
What if I die?
Depending on where your next of kin resides then the QROPS can either be paid out in its entirety or be structured so it rolls into a trust for the benefit of your next of kin.
Who will receive my pension when I die?
Your designate as beneficiaries, or, according to your Last Will and Testament.
Can I transfer my UK pension into a QROPS myself?
No. Only appointed intermediaries are allowed to do a QROPS Pension Transfer. This is because you need to have expert advice on this as well as the paperwork being intensive.
I don’t have all the details regarding my UK pensions, what can I do?
With some basic information we can trace most pensions.
How do I know if my UK Pension Transfer scheme is HMRC approved?
The current list of eligible QROPS Pension Transfer schemes can be found here: http://www.hmrc.gov.uk/PENSIONSCHEMES/qrops.pdf
How does a QROPS work?
In effect it is similar to a UK pension except it’s held in a trust, which reports to the HMRC each year to confirm your pension is safe and adhering to the rules.
What UK pensions can be considered for a Pension Transfer?
- Personal Pensions
- Final Salary Pensions
- Money Purchase Section 32 and Section 226
- FURB/URB
- Civil Service & Armed Forces
- Protected Rights/GMP
When should I not transfer my ‘frozen’ pension?
Each instance varies and you will require the advice of a pension professional. Contact us.
What is the minimum age I can draw benefit and how much?
From age 55 year you can take up to 30% lump sum of your fund. 70% minimum, remaining funds need to provide ‘income for life’.