Cogs4Cancer fundraising hits €285,000
By Spectrum IFA
This article is published on: 28th November 2014
Back in October there were 16 fearless riders that set off from Ancona in Italy and after cycling over 850km in six days arrived fresh faced in Antibes, France.
This gargantuan ride was completed with one thing in mind – to raise as much money as possible for cancer research. All funds raised, that means 100% are in aid of Cancer Research UK, Clinique Tzanck Cancer Care unit in Mougins, France and the Children’s Cancer unit at the Lenval Hospital in Nice.
The Spectrum IFA Group were very proud to be sponsoring Lee Mutch on this epic ride and were delighted to be part of the other fund raising events held in and around Antibes.
The amount raised at this time has hit an unbelievable €285,560.06.
Financial success from your yachting career
By Peter Brooke
This article is published on: 27th November 2014
RULE: Conceptually plan out different financial pots.
This is a really good way to plan your future in yachting. There is no need to have different accounts for these “pots”, although it may help.
Pot 1 – Emergency fund – we all know how volatile the yachting industry can be in terms of job security. It is important that if you suddenly find yourself without a job you can at least survive for a few months, get yourself to one of the main yachting centres and afford accommodation while looking for work. I recommend having at least 3 months’ salary in a bank account at any time.
Pot 2 – Education – in order to progress your career it is vital to consider the costs of education. Hopefully you will be on a yacht where Continual Professional Development (CPD) is part of the culture but there will still be courses that you need to fund yourself. Start to plan when you will need the money for the next course and how much it will be… then divide the amount by the number of months until the course, and save that amount EVERY month into an account. Remember there may be additional travel or accommodation costs too.
Pot 3 – Exit – you have now saved an emergency fund and are putting money aside for the next course…. now consider what you plan to do when you leave yachting? Are you going to start a business? Return home? Retire? You should now look to save at least 25% of your income for this purpose. It is very easy to go through a yachting career and end up with very little saved for when you want to leave. There is no provision made by your boss for your long term future, it is down to you to save.
Remember if you worked on land you’d lose at least 25% to social charges and tax anyway. As these are longer term savings you can now consider making investments to try and grow your money more. Make sure as your income grows, your savings and investment amounts grow too.
Pot 4 – Property – if one of the investments that you want to make for your long term future is into property, then you need to start planning what you need to put aside every month to be able to save enough for a deposit and legal fees/taxes. In France, for example, a yacht crew will now need at least 28% of the property purchase price to be able to borrow… saving this amount takes discipline and planning.
Pot 5 – Expenditure – all of the above requires a habit of saving and bit of effort to form the best plan… the single best way to successfully save for your future is to be strict with your own expenditure. Look at all of the above and then give yourself a set amount each month that you can spend on having fun and travelling. Do this well and the more difficult disciplines above will be easy. Saying no to another night out is the hardest part!!
This article is for information only and should not be considered as advice.
Should I stay or should I go?
By Spectrum IFA
This article is published on: 25th November 2014
Quite frankly I’ve been struggling to think of what to write about this week, but then it suddenly struck me that there has been a recurring theme in a number of my client meetings recently. That theme put simply is, ‘Where will I end my days; in France, or in England?’ This isn’t a popular topic of conversation amongst vibrant, exuberant, middle aged expatriates, but we’re not the only people here. We are in the company of many seasoned expats who’ve been here longer than we have; seen it all; done it before we did, and are feeling a bit tired. Many of them are ‘going home’.
We should pay a lot of attention to this group, because we are going to inherit their shoes. We need to learn from their experiences, and take the opportunity to plan for the time when we will experience what they are going through.
Five years ago, when writing on a similar theme, I think I proffered the theory of the three ‘D’s as the principal reason to return to the UK: death, divorce and debt. I still think that they are valid causes, but I now think that there are many subtle variations to be taken into account, and the biggest addition to the equation is age. Age changes your perceptions; often for the better, but age often also brings insecurity and loneliness. Add to that illness, and maybe bereavement, and you have a powerful reason to examine your reasons to continue to live hundreds of miles away from a family that (hopefully) continually worries about you. In short, no matter how much we pooh-pooh the idea now, the chances are that we may eventually end up being cared for in our final years in the UK rather than in France.
OK, that’s enough tugging at the heartstrings. Why is a financial adviser (yours truly) concerned about where you live, and where you may live in future? The answer is currency, specifically Sterling and Euro. In a previous existence, I was responsible for giving advice to corporate and personal clients of a major High St bank regarding exposure to foreign exchange risk. The basic advice was simple – identify and eliminate F/X risk wherever you can. F/X risk is for foreign exchange dealers; it is gambling. Don’t do it unless you know what you’re doing, and even if you do, prepare to lose money.
On a basic level, eliminating exchange rate risk is easy. Faced with a couple in their 50’s relocating to France with a healthy investment pot behind them and good pensions to support them in the future, I will always ask ‘Where do you intend to spend the rest of your days?’ The answer is usually an enthusiastic ‘France, of course. We have no intention of going back to the UK. In fact wild horses wouldn’t drag us back.’ I know this for a fact – I’ve said it myself.
The foreign exchange solution is simple. Eliminate your risk. Convert your investment funds to Euro (invest in a Euro assurance vie). Convert your pension funds to Euro (QROPS your pension and invest in Euro). Job done! Client happy, for now! But what happens 25 years later, when god knows what economic and political shenanigans have transpired, and the exchange rate is now three Euro to the pound and the surviving spouse wants to ‘go home’?
As it happens, I will no longer be his or her financial adviser. The chances are that I will have popped my clogs years ago, but If not, I will most likely be supping half a pint of mild in a warm corner of a pub somewhere in the cheapest part of the UK to live in. (In fact that is poetic licence, as I know full well that I’d probably be being spoiled rotten in my granddad flat in one of my sons’ houses). To draw this melancholy tale to a close, I’d just like to round up by saying that things are rarely as simple and straightforward as they seem. My job is not always to take what you tell me at face value. I know people who’ve been here longer than you. My advice may well be ‘hedge your bets, spread your risk’. I will give you the best possible investment tools for your money and pensions, but I might just surprise you with my recommendation as to what currency those funds should be invested in.
Do You Fear For Your Financial Future?
By Jonathan Goodman
This article is published on: 24th November 2014
How do you choose your investments when you are an expatriate?
International investors face many choices, and taking personalised advice can be vital, especially in the current economic climate. With high inflation and record low interest rates, volatility, complexity, uncertainty and a huge amount of change sum up the current state of the global economy.
Picking the right investment opportunity with maximum return objectives can be a risky and complicated process, and mapping a financial strategy that enables you to better navigate these turbulent financial times is a must.
The International Prudence Bond (Spain)
The International Prudence Bond (Spain) is a medium to long term bond designed with the needs of international investors in mind. Tailored to each market and sold via professional Independent Financial Advisers, it allows access to a range of unit-linked investment funds with the aim of increasing the value of the money invested over the medium to long term.
The PruFund Range of Funds includes guarantee options where the choice of guarantee can be linked to the anticipated year of retirement. The funds utilise the asset allocation expertise of the Portfolio Management Group and offer a truly global investment perspective.
Benefits
- Funds denominated in euros, sterling and US dollars
- A minimum investment of only £20,000, €25,000 or $35,000
- A minimum allocation rate of 100%
- No set investment terms
- Top-up facility from £15,000, €20,000 or $25,000
- Cumulative allocate rate on top-ups
- Flexible withdrawal options so clients can access funds when it suits them
- PruFund Protected Funds guarantee
How Spectrum Can Help
Spectrum’s role is to provide Insurance Intermediation advice and to assist clients in their choice of Investment Management Institution. Our Financial Advisors can help you decide which investment opportunity is right for you.
For more information or to contact one of our Financial Advisors to arrange a full financial review of your current situation please use the contact form below.
What New Year’s Resolution can I make for 2015?
By Amanda Johnson
This article is published on: 18th November 2014
As 2014 draws to an end and we look forward to spending the festive period with family and friends, there is one New Year’s resolution that you can make which will benefit both you and your family and that is to make sure that you review your finances in 2015.
2014 has seen the UK Government make changes to pensions, the French Government levy Social Charges on areas not previously charged and a joint agreement on Wills which is due to come into effect during 2015. On top of this, there is constant media concentration on whether the UK is better off in or out of the EU. Bearing all of this in mind, it is worth taking advantage of a free financial review to ensure your savings, investments & pensions are working for you in the most tax-efficient manner and that they match your goals and aspirations for the future.
A free financial review will include the following areas:
- Investments – to ensure they are as tax efficient as possible
- Inheritance tax – to minimise the amount of inheritance tax imposed and increase your say in where you money goes after you die.
- Pension planning – putting you in better control of planning for your future
Whether it has been a while since you last looked at your finances or you are unaware of how changes both in the UK & France could affect you, a decision to take a free financial review could be one of the best New Year’s resolutions you can make.
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 and I will be glad to help you. We do not charge for reviews, reports or any recommendations we provide.
Have a Merry Christmas and a very Happy New Year.
Spectrum sponsor the Barcelona English Radio Party – 20th November
By Spectrum IFA
This article is published on: 14th November 2014
The Spectrum IFA Group are delighted to be sponsoring the English Radio Party on 20th November, 2014.
Baribau CARRER D’ ARIBAU 131, 08036 Barcelona View Map
Date & Time:Nov 20, 2014 20:00 – 03:00
€7 advanced booking
€10 on the door
DJ Simon Jordan
Beckham Bounces Back in Spain
By Barry Davys
This article is published on: 12th November 2014
When David Beckham (Becks) came to Spain to play for Real Madrid in 2003, a special Spanish tax system was set up for him so he did not have to pay tax on his worldwide image rights. This system has been extended to people moving to Spain, although in an ironic twist, professional footballers will be excluded from the scheme from 1st January 2015.
Tax rates in Spain are falling with plans to reduce the top rate of tax in Spain from 51% (56% in Catalunya) to 47%. The top rate is however still very high. However, in a bid to attract high earners to Spain the law is being improved.
Why use the Beckham Law?
Well, the three benefits are as follows:
- Flat rate income tax of 24% on Spanish earnings in Spain. If your income is derived from Spanish sources then the maximum rate you would pay will be 24% instead of normal rates up to 600,000€ pa. Above 600,000€ the tax rate is 45%. Here are some specific examples of the saving based on the 2015 Spanish Tax rates.
| Annual Salary € |
Beckham Tax Rule Saving € |
| 100,000 | 13,645 pa |
| 150,000 | 26,495 pa |
| 200,000 | 36,645 pa |
| 250,000 | 48,145 pa |
| 300,000 | 59,645 pa |
| 400,000 | 82,645 pa |
| 500,000 | 105,645 pa |
| 600,000 | 128,645 pa |
You are allowed to stay on the Becks rule for a maximum of 5 years. The total saving is therefore the figure above x 5. Your individual circumstances will dictate exactly how much saving you will acheive but the figures above are a good guide.
- No capital gains tax to pay on any gains made outside Spain. This includes the sale of property, shares, etc. This point is especially important if you have a property to sell or a business to sell outside of Spain. As an example an owner of a technology company that sells the business for £20 Million whilst on the Beckham scheme will not pay Capital Gains tax in Spain nor in the UK if he/she does not return to the UK for 5 years.
The potential capital gains tax saving in this example could be £8 Million.
- Only income obtained in Spain will be subject to Spanish taxation. As an example, bank interest earned from bank accounts outside Spain are not subject to Spanish Tax whilst you are on this method of taxation. Rental income from property outside of Spain is another example.
Beckham tax scheme rules
If you meet the following conditions you can reduce your tax by requesting to be taxed on a non resident basis under the Beckham rule:
- If you have not been resident in Spain in the last 10 years.
- If you apply for the “New” Beckham law within 6 months of arriving.
- You must be resident in Spain. The main condition being living in Spain for 183 days a year.
- The requirement for work to be primarily conducted in Spain has been reformed.
- The requirement to work solely for a Spanish company has been reformed.
- The reduced rate of taxation will apply for a maximum period of 5 years.
If you meet these criterias, you should consider using this method of taxation.
References:
SpainRoyal Decree 687/2005
Baker and McKenzie SLP, Acccountants, Spain
This information is intended as a guide only. A suitable qualified tax lawyer should always be used to calculate a specific liability. Legislation can be subject to change in the future.
Have you or someone you know had to pay Spanish non-resident inheritance tax since 2010?
By John Hayward
This article is published on: 11th November 2014
Further to the judgment made by the European Union Court of Justice (ECJ) on 3rd September 2014, that Inheritance and Gift tax rules in Spain were discriminatory between residents and non-residents, several key firms of accountants and lawyers have implied that anyone who has been subject to the higher non-resident rates in the last 4 years could make a claim.
There has not been any formal approval by Spain but proposals are to treat those non-Spanish tax residents living in the European Union (EU) or the European Economic Area (EEA) as if they lived in one of the autonomous regions of Spain where tax rates tend to be heavily discounted. The region will be determined by where you have spent most time in the last two and a half years or by where the majority of your Spanish assets are situated if you live outside Spain.
Gifts outside the EU or EEA to a Spanish resident could be subject to the rules of the autonomous region where the recipient has his/her residency.
Although the changes have not yet been formally approved, lawyers are submitting tax returns on the basis that the qualifying non-resident will receive the tax advantages of the relevant autonomous region.
This will mean that, for example, children living outside Spain, inheriting from parents in Spain, will no longer have the much higher (generally) “National” Spanish taxes to pay. Parents will be able to gift property to their children without necessarily needing to make expensive tax avoidable arrangements.
However, not all autonomous regions are so generous with their discounts. Whereas Valencia offers very large discounts to all direct family members, Murcia, next door, only offers significant discounts to those under 21. Also, there are limits on discounts in most, if not all, regions and so they may not cover all of the assets. Therefore it is extremely important to have assets positioned in the most tax efficient manner. This needs to be legal as well.
How can we help?
1/ If you or someone you know has paid inheritance tax on money from an EU or EEA resident who has died in the last 4 years, you may be able to make a reclaim. We have lawyers who can help with this on a no win, no fee, basis. (We are not tax advisers)
2/ We are experienced in helping you arrange your finances in a Spanish tax compliant manner, helping you and your loved ones to reduce the impact of Spanish taxation.
EU SUCCESSION REGULATIONS – the perfect solution?
By Spectrum IFA
This article is published on: 10th November 2014
The EU Succession Regulations (also known as Brussels IV) were adopted on 4th July 2012. The UK, Ireland and Denmark opted out of the Brussels IV, but residents of these countries are still affected, particularly if they have cross-border succession interests.
The default position is that the law of “habitual residence at the time of death” will apply to the succession of the entire estate of persons who die on or after 17th August 2015. However, a person may choose the law of the country of his “nationality” to apply by specifying this in a will. If the person has more than one nationality, he can choose whichever he wishes.
Therefore, except for residents of the UK, Ireland and Denmark, a foreigner (not necessarily an EU national) living in any of the other 25 EU States can elect the country of his nationality to apply to the succession of his estate. Interim measures are already in place to make such a ‘nationality election’ now in a will, but it will not be effective until 17th August 2015.
There is considerable misunderstanding about the Regulations and whilst it is true that people will be able to choose the succession rules of their country of nationality this will not change the inheritance tax rules that apply. Therefore, if at the time of your death you are French resident or you own property in France, even if you have chosen the succession rules of another country, it is still the French inheritance tax rates that will apply. This means that the amount of French inheritance tax that your beneficiaries will have to pay will depend upon their relationship to you.
Unfortunately, I am finding that people who are purchasing property now and are planning to live in France may not be seeking adequate inheritance planning solutions. They believe that they can rely on the EU Succession Regulations to protect the survivor, but sadly they are not aware of the potential inheritance tax issues that can exist.
For example, the most common scenario that we come across is one that involves there being children from a previous marriage. Currently, unless the couple buy the property ‘en tontine’ or the children enter into a family pact with their natural parent, the surviving step-parent will not have full control over the property. The EU Succession Rules achieve the same effect as these techniques, if the couple elect for the succession rules of their country of nationality to apply and that country does not have any concept of children being ‘protected heirs’.
A perfect solution? Maybe, if the only objective is to protect the surviving step-parent, but if the step-parent wishes to leave the property to the step-children, then there will still be a 60% inheritance tax bill, so perhaps not quite the perfect solution!
Actually, I have greater concern about some expatriates who are resident in France now, who are already making new French wills, choosing the law of nationality to apply to their succession. This may be fine if there is a ‘stable family relationship’ and the couple only have children of their marriage, particularly as it is likely to cost less in legal fees than the alternative of changing their marriage regime to one of “Communauté Universelle avec une clause d’attribution intégrale de la communauté au conjoint survivant”, which would achieve the same effect.
However, many people have already undertaken inheritance planning (and paid for this), which has achieved the objective of protecting the survivor and mitigating the potential inheritance tax bills of their heirs, as far as possible. Depending on the situation (value of estates, stable family relationship or not), it is highly likely that the planning already undertaken will be better for the majority of cases and making a new will now might turn out to be a costly mistake for the potential beneficiaries.
Like all aspects of financial planning, every case should be looked at on its own merits and what seems clear is that there will be some cases where the ‘French way’ may still be best. For example, take my own situation where as a British citizen who is in a French civil partnership (PACS) with someone who has dual US and British citizenship, as well as him having two daughters and two grandchildren living outside of the EU, we will not be rushing ahead to request that English succession rules apply to our estates. Instead, we will definitely continue to depend upon our French family pact and assurance vie because in that way, we know that when the time comes, the survivor will be fully protected and the potential inheritance tax bills of our heirs have been mitigated.
Hence, as can be seen, tried and tested solutions already exist for dealing with property, plus assurance vie will continue to be an effective succession planning tool for financial assets. You can find out more about the ‘French way’ by reading my article on ‘Inheritance Planning in France’ on our website at https://spectrum-ifa.com/inheritance-planning-in-france/ or by contacting me directly for a copy.
Brussels IV aims to harmonise the approach to succession across the EU with the intention that the civil rules of only one jurisdiction apply to the succession of a person’s estate, i.e. habitual residence or nationality. However, due to the opt-out of the three Member States, this has already created uncertainty. In addition, it is not clear how the Regulations will work at a practical level, in particular, how the courts in one country will administer the succession of both moveable and immoveable assets in another country. Hence, even some international legal experts are not yet drafting transitional provisions into wills that involved a cross-border succession, as there is still too much uncertainty. We can only hope that there is further clarification before August 2015.
The above outline is provided for information purposes only and does not constitute advice or a recommendation from The Spectrum IFA Group to take any particular action on the subject of investment of financial assets or on the mitigation of taxes.
Tax Efficient Savings in Luxembourg
By Michael Doyle
This article is published on: 6th November 2014
Two of the main concerns many of my clients have whilst living in Luxembourg are:
- The low interest rates they receive from saving in the bank.
- How can they save in a tax efficient way?
At the moment, as most of you will already know, whilst leaving your funds to accrue in a bank account in Luxembourg you can receive interest of around 1%. However, due to the European Savings Directive, you lose 10% of this as a tax, thus you will receive around 0.9% interest net.
Putting this in perspective, most of us have to save for the future, either for our pension provision or for our children’s further education. Based on the Liverpool Victoria Study in November 2007, it said that University costs increase at approximately 7.5% per annum (the current level of inflation for educational costs). This was further supported by an article in The Sunday Telegraph, (26th August 2007), which stated:
“School fees have risen 41% in the past 5 years”
Fees at many universities in the UK now stand at £9,000 per annum.
So the question we have to ask ourselves is whether or not by leaving our money in the bank, will we be able to meet all of our future goals?
One solution is to look at saving through a Life Assurance wrapper.
A wrapper is effectively an “investment platform” through which an enormous range of underlying investments can be purchased. Whilst the wrapper will be provided by a life assurance company, it is important to note that you are not paying a premium to purchase additional life assurance. It is, to all intents and purposes, an investment contract.
So what are the benefits of saving within a wrapper here in Luxembourg?
- All investments grow within the wrapper free of income tax and capital gains tax.
- As the wrapper is considered a life assurance contract it is not affected by the European Savings Directive.
- The premiums you pay could be tax deductible (subject to personal circumstances).
- You have access to investments perhaps only available to institutional investors.
- Lower minimum entry levels in underlying investments.
- Access to some of the top fund managers in the world.
- The flexibility to change your investment strategy at any time.
- The ability to access your funds if required.
- Higher bank rate. For example, there are currently bank rates offered within the wrappers of 4.25% per annum.
- Security.
Every person’s circumstances are different and you should always seek Independent Advice before making any investment decision. Here at The Spectrum IFA Group we offer a no obligation Financial Review before offering any advice.