Luxemborg Business Lunch
By Michael Doyle
This article is published on: 8th June 2014
The next Pecha Kucha evening will be held on Thursday, 19 June in Hotel Parc Belle-Vue from 19h00 – 22h00.
Pecha Kucha is an entertaining and informative event giving presenters the chance to “beat the clock”. The idea being that presenters have 12 PowerPoint slides, each lasting for 20 seconds, accompanying their verbal presentation. The slides move on automatically even if the presenter is not ready to move with them.
A free cocktail reception will be held at the end of the presentations to give guests the opportunity to meet the presenters at their trade table and to network. Please note that only registered guests can attend this event and there will be strictly no entry to the venue once presentations have started.
If you would like to register to be a guest at this event please click here.
Only a few presenters places remain, please contact maureen@tbl.lu for information.
For a full list of presenters and for more information please click here
Stick or Twist?
By Spectrum IFA
This article is published on: 6th June 2014
Stick or Twist? Or maybe both? Let me explain.
Thankfully, despite the ups and downs of the UK housing market and the £/€ exchange rate, there are still plenty of new expats arriving in France. It is noticeable though that quite a few of us are taking the decision to return to the UK. At first, this trend surprised me, but then I began to think about it in more detail.
I always have the same conversation with all my new clients. Where do you think you will be living in ten, twenty, or thirty years’ time? The most popular answer is here, in France. ‘Wild horses wouldn’t drag me back.’ ‘I’ve escaped from the concrete jungle, why would I want to go back?’ ‘ I only go back when I have to, to visit relatives. If they weren’t there, I’d never go back.’
That is of course the more entrenched end of the market. A lot of people will qualify their enthusiasm for being here by using the word ‘we’, and it is an important detail, conveying ‘I know where I want to be as long as my spouse/partner is with me, but I don’t know what will happen when that isn’t the case’. And just in the cause of balance, yes, I have met potential clients who said that they were here to try out the lifestyle, and if it didn’t suit, they would go straight back. That stance is however rare.
I then realised that time does, indeed, fly by. I’ve been talking to new expats for over eight years now, and we all get older. Some even wiser. Should I be surprised that some of my early clients have returned to the UK? Probably not. The reasons they give are interesting, and make a lot of sense. Illness and death are way up on the list of reasons to go ‘home’. Not your own death of course, but that of your partner. Widow(er)hood can be a lonely place. And we all know that the French health service is one of the best in the world, but it’s not English, is it? We might feel linguistically comfortable in a restaurant, a garage, or a supermarket, but when it comes to being interned in a foreign hospital with our internal organs at stake, it’s a different matter.
Divorce is another deal breaker, as is debt, but number three in my league table of reasons to be homesick is/are – grandchildren. A natural progression. We have children, they have children, and we feel a very strong emotional tie to those children. Being a thousand miles away doesn’t feel very good, and the pressure grows with them.
Where, you might ask, is this all leading? Am I reading a dissertation on the social demographics of Europe, or is this bloke supposed to be a financial adviser? Fair cop, let’s get back to finance. The reason I’ve been thinking about how and why some clients return to the UK is totally financial. I used to be a corporate foreign exchange dealer. An important part of that job was teaching clients how to avoid exchange rate risk, and how to eradicate it or at least manage it if they already had it. The problem with expats is what is avoiding risk and what is creating it?
If you relocate to France and it is your avowed intent never to leave these shores again, the only way to avoid F/X risk is to move all of your assets into Euro. At the other end of the scale, if you come to France for a three month holiday, you would be mad to change all your sterling into Euro, with the likelihood that you would change it all back again three months later. So where does this leave our undecided expat, who might live in Euroland for twenty years or more, but then return to the UK?
Stick or Twist?
Now my job starts to get a bit complicated. To give you the best advice on your investments and pension funds, I have to decide what your real expat profile is. Luckily for both me and my clients, the choice isn’t all black and white. There are shades of grey. You can indeed ‘stick and twist’ at the same time. I tend to take a different view of pension assets than I do to investment funds. One of the great selling points of transferring your pension fund outside of the UK is that you can invest it in Euros, but if there is even an outside chance that you will be spending your latter years in the UK, should you desert sterling? Don’t think I’m arguing against transferring your pension though. There are plenty of other benefits, and you can transfer and keep your fund in sterling.
Investment funds I see as being more flexible. I’ll take Assurance Vie as a given here. If you don’t know what it is, send me an email immediately. You don’t however have to make any full term commitment to either currency. You can in fact have both, and a number of clients are now taking that option. You can have as many assurance vie contracts as you like. This offers both flexibility of currency choice, and also of investment method.
To summarise then, my message is that it is important to get your investments into a tax efficient environment, but it is also important to decide what currency to be in at what time. I’d like to think that I’m in a good position to help you make those choices. If you have any questions on this, or any other subject, please don’t hesitate to contact me.
Residency & Tax Returns in France
By Spectrum IFA
This article is published on: 4th June 2014
During May, I always receive lots of questions from people about French income tax returns. The most common ones are – should I complete a French tax return, do I have to declare that tiny bit of bank interest on my savings outside of France, do I have to declare dividends even if these are re-invested? If you are French resident, the answer to all of these questions is “YES”. In addition, depending upon the value of your assets, you may need to complete a wealth tax return.
Whether or not French tax returns should be completed is always a popular subject at social gatherings of expatriates and I have heard many people say that they “choose” not to be French resident. Well French residency is a fact and you only have to satisfy one of the following conditions and you will be resident in France:
- France is your ‘home’. If you have property in France and in another country, but the latter is not available for your personal use (for example, because it is rented to tenants), then France is your home.
- France is your ‘centre of economic interest’. Generally, this means where your income arises. In addition to pension, salaries, etc., this can include bank interest and other investment income.
- France is your place of ‘habitual abode’. Notably, no reference is made in the law to the number of days that you actually spend in France and this is where many people are caught out believing that if they do not spend at least 183 days in France, then they can decide that they are not resident. This is not the case and your place of ‘habitual abode’ is, quite simply, where you spend most time.
- Nationality. If your residency has not been established by any of the above conditions, then it will be your nationality that determines your residency, however, this is very rare.
So with residency established, when completing a French income tax return, you must declare all your worldwide income and gains, even if some of this is ultimately taxable in another country. If there is a Double Taxation Treaty (DTT) between France and the country where the income arises and that other country has the right to tax certain income, your French tax bill will be reduced to reflect this. If there is no DTT and you pay tax in the jurisdiction where the income arises, then this will result in you being taxed twice. Although France has many DTTs, this is not so with the popular offshore jurisdictions of, for example, the Channel Islands and the Isle of Man.
For those of you who have completed the French tax returns this year, if you had to complete the pink 2047 form, this means that you had foreign income and/or gains to declare. If this is for any reason other than pension income, earnings or perhaps property rental income from outside of France, then you may benefit from a discussion to check that you are not paying unnecessary taxes on any investment income. For example, it may be better to invest your financial assets in an assurance vie, which is more tax-efficient for French residency, when compared to foreign bank interest and dividends.
Inheritance taxes should also not be overlooked. As a French resident, you are considered domiciled in France for inheritance purposes and your worldwide estate becomes taxable in France (except for anything that might be exempt as a result of a DTT), where the tax rates depend upon your relationship with your beneficiaries. However, by investing in assurance vie, in addition to the personal tax-efficiency for you, this type of investment also has the advantage that you can create valuable additional inheritance allowances for your beneficiaries.
If you would like to have a confidential discussion about your financial situation, please contact me by telephone on 04 68 20 30 17 or by e-mail at daphne.foulkes@spectrum-ifa.com.
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.
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
Le Tour de Finance – a winner again
By Spectrum IFA
This article is published on: 1st June 2014
Last week, my colleague Rob & I presented at two of the South West France venues of Le Tour de Finance. This is a tour that travels around France, where we bring ‘experts to expats’. Now in its fifth year and due to the popularity of ‘Le Tour’, the events take place around the country in both spring and autumn.
Rob and I did a ‘double act’ and gave a presentation on The Spectrum IFA Group, which covered 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 discussed client concerns (tax-efficiency, inheritance tax planning, securing pensions, protection of capital and continuing issues about the security of banks in the Eurozone).
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, depending upon attitude to investment risk.
The Standard Bank provided details of its structured product offerings that are currently available. There are different terms available and there is an element of linking to stock market performance with this type of investment, but all provide a guarantee that at least the original capital invested will be returned at the maturity date. For our clients who invest in these Standard Bank products, when used in conjunction with a particular life company wrapper, the clients benefit from an extra bonus, which is provided in addition to the capital guarantee.
Currencies Direct presented the various options open to clients who wish to exchange currency, whether this is for regular payments or for ad-hoc exchanges perhaps for larger purchases, for example for property. It was very interesting to see how much could be saved by using Currencies Direct, rather than a retail bank. Unexpectedly, as the Sterling Euro exchange rate jumped by more than a Euro between one day and the next over the two days when Rob and I were at Le Tour, currency exchange proved to be more topical than any of us were expecting.
Exclusive Healthcare Insurance presented on the range of products that they can offer clients. This included a range of seven different mutuelle plans that top-up the basic French health cover, which are designed to meet the needs of the different income groups of French residents and the variation in medical costs from region to region. Like all mutuelle insurance in France, there are no underwriting conditions and pre-existing conditions are covered. The company also outlined a different product that provides full private medical insurance, but which is subject to underwriting conditions. However, since the UK will stop issuing Certificates S1 to early retirees from July this year (i.e. for those who are not receiving UK State pensions), this might be a viable option for those who may be affected.
There was a presentation on French succession planning from Heslop & Platt, which is a firm of UK solicitors that are specialists in French law. As many of our clients maintain a connection with their former home country, the importance of ensuring that there is no conflict existing between the wills made in the different jurisdictions was highlighted. In addition, the forthcoming EU rules on succession were outlined and it could be seen that there would still be a need in France for inheritance planning the ‘French way’ to avoid the French inheritance taxes that will still exist even when the EU rules are in operation from August 2015.
New to Le Tour this year was PetersonSims, a firm of chartered accountants based in France, which also specialises in expatriate tax issues. A presentation from their Tax Director demonstrated how much money they could save clients, just by making sure that French tax returns are completed correctly and relief from double taxation is obtained.
If you did not make it this time to Le Tour de Finance, keep in mind the next local events which will take towards the end of June. On the other hand, if you would like to have a confidential discussion now on your financial situation, please contact me by telephone on 04 68 20 30 17 or by e-mail at daphne.foulkes@spectrum-ifa.com.
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 the mitigation of taxes.
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
Capital Gains Tax and the Expat Property Owner
By Lorraine Chekir
This article is published on: 28th May 2014
You have realised your dream, bought a property in France, perhaps as a holiday home to start with but now you have moved here, maybe to work, or perhaps you have retired. The big question is what to do with your property or properties in the UK?
When moving to a new country many people are a little nervous about letting go of their old one, rightly so after all holidaying is one thing, but living in a foreign country quite another. So often people keep their property in the UK, for a while at least, however this can have Capital Gains Tax (CGT) implications on a future sale.
A tax treaty signed between France and the UK which became operative on 1st January 2010, meaning that for former UK residents now resident in France, they are liable for french CGT on the future sale of any property including your former main residence. However no liability will apply in the UK.
Main Residence
If you sell your UK home when you move to France or within a relatively short space of time (usually within a year) then no CGT will be payable in either France or the UK. If however, you hold into it for a while ( then or rent it out) then you will pay CGT on it in France just like any other maison secondaire, with no allowance being made for the fact that it was your main home for a period of time.
Buy to let
If you sell your UK buy to let property when you move to France rather than at a later date then you will pay UK CGT. To work out how much tax you will have to pay, take the selling price of the property, then deduct the buying price. You can deduct the costs of buying and selling, e.g. solicitor’s fees, stamp duty, estate agents fees, advertising etc. You can also deduct the cost of
improvements to the property but not routine maintenance and repairs. There is also an annual exemption allowance (£11,000 for 2014/2015 tax year). CGT rates are 18% or 28% for higher rate tax payers. HMRC website provides a step by step guide.
Any buy to let properties that you own in the UK and subsequently sell after you become a french resident will be liable to French CGT.
Ownership
An important point to note, if you are married, but your UK property is only in one person’s name, it may be sensible to transfer the property into joint names prior to any sale to reduce any potential UK CGT liability. There is no CGT payable between spouses/civil partners and the CGT calculation on sale will be based on the original purchase price for both parties.
In France Gift Tax applies between spouses and applies to gifts made in the previous 15 years so it is sensible to take advice from a professional before taking any action.
French CGT
Like UK CGT, you start with the sale price and deduct the purchase price plus any associated buying and selling costs and costs of improvements (but not repairs or DIY, invoices need to be provided from registered builders etc). If you have owned the property for more than five years the notaire can apply an allowance of 15% of the original purchase price of the property – even if you haven’t done any work!
For EEA residents the starting rate for french CGT is 19% plus 15.5% social charges however these start to reduce on a sliding scale from year 6 of ownership onwards. After a full 22 years have passed the CGT reduces to nil, however it is 30 years before the social charges reduce to nil. Additional charges apply for gains above 50,000 euros.
Working out when, where and how much Capital Gains Tax you should be paying can be quite a headache and the best thing to do is take advice from a professional.
This article is for information only and should not be considered as advice and is based on current legislation. 25/05/2014.
The Full Spectrum
By Spectrum IFA
This article is published on: 26th May 2014
Having recently started working for the Spectrum IFA Group I thought it time I start a weekly Newsletter covering issues important to all of us, one way or another. Especially for expats who have made Italy their home/spend much of their time here. The main thrust/focus of my Newsletter is to impart in an easy-to-understand, but not too lengthy outline, important matters and up-to-date information to expats residing in my area on matters such as investments, tax and general financial planning issues. And being part of the Spectrum Group means I also have access to professionals in various fields of expertise.
So, taking the above into account, I thought a very good and apt place to start would be to give a broad overview of current happenings in world markets, as we are all affected one way or another, especially with the speed at which events are communicated.
Probably 95% of people I have assisted or advised has had or still has capital in the markets in one way or another. There are many ways this could occur, viz a Pension Fund, a Money Market Fund, an Insurance Policy, Unit Trusts (Mutual Funds) or direct Share Investment.
Markets go up and down, and likewise interest rates. And then we have inflation to factor in. We may not be affected by these movements in the short-term, but are almost certainly going to be in the longer term (five years onwards).
Hence the extreme importance of reviewing your finances on a regular basis, at the very least once a year, in order to ensure your investment aims and objectives are still on course. We are all told to have a thorough medical check-up once a year so as to ensure all our parts are functioning correctly. And we are willing to pay for this because we can appreciate the need – after all, we want to be on planet earth for as long as possible.
Likewise the common sense of having a proper financial check-up at least once a year. And in most cases this involves no fee but at the end of it one wants to walk away knowing everything is alright but, if not, then to be able to change the doctor’s prescription! And this gives us peace of mind.
Unfortunately many are the cases where we come across people who consult an advisor, but then forget to review or the advisor disappears and they fail to take remedial action to consult another.
There is so much “doom and gloom” about these days, so it is wonderful to read of or hear about news filtering through regarding the economies of the UK and EU which are quite positive, and this augers well for investors who have experienced a bit of a bumpy ride over the last 18 months and which offers potential for new would-be-investors or those who have been waiting. Matthias Thiel, market strategist at Hamburg-based M.M. Warburg, which is bullish on southern European assets. “The recovery story is playing out as expected,” he said.
The European Commission had, inter alia, the following to say in its Economic Forecast for EU countries……
- United Kingdom: Recovery takes hold, fiscal imbalances still sizeable
- Italy: A slow recovery is underway
- France: Recovery remains slow amid sizeable budget deficits
- Germany: Accelerated growth in the offing
- Portugal: Gradual economic recovery
- Greece: First signs of recovery
- Spain: The recovery becomes firmer while the re-balancing of the economy continues
It is very important to remember that markets experience upturns/good times (good times) as well as downturns (negative periods).
And economic experts never all agree! So when times are prosperous, out of, say, 100 experts, a third will have a certain view or opinion, a third exactly the opposite, and the remaining third will be neutral. And all will have convincing arguments to prove their respective outlook. But true, experienced economists, when asked what they think about a certain economic outlook will be honest enough to simply say “I do not know!”
Economies throughout the globe are all intrinsically linked together, and what happens in one country can impact on another, even if they are miles apart. Like that old adage “If America sneezes we in UK or Italy catch cold.
So, in conclusion, there is much to be positive about but with it comes a caveat: Do not put all of your eggs in one basket but spread your resources across the various asset classes.
In my next Newsletter we will focus on the different asset classes and what it means to diversify.
Until next time, ciao!!
Should I use a Financial Adviser?
By Peter Brooke
This article is published on: 24th May 2014
Creating a financial plan is NOT a complicated thing to do; it is an audit of where you are today, financially, and where you want to be at different stage of your life. This requires creating a list of what you have, earn, own and owe and agree with yourself to put something aside to cover different goals for the future.
If we don’t have goals in life there is probably little point in getting up in the mornings; unfortunately most things cost money and so having financial goals is also an important part of life. Money doesn’t buy happiness, as we all know, but it does buy some choice and, to some extent, some freedom. I have met yacht crew who have worked for 20 years without implementing a financial plan and want to leave yachting; as they have no pensions and minimal savings or investments they are left with a simple choice… live on very little or keep on working… I see this as a loss of freedom, and so do they.
So we can agree that having a financial plan, however simple, is a very important thing to have but why have (and pay) someone to help you bring this together?
The process – though doing a plan is quite simple a financial adviser will ensure that all areas are discussed and re-examined so nothing is left out. All of the horrible ‘what if’ questions should be covered:
Implementation – a good adviser will have access to thousands of products from to use with different clients who have different needs. The more choice available the more assistance you will need in choosing the best ones, but also the more independent the advice will be. A small advisory firm is likely to have only a few products to choose from and so will display less independence.
Professionalism – if we are ill we go to a doctor; they have qualifications to diagnose our problems and help to put together a plan to make us better. Likewise with a lawyer. A financial adviser should also have qualifications in his or her trade too. Some advisers also specialise in certain areas, like investment or protection etc.
Regulation – like a Doctor or lawyer a financial adviser will be regulated by a government body and will have to display a certain competency and have insurance in order to practice.
Knowledge – qualifications don’t guarantee knowledge, a good adviser should continually improve their knowledge and should be able to prove this through their ability to explain complex issues.
Humanity and perspective – most importantly you need to trust your adviser, this person or firm should be your trusted adviser for most of your life; they need to be able to empathise with the different situations you will find yourself in over the years. They should be able to draw on experience from other clients to help solve issues you face too; they should be able to offer perspective on the decisions you make.
This last point is the hardest to prove and is probably best achieved through a combination of your own ‘gut instinct’ and referrals from friends and colleagues. Do your own research on the all of the above factors, ask around and keep asking around until you have a short list of advisers to meet… then follow your own feelings as to whether you can trust them; the relationship should be a long term one and you will end up telling them a lot of very personal information over time.
This article is for information only and should not be considered as advice.
This article appeared on the FEIFA website. The Spectrum IFA Group is a member of FEIFA. (The European Federation of Financial Advisers and Financial Intermediaries)
Buying Property in France
By Peter Brooke
This article is published on: 23rd May 2014
Buying property is one of the most major investments we make in our lives. For yacht crew, it’s rarely for a primary residence, which makes the considerations for buying a little different.
Location will always come first, but when using property as an investment, yield should be a very close second. This is the net annual rental income (after all costs) divided by the value. One of the biggest reasons why property is considered the best investment is because it’s possible to leverage, or borrow, to buy it, especially when interest rates are low. For example, if you buy property for €200,000, and it gives a rental income of €8,000 per year, a four-percent yield is realized. If you only invested €40,000 and borrowed the remainder at three percent interest, then you immediately double your yield to eight percent. This is a compelling reason not to invest all your capital into a property. Even if interest rates are higher, it may still make sense, as it’s often possible to offset the interest against rental profits to reduce income tax.
Buying property in France is very popular amongst yacht crew, especially near the yachting centers of the Côte d’Azur. This is because the property can be a great escape in the winter when the yacht is in port or the yard, and also gives a great seasonal rental yield in the summer, the time when crew are hard at work.
These areas also are very sought after and selling a property is rarely difficult. The costs of buying in France are quite high; government taxes and notary (legal) fees total approximately 7.5 percent of the purchase price, and agent fees (when you sell) can be five or six percent. This means 13 percent growth on the property is necessary to make any capital profit, which is why property should be seen as a long-term investment and why rental yield is important. Annual taxes also apply and vary depending on where the property is located and its size. Borrowing in France is still possible for yacht crew, although it’s getting a little harder as banks tighten their rules. Generally, crew can borrow 75 (sometimes 80) percent of the purchase price. This means you need approximately 32.5 percent deposit (including notary fees) to start your property portfolio.
French lending laws allow you to be up to one-third of your income in debt, so if you earn €3,000 per month, you cannot spend more than €1,000 on your debt repayments. Over 20 years at three percent, €1,000 per month equates to a loan around €185,000. For tax-resident yacht crew (in France or any other country), the loan-to-value can often be higher as tax documents make banks feel more comfortable about lending. Any rental income is taxable in France, whether you are resident or not, and capital gains tax and inheritance tax will be initially liable in France, too.
There are many considerations when buying property, so seek good, qualified advice especially if it’s part of an overall plan; a mortgage broker should be able to find the best terms for you, often at no cost.
Le Tour de Finance in France
By Spectrum IFA
This article is published on: 22nd May 2014
After a hugely successful run of events in Italy and Spain, Le Tour de Finance has come home to France for a run of 9 events throughout the country.
The first 5 legs of le Tour are taking place from 20th – 23rd May. The final 4 events are taking place towards the end of June from 17th – 20th.
These informal events are a great opportunity for expats of all ages to get those unanswered financial questions clarified in plain English.
The range of professional speakers is varied and will cover a multitude of subjects from; Pensions & QROPS, Currency Exchange, French Wills, Tax Efficient Investing, Estate Planning & Tax Advice in France.
These sessions are free, you’ll get to meet other expats in your area and can finish the morning with a complimentary buffet.
For further details on future events please click here.
Swiss British Classic Car Show in Morges
By Chris Eaborn
This article is published on: 20th May 2014
On the doorstep of our two Swiss-based advisers, Chris Eaborn and Robbin Davies, is the lakeside town of Morges on Lake Geneva, where for the past 21 years The Swiss Classic British Car Meeting has built to become one of the leading classic car events in Europe.
The brainchild of one man, Keith Wynn, a British expat, it attracts around 1,500 classic and special interest British cars and around 20,000 spectators every year. The event is non-profit, fuelled by Keith and other supporters’ love of some of the most evocative names in automotive history, and the thrill of seeing them driven to the event and displayed along the shorefront for all to enjoy.
The Spectrum IFA Group is a main sponsor and proud to be associated with such a delightful event that brings many visitors to the region and is so popular with the community in which we have many clients.
Entry is free to both drivers and spectators and the location is easily accessed in 20 minutes by train from Geneva Airport.
Maybe you fancy an excuse to visit Switzerland and at the same time visit the show this year on October 4th?
For details of the event, and helpful planning tips such as hotels and transportation, visit www.british-cars.ch