UK-originated benefits are a problem too; according to the Department for Work and Pensions (DWP), it has recently managed to secure £1.1 billion in reclaimed benefits from expats who should not have been receiving payment.
Fraudulent or negligent personal wealth management in Spain would appear to be a particular problem, with as many as 10,000 expats in the country prosecuted or fined for breaches in this regard.
However, it is likely that not all cases of tax and/or benefit fraud are deliberate. Some expats who are unaware of the rules, or confused by them, may make mistakes in good faith or sometimes as a result of negligent wealth management advice.
Fortunately, the DWP is prepared to make some distinction between benefit and pension overpayment cases that are clearly instances of intentional fraud and those that come about as a result of negligent mismanagement or misunderstanding.
In terms of the consequences for misdemeanours, approximately 50% of cases result in individuals being ordered to repay benefits in full, while the rest not only have to repay sums but also receive prosecution and a substantial fine.
HMRC adopts a similar approach to tax errors that are made in good faith and those that are made deliberately.
It is a difficult problem for the British government, HMRC and the DWP to address; nearly 4 million British citizens live outside the UK and there are a complex range of options available for both tax collection and benefit payments. Advice and clarity are clearly essential in this regard.
Tax reporting requirements for investment funds are constantly changing. Many EU countries, including the UK, Germany, Austria and Switzerland, have recently modified or introduced new tax reporting regimes.
Getting it right with Blacktower
As an established wealth management firm in Spain, Germany and other major UK expat hubs, Blacktower has a detailed understanding of all the country-specific and cross-border tax and asset issues that affect you. For more information, contact us today.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
On Thursday the Bank of England (BOE) rate committee met to discuss interest rates, and, even though inflation is growing, yet again they have decided to leave the base rate at 0.25%. They obviously feel this is the best option as they assess the extent of any consumer slowdown and while they continue to play the waiting game regarding how the EU Brexit divorce negotiations pan out. The BOE seems to be playing a deliberate wait and see game, and with economic news continuing to be negative in the last few weeks, it now seems likely that the base rate could stay at this level until at least 2019.
It’s not hard to see why Portugal is such a desirable destination for people wishing to move overseas in their retirement. The warm climate, reasonable living costs, and tax benefits for retirees mean it’s regularly voted as a top global place in which to live out one’s later years.