Tax Compliant Solutions for the Portuguese Tax Resident by Antonio Rosa, Regional Manager Lisbon
Have you restructured your international investments?
On the 1st of January 2015, the Portuguese Tax Authorities brought about sweeping changes to its Personal Income Tax Legislation, specifically aimed at but not limited to, previously sheltered international investment structures. Six months into the 2015 fiscal tax year, there seems to be a wait and see attitude to the impending punitive tax burden that will be levied on investments held by both Portuguese nationals and Expat Tax Residents in Portugal.
One thing I do know and that is many international and national people still live in the past, thinking Portugal is a laissez-faire country unable to, with efficacy, diligently collect its taxes.
Award winning software helps HMRC connect data in its hunt for tax evasion
The offices of the taxman are not usually credited with efficiency and success. But there is one aspect of HM Revenue & Customs which is terrifyingly efficient, and that is its powerful computer program which is accessing and trawling databases of personal financial information on an unprecedented scale.
Assurance Vie and Fonds En Euro/Sterling
Many clients have sensibly opted to invest in Assurance Vie (Investment Bonds) type arrangements in France for the huge income tax and inheritance advantages offered though these products for French residents. A large selection of clients have also taken the option of using the Fond en Euros or Sterling funds preferring the guaranteed rates of return offered and the invested capital's security.
Indeed so used are the Fond en Euros funds within Assurance vie “wrappers” that often clients believe that they are one and the same. The Fond en Euros main principles are that your capital's value is guaranteed and you are given an annual rate of interest. The assurance vie ensures your funds grow free of French taxation due to the code of law relating to Life Insurance products. This combination has been so used in France and so much money tied up in these arrangements that the Government want to bring in a statute to limit the percentage invested into Fond en Euros per investor portfolio as they see this type of fund as stagnating the French economy and restricting investment into industry via the purchase of “actions” or shares.
New Spanish Will Laws from 17th of August
Many of our clients will have beside their property and / or bank accounts here in Spain still assets abroad. This could be a property in the “home” country, a share portfolio in Luxembourg, an offshore bank account etc.
Most would have a Will covering these assets in their home country and without specific mention of the asset will have laid out their wishes in the form of for example “spouse to spouse on first death and on second death to the children” which would apply to all their assets.
Should the person have not bothered taking on a Spanish Will then the heirs would have to go through the extra work and costs involved in relying on a UK or foreign will for the disposal of the Spanish assets. The Will would have to be translated and apostiled adding delays and extra costs at a difficult time for the heirs.
The Plot Thickens on the Pension Agenda…
The announcement made by the UK Government on the 5th of April 2015, regarding the possibility of YOU being able to access your Private Pension Entitlement (at the age of 55 years) resulted in literally thousands of enquiries to each and every Pension Scheme Provider in the UK, from both Expats and UK Residents alike. No wonder then that the stock response when telephoning, is “We are currently experiencing a high volume of calls…”, “Your call will be answered in approximately … minutes, you may wish to call back at another time.” etc. Infuriating? Yes, absolutely! Well, here´s something else all of you ex-pats need to know…
Comparison website ‘misleading’ savers into buying low rates
A leading comparison website’s customers were directed to savings accounts that could leave them £500 worse off than the best possible rates, according to an investigation.
Savers who compared ISA’s and bonds on the site were not offered the best rates on the market. Thousands of savers who used the website to select a savings account were misled, costing them potentially up to £500 a year in lost interest, according to a recent investigation. Channel Four's Dispatches said that the comparison website advertised poor-value savings.
Never too late to take control of your financial future
One of the biggest challenges that expatriates confront when moving abroad is the complexity of expat finances. According to HSBC’s Expat Explorer Survey, 75% of respondents (9,288 respondents worldwide) say that their finances have become more complicated since they left their home country.
Compounding this, many expats don’t consider all aspects of their finances before, during and after moving abroad, therefore making organising their finances even more complex than it needs to be. What are the common mistakes seen time and time again?
Investment Cons and Misleading Deals
Social Media is now a prime area that investment scams are targeting. Be careful of very clever advertising using your friends to lure you in.
I am came across one very recently on Facebook where a friend of mine had supposedly ‘liked’ a company that claimed to compare rates of investment interest from all providers available for Expats in Spain. The rates offered looked extremely good, as an IFA I am supposed to know all the best rates available so I was intrigued to know more.