Despite the massive tax breaks investors can pick up from the Seed Enterprise Investment Scheme (SEIS), the government seems set on keeping the benefits quiet.

SEIS slashes the risk of investing in start-ups for private backers by offering income tax and capital gain tax reliefs that far outweigh any the tax inducements on any other investment.

Yet the latest report from the Prime Minister’s enterprise adviser Lord Young fails to mention the benefits for firms and investors in his second report for the government on how to boost start-up businesses.

The report recommends opening up the public sector to tenders worth £230 billion from micro businesses and urges extending government financial help to fresh businesses.

However, an issue for entrepreneurs and investors is the hush-hush roll-out of SEIS.

Need to know

Instead of a blaze of publicity to attract money from less tax-efficient ISAs, SEIS seems to have developed on a need-to-know basis after an initial fanfare from Chancellor George Osborne to launch the scheme.

Indeed, some of the capital gains tax benefits were cut in Budget 2013.

One of the main criticisms of SEIS is the investment limit of £100,000 in a tax year and £150,000 in a single company over a number of tax years is too low for professional venture capitalists as they have to spend almost the same again in due diligence.

In his latest report, Lord Young explains that micro businesses – which have 10 or fewer workers – make up 95% of the economy and contribute more to the economy in terms of money and employment than all the much larger businesses combined.

Now, Lord Young is calling on Prime Minister David Cameron to widen the Start-Up Scheme to allow applications from entrepreneurs over 30.

Ambitious small firms

He also recommends:

• New laws to cut red tape on tenders for public service contracts worth less than £168,000

• Setting up a single market to standardise bidding for local authority and public sector contracts

• A £30 million Growth Voucher scheme to give more consultancy support to small firms

Business Minister Michael Fallon said: “We are supporting ambitious small firms to grow, create jobs and achieve their goals by providing access to mentoring and advice, cutting red tape or through successful schemes like Start-Up Loans.

“We are determined to go further and faster. Lord Young’s important report sets out a series of practical steps that can make a real difference to entrepreneurs across the country.”

Download the report here http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/198165/growing-your-business-lord-young.pdf

The post SEIS – Business Investment’s Best Kept Secret appeared first on iExpats.

FATCA is damaging US interests and is too unwieldy to deliver the tax results Washington demands claims Nigel Green, CEO of deVere Group.

Speaking to NewsMax TV, Green explained his forthright opinions on the Foreign Account Tax Compliance Act (FATCA).

“The people haven’t thought through the consequences of FATCA,” he said. “On the surface, FATCA tends to go and find people avoiding tax, but actually it doesn’t achieve that and it causes, if you’re thinking very logically, a whole series of problems.”

The US FATCA rules demand US taxpayers should declare their worldwide incomes to the Internal Revenue Service (IRS) including any income or assets held in foreign financial institutions of more than $50,000.

As a check to ensure taxpayers tell all, foreign financial institutions must report account details of US taxpayers to the IRS – and face stringent financial penalties for failing to do so.

Heavy-handed approach

FATCA is the spearhead of an international drive to recoup suspected undeclared tax.

“There are companies that invest in America and that becomes much, much more expensive to do,” said Green. “When companies decide, as many are, that they don’t want to invest in America because of the cost factor, obviously that affects the American economy and that affects jobs for those particular people.”

During the interview, Green also discussed how FATCA is having a detrimental effect on the USA’s image overseas and is seen by many as a heavy-handed approach for dealing with tax issues.

“There are many people around the world that are upset by the fact that the American authorities are asking people to collect their tax information,” he said. “Many people are saying that’s the United States of Arrogance rather than the United States of America, which is a terrible situation for America and I’m sure not something people thought through correctly.

Future focus

“America can see how much money and how much income is generated in America and it can control that money and see where that money goes, rather than trying to find out where money is, perhaps from the history of people that live abroad and perhaps put it into a tax haven.”

Green also argued that successful investors like Warren Buffett plan years ahead, and other investors should follow his example and focus further into the future.

He also favours investors pulling back and looking at worldwide investments rather than fettering their ambitions with self-made restrictions, like only investing in specific countries.

“You have to take an international view, and that’s where our company would have the edge because we’re not just looking at America. We’re looking at the world of investment,” said Green.

Watch the Video Interview

Source www.moneynews.com

Read the full article here: www.moneynews.com/StreetTalk/DeVere-Nigel-Green-Investors-Longer-Term/2013/05/16/id/504773

The post FATCA Wrong Tool To Fix Tax Issues appeared first on iExpats.

Below is what happened in a week in Expats Finances, as reported on iExpats and from other places across the web.

From iExpats:

• Eurozone Braced For New Economic Crisis
  The looming spectre of deflation is stalking Eurozone economies as prices continue to fall, say economists

• Meet the Ivanovs – Russia’s Mr and Mrs Average
  Investors have a chance of a glimpse at what Russian’s really think about life and money in their country with two new research projects

• Malta Unlikely To Need Euro Bail Out, Say Money Men
  Fears that Malta could follow Cyprus into a financial abyss are unfounded, according to financial experts

• Police Warn Expats About Money Laundering Scam
  Police are warning expats about a money transfer scam which could end in serious criminal charges because they are laundering money for organised crime gangs

• UAE Foreign Investor Law Rejected Over Security Fears
  Plans to increase the number of foreign companies investing in the United Arab Emirates have hit the buffers after lawmakers threw out draft legislation

• Expat Anger At Paying Higher Prices To Live In Malta
  Expats furious with financial discrimination in Malta have started a campaign protesting at the unfair way the government treats them

• Singapore QROPS Investors Win Another Day In Court
  An ongoing legal battle between HM Revenue and Customs (HMRC) and the beleaguered investors in Singapore QROPS will go another round after the High Court gave permission for a new legal challenge

• Are Internet Brides To Blame For State Pension Ban?
  Foreign brides are blamed behind closed doors in Whitehall for the government’s decision to scrap state pensions for spouses of British expats

• 1 In 8 Brits Have No Pension Savings
  Shocking figures have revealed that 12% of British workers aged over 55 have not saved a penny for their retirement, says the government’s Money Advice Service (MAS)

• Pension Firms Declare War on Liberation Scams
  The fight against controversial pension liberation fraudsters has stepped up a gear with one firm working on a legal interpretation of a pension fund’s transfer rules to help protect their clients

• Stores Rushed Off their Feet As Gold Prices Plunge
  A new gold rush is going on as hordes of desperate buyers – including expats – try to buy the precious metal in the United Arab Emirates as prices plummeted

• Expats Hold The Key To Middle East Building Boom
  A boom in the spending on massive infrastructure projects across the Middle East is likely to continue but those running the programmes will face big demands,

• FATCA Is A Family Financial Affair
  With growing numbers of countries around the world signing up to the Foreign Account Tax Compliance Act (FATCA), wealthy Americans may inadvertently fall foul of the law

• Senator Leads Congress Battle To Repeal FATCA
  The potential impact of a controversial law aimed at unearthing the overseas financial deposits of US taxpayers has led to one US senator introducing a bill to repeal the Foreign Account Tax Compliance Act (FATCA)

• Hundreds Rip Up US Passports To Escape FATCA
  A clampdown on taxing US citizens living abroad is having an unintended consequence with growing numbers preferring to ditch their passport rather than face disclosing their overseas assets

• Tax Haven Whistleblower Triggers Huge HMRC Hunt
  Tax authorities across the world are targeting the wealthy and businesses shrouding their financial affairs in offshore havens after a huge amount of sensitive financial information was leaked by a whistle-blower

• Pension Tax Alarm Triggered For 30,000 High-Earners
  Anyone who has deferred their defined-benefit pension could unwittingly face a massive tax bill

• French Confusion Over Taxing Expat Offshore Earnings
  Expats living in France face financial confusion as the country’s lawmakers drag their feet over whether to tax them over the rent and pensions they earn in other countries

• Bitcoin Rate Soars On Back Of Hard Cash Investments
  Bitcoin is money you cannot touch and only ‘virtually’ spend online, but the concept is attracting a lot of intention from investors putting up real cash to back the currency

• QROPS Numbers Hit New High For 19th Month In A Row
  Qualifying Recognised Overseas Pension Schemes (QROPS) continue to show they are the rising star of expat pension plans by reaching a new high for the 19th month in a row

• Capital Gains Tax Discount Axed For Expats
  Expats living in Australia under temporary resident rules have lost their capital gains tax (CGT) discount as part of the country’s tax grabbing budget

Financial News From Around The Web

New Zealand tax man  to target property investors – Stuff.co.nz

Australia to sign tax evasion treaty with Switzerland – International adviser

Saudi Arabia’s illegal expat exodus set to start – Arabian Business

New Zealand To Address FATCA Compliance Cost Concerns – TaxNews.com

Ecuador ‘is the place to live your expat dream’ – The Telegraph

Expat managers cost more, but are worth the money – QROPS Adviser

IFAs may face £100m FSCS bill due to Harlequin mis-selling – Citywire

What Indian-Americans should know about FATCA – Times of India

The post Week In Expat Money Matters May 13 – May 18, 2013 appeared first on iExpats.

Expats living in Australia under temporary resident rules have lost their capital gains tax (CGT) discount as part of the country’s tax grabbing budget.

Australians living overseas and expats in Australia benefitted from the tax break – but are now treated as foreign residents and lose the relief.

Critics say snatching back CGT will affect Australians working in the Middle East who have homes in Australia with a view to moving back to the country at some point in the future.

The Australian government has now removed the 50% discount on CGT enjoyed by non-residents on taxable Australia property which also includes mining assets and real estate.

Officials say the discount is no longer needed as an attraction for expats to buy property in the country.

Disappointment for expats

However, expats may still be entitled to a discount on capital gains accrued before the move was announced in the Australian budget in 2012, but was confirmed and came into effect when the latest budget was published on May 8, 2013.

The move will also affect profits made from managed funds and Australian shares.

Australians living or working overseas will now see the profit they may have made on property taxed at the full CGT rate, though older properties will see a portion of the profit being taxed at the discounted rate.

Pensions adviser David Retikin said the discount loss would come as a disappointment to Australians living abroad who frequently invest their earnings into property.

He added: “Australians like to invest in Australian property because it’s seen as a stable investment with a low tax status and it’s something they can return to later in life.

Other opportunities

“Losing the discount means that expats should now avoid investing in property.”

Australia’s property market has enjoyed a boom in recent years and many believe the market is overpriced – the ending of the CGT tax break means that expats would be paying more for less and then pay more tax on a smaller gain.

One upside to the move being promoted by Australian commentators is that there will be a dwindling of investment from overseas into the country’s property which should result in lower prices for buyers.

Paul Preston, a director at real estate firm IP Global, says Australian expats and British expats working in Australia shouldn’t worry about the ending of the discount rate.

He said: “The move for expats in Australia is in line with many other countries and so isn’t that unreasonable so while there isn’t an incentive for investing in Australian property there are still great opportunities for real estate investment in the country and in overseas markets such as London and Kuala Lumpur.”

The post Capital Gains Tax Discount Axed For Expats appeared first on iExpats.

Qualifying Recognised Overseas Pension Schemes (QROPS) continue to show they are the rising star of expat pension plans by reaching a new high for the 19^th month in a row.

As HM Revenue and Customs released the latest QROPS List on May 15, 22013, the key facts are:

• The number of QROPS pension plans worldwide is 3,015

• 46 different financial jurisdictions offer QROPS

• Australia is the dominant QROPS provider with 1,145 schemes. This represents 38% of the market.

• The number of Australian schemes rose by six in the past fortnight – from 1,139 to 1,145

• Other jurisdictions that increased QROPS since May 1, 2013, are Ireland (3), the Isle of Man (2), Jersey (1) and Guernsey (1)

• No schemes closed

• No new jurisdictions entered the market and none left

QROPS were first introduced as an expat pension on April 6, 2006 – by the end of the year 296 pensions had been established, with Ireland (66) and Australia (63) leading the rankings.

The QROPS List gives the details of pension schemes self-certifying that they meet qualifying conditions laid down by HM Revenue and Customs.

The list is published fortnightly – the next is due on June 1, 2013.

QROPS by financial jurisdiction – May 15, 2013

Source: HMRC May 15, 2013

The post QROPS Numbers Hit New High For 19th Month In A Row appeared first on iExpats.

Expats furious with financial discrimination in Malta have started a campaign protesting at the unfair way the government treats them.

Many European expats who have moved to Malta have been stunned to realise that the country operates a system of dual pricing for utilities and bus fares.

Now the petition, which has been signed by more than 1,110 expats, says they are fed-up with Maltese companies charging them between 35% and 60% more than nationals for electricity, water, public transport, internet services and car registration.

They are now urging the Prime Minister of the new Labour administration, Joseph Muscat, to act and bring dual pricing to an end.

The petition was started by Patricia Graham, who originally comes from Scotland, who says she wants to bring an end to what is blatant discrimination.

Prime minister’s promise

Indeed, one group of expats has already begun a class action against one of Malta’s biggest utility companies in a bid to be charged the same prices as nationals are.

The situation, which comes as a surprise to many of those moving to Malta, is now causing resentment between expats and locals.

The group behind the petition has been assured that the protest will not be ignored and that the new government is against all forms of discrimination.

A spokesman for the Prime Minister said: “A specially appointed Parliamentary committee will evaluate the petition and propose a discussion in Parliament on its contents.”

The announcement was greeted warmly by Mrs Graham but she feared that the government was trying to side track the campaign.

Meanwhile, a move to replace ID cards for expats living in Malta with an e-residence card has led to scenes of chaos with people having to queue for several hours to be seen by an official.

Residence card chaos

Many people of those queuing at the Citizenship and Expatriate Department have described the situation as ‘a nightmare’.

Applicants found there was no receptionist to help them and there was no advice on what they were expected to do with many queuing unsuccessfully for hours to try to resolve the problem.

Malta launched the new system in January and said all applications had to be made in person after making an appointment via email, though many people queuing said they were doing so to meet their appointment but no one knew what was going on.

Many applicants were told that they should consider themselves lucky if they were served by someone within two hours of their appointment.

Now, officials are working their way through a backlog of more than 3,000 applications from expats.

The post Expat Anger At Paying Higher Prices To Live In Malta appeared first on iExpats.

Expats living in France face financial confusion as the country’s lawmakers drag their feet over whether to tax them over the rent and pensions they earn in other countries.

The issue is over whether an expat’s rental or pension income should be assessed for tax in France – but only if the expat has paid no tax on the money earned in another country.

French lawmakers are analysing the double tax treaty rules between the two countries in a bid to resolve the problem.

The situation has been dragging on for several months and officials said they would make a decision of whether income tax and social contributions should be made on income earned in 2012.

Currently, this is something of a grey area for tax officials, especially for British expats, who pay no tax in the UK if it falls below the personal allowance limits.

Bills and refunds

This situation has previously led to expats made exempt from French income tax and their related social contributions.

However, many expats last year reported that they were being handed French tax bills on their UK income as well as demands for hefty social contributions.

This situation led to confusion since many people who contested the bills were reimbursed while others were turned down.

To confuse the situation even further, some French tax offices did not tax the UK incomes of expats at all.

French tax authorities explained that the variety of actions was down to regional differences and differing interpretation of the rules of whether the income was taxed by the UK.

Declaring income

Now expats a desperately waiting to hear how the situation will be resolved and the country’s finance ministry has said it will clarify its policy and communicate this to all of its offices, particularly those with high numbers of British expats living in the area.

In the meantime, expats are being urged to declare all relevant kinds of income on the French income tax form.

The French taxman has said this is the correct course of action if the income declared has not already been taxed in the UK.

Tax experts are also urging expats to use the extra information section to detail precisely what the income is to help avoid attracting social contributions. Under the double taxation treaty between the nations, some income should not be taxed or attract the social contribution charge.

The decision on how tax offices should deal with this situation is expected in the next few weeks but in the meantime expats should file their tax returns, or even amend the ones that have already filed, just in case an announcement is not made before the tax deadline.

The post French Confusion Over Taxing Expat Offshore Earnings appeared first on iExpats.

A boom in the spending on massive infrastructure projects across the Middle East is likely to continue but those running the programmes will face big demands, says a new report.

The report, GCC Powers of Construction by accountancy firm Deloitte, focuses on how the mega projects can overcome the challenges facing them and be delivered on time and budget.

The report highlights that the Gulf Cooperation Council region is lacking in infrastructure and the massive projects funded by oil income will continue but with many countries facing a range of different problems the people running the schemes – who are often expats – will face fresh challenges.

The countries involved are looking to maintain their spending by essentially getting more for less, says Deloitte.

Those signing the cheques are also looking for greater transparency on how the money is spent and for contractors to improve their performance by looking at how they can boost performance and improve costs.

Infrastructure investment

Andrew Jeffrey, a director with Deloitte’s corporate finance section, says: “Contractors can leverage better internal controls to deliver more for less while retaining or even improving profitability.

“Contractors should be looking at ways to make savings, reduce risks and improve opportunities for themselves by engaging more intelligently with their clients.”

On the whole, says the report, many in the construction industry in the GCC region are optimistic for investment in 2013.

Indeed, investment in infrastructure and capital projects is growing rapidly with many countries spending huge amounts without necessarily looking for ‘pay back’.

However, it is becoming increasingly apparent that many of the countries are coming under pressure to save costs and boost revenue while pushing for a demanding infrastructure agenda.

Significant investment

Contractors play a key role in running these projects, says the report.

Deloitte’s Cynthia Corby, an audit partner, says: “Over the coming years across the GCC region there will be significant investment for major infrastructure programmes which will lead to contractors, clients and consultants alike having to rethink how they engage with each other if they are going to realise the benefits that each brings to the process.”

The report also flags up some of the projects being undertaken in the region and points to the biggest construction sector as the United Arab Emirates, which was worth around £10.5 billion last year – 4% more than the contracts awarded in Saudi Arabia.

However, the biggest single deal was awarded in Saudi to expand the Masjid al-Haram mosque in Medina and that was worth nearly £1 billion.

The post Expats Hold The Key To Middle East Building Boom appeared first on iExpats.

Plans to increase the number of foreign companies investing in the United Arab Emirates have hit the buffers after lawmakers threw out draft legislation.

Instead, members of the Federal National Council (FNC) opted to move the legislative draft to a new law set to be discussed later this year.

The council’s members voiced fears over national security and worries to local firms as reasons for the rejection.

The Emirate’s business community also raised its worries over what increased competition would bring.

Currently, foreign companies can set-up in the UAE’s ‘free zones’ without restriction. If they want to expand out of those areas, they have to work with an Emeriti business but can only hold a minority stake in the joint venture.

Fiercely protective

The UAE’s cabinet had drafted changes to a 1984 law which would have allowed foreign companies own 100% of the company operating outside a free zone.

The move has proved controversial since only 10% of the Emirate’s 8.3 million population are nationals, while the rest are expat workers.

The result is that UAE citizens, who are among the world’s richest people, are fiercely protective of any moves which threaten a loss of national identity or which undermine their control of the economy or country.

Ahmed al-Zaabi, deputy of the FNC, said: “This situation is bad. These clauses are completely contradictory and could lead to foreign investments outside of the control of the state, and this, in turn, could lead to the destabilisation of security.”

Sultan bin Saeed al-Mansouri, the Emirate’s economy minister, said the agreement was reached to move the foreign ownership clause to another draft law on foreign investment, which is currently under preparation.

Compromise expected

He said: “Moving this clause to the foreign investment law is much more suitable, and we will review some of the terms and conditions that will be applied.”

However, one expert says that the UAE’s lawmakers should consider the benefits of what foreign firms could bring to the country.

Alan Wood, who is based in the Dubai offices of law firm Pinsent Masons, said: “When the FNC has the opportunity to debate the issue again, it will be persuaded of the benefits to the UAE economy, and its status as the regional commercial hub.

“A compromise might involve preserving the involvement of an Emirati national by requiring wholly foreign-owned companies to appoint a national in a non-equity participation role akin to the national service agent role applicable to branches or foreign companies.”

The post UAE Foreign Investor Law Rejected Over Security Fears appeared first on iExpats.

Anyone who has deferred their defined-benefit pension could unwittingly face a massive tax bill.

The call has been made after pension analysts realised that the move would trigger a tax trap for thousands when the government reduced the lifetime pension limit to £1.25 million in the 2013 Budget.

Essentially, anyone has saved into their pension and who has earned at least £40,000 a year during their career is at risk.

If their defined benefit pension is worth around £20,000 a year and if they have been paying into another pension as well, they could find themselves having pension funds greater than the lifetime limit.

They could now be facing tax bills ranging from several thousand pounds up to seven figures when they retire.

55% tax grab on pensions

Savers need to take action now to avoid the punitive 55% tax grab of their pension pot.

To illustrate the situation: a 40-year-old who is expecting a defined-benefit pension pay out of £20,000 annually would need to only save another £10,000 every year until the age of 65 to exceed the current limit.

Savers should remember that some of the best paying pension investments are returning around 7.5% a year which means that our 40-year-old old saver is looking at a whopping £252,598 tax bill when he retires.

According to HM Revenue and Customs own figures, more than 30,000 taxpayers could have pension assets over the limit when they retire.

One of the issues for savers is that pensions are growing quickly and many do not appreciate the impact this will have on their retirement savings.

Police chiefs over the limit

On top of this, those with defined benefit pensions do not realise that their savings are not growing in line with interest rates but growing with inflation, with many averaging 5% a year growth.

The warning now means that those with a defined-benefit scheme need to be vigilant about fund performance and be careful about how much extra they save.

Those who have left their employer but retained pension rights also need to check their current financial situation as a matter of urgency.

Chris Aitken, a financial planner at Investec Wealth Management, said many savers with a sizeable pension pot which has been unchecked for a few years should steel themselves for the fact it has probably grown by a ‘shocking’ amount.

“Many people from teachers, MPs to senior police officers could all find themselves exceeding the limit,” he said.

The post Pension Tax Alarm Triggered For 30,000 High-Earners appeared first on iExpats.

Police are warning expats about a money transfer scam which could end in serious criminal charges because they are laundering money for organised crime gangs.

The warning comes from Action Fraud, Britain’s official scam busters run by the National Fraud Authority and the National Fraud Intelligence Bureau.

They say many expats are being contacted by phone, email or letter in what appears to be a simple money making scheme.

Some expats are even getting involved after seeing a newspaper advert.

The idea behind the scam is simple and involves the expat receiving a payment into their bank account which they then withdraw in cash and send on to the crime gang.

Criminal offences

For their trouble, the expat could earn as much as 20% in commission.

However, it is more likely that they are helping criminals launder money which is a serious criminal offence.

A spokesman for Action Fraud said: “Money laundering is a method to disguise the proceeds of crime to appear as if the money comes from a legal source and one way of doing this is to put that money through a series of bank accounts.

“If anyone is approached to get involved in something like this, they should remember that if it sounds too good to be true, it probably is.”

The opportunity of earning 20% in commission on a substantial sum of money for what appears little risk is often tempting for expats, many of whom have been targeted because they are struggling financially.

Expats targeted

The criminals are also targeting people who are advertising for work online, who are sometimes offered a work from home opportunity with the job described as a ‘transfer manager’ or ‘account manager’.

Some expats have been told that the money they are transferring is for trading shares overseas or that they are helping distribute charity funds.

Anyone getting involved in the scam should be aware that once money is taken out of their bank account, tracing the cash is almost impossible.

The penalties for money laundering convictions vary from country to country but in the UK, a conviction could lead to 14 years in jail and an unlimited fine.

Police also point out that once the criminals have someone’s bank details, they often try to steal money from the account. Some expats are ordered to transfer money they have not received to meet a deadline and send their own cash because they fear crossing the criminals.

The post Police Warn Expats About Money Laundering Scam appeared first on iExpats.

Tax authorities across the world are targeting the wealthy and businesses shrouding their financial affairs in offshore havens after a huge amount of sensitive financial information was leaked by a whistle-blower.

The data reveals the names behind secret accounts in the Cayman Islands, British Virgin Islands, Cook Islands and Singapore.

In Britain alone, HM Revenue and Customs has already identified and opened investigations in to the finances of around 100 taxpayers and companies.

Another 200 British-based tax advisers face some difficult questions about participating in tax avoidance schemes from HMRC.

Chancellor George Osborne said: “We have a simple message – if you evade tax then we are coming after you.

Aimed at tax avoidance

“With the UK’s presidency this year of the G8, the Prime Minister David Cameron is making it a priority to lead international efforts to fight tax evasion and avoidance.

“We have invested hundreds of millions of pounds to fight tax evasion, in the UK and abroad, and access to this data is another weapon in HMRC’s arsenal.”

HMRC says that anyone who has used offshore structures now needs to seek professional advice urgently and review their tax arrangements to ensure they meet UK law.

To help people come forward, HMRC is encouraging voluntary compliance and those not using this opportunity are leaving themselves liable for prosecution and heavy financial penalties. They add that investigators are still working on identifying more people to investigate.

Jennie Granger, HMRC’s commissioner for enforcement and compliance, said that while many international offshore structures may not be illegal and may have been declared to HMRC, some were undoubtedly aimed at tax avoidance.

International investigation

“Tax avoidance, evasion and other serious offences are illegal and the use of international structures to hide income and assets illegally must stop,” she said.

The hunt for those using such structures to hide their financial affairs is international, with HMRC revealing that the data is shared with the US Internal Revenue Service and Australia’s taxation office.

The leaked data amounts to 400 gigabytes – which HMRC says it cannot comment upon – but Phil Berwick from law firm Pinsent Masons says this latest announcement will unnerve many people.

He added: “The news is a warning shot for accountants and tax advisers who establish offshore structures that HMRC is coming for them if they feel those advisers have overstepped the mark.”

The post Tax Haven Whistleblower Triggers Huge HMRC Hunt appeared first on iExpats.

Fears that Malta could follow Cyprus into a financial abyss are unfounded, according to financial experts.

The similarities between the two Mediterranean islands are uncanny but their current positions, in financial terms, are worlds apart.

While both countries signed up to the European Union in 2004, joined the Euro and both have banking sectors that dominate their economies, the comparisons end there.

Investors have been growing increasingly uneasy about the prospects for Malta since Cyprus received a desperately needed bail out and raided the bank accounts of its banks to help pay for its current crisis.

Without the 10 billion Euros of aid, the economy in Cyprus would have collapsed and the country would have had to leave the Euro zone.

Financial shocks

However, experts looking at the banking risk of Malta claim it is unlikely that the island will need rescuing and instead point to the woes of Greece, Ireland, Spain and Portugal as far worse.

Analysts at the European Commission predict growth in Malta, which has a population of 450,000, this year led by domestic demand and increasing exports.

Malta’s unemployment rate is just 6.4%, while debt as a proportion of GDP is running at 72%; both below the Euro zone average.

However, Malta’s economy is prone to financial shocks because of reliance on financial services, with the sector around eight times bigger than GDP, similar to Cyprus before the rescue.

The problem in Cyprus is that two big domestic banks dominated the sector, which relied on foreign money deposits, mainly from Russia, and the banks then invested in government bonds abroad, especially in Greece.

Ratings thumbs up

The situation in Malta is slightly different since many of the banks in the financial services sector are subsidiaries of overseas banks which would be responsible for bailing them out should they hit trouble.

Malta’s domestic banks have assets that add up to 200% of the island’s GDP which means they would not be allowed to fail because if they did so Malta’s economy would probably collapse.

Analysts say that the proportion of GDP was twice as high in Cyprus when their economy hit the skids.

The Maltese economy has also had a thumbs-up from ratings agency Fitch which says the island is better placed to handling an economic crisis. The International Monetary Fund (IMF) has also expressed confidence in a report published last year.

The post Malta Unlikely To Need Euro Bail Out, Say Money Men appeared first on iExpats.

A clampdown on taxing US citizens living abroad is having an unintended consequence with growing numbers preferring to ditch their passport rather than face disclosing their overseas assets.

The figures come from the Internal Revenue Service (IRS), which reveals that in the first quarter this year 670 Americans ripped up their passports.

By doing so, they have also given up the prospect of receiving any future tax bills since America is the only country to tax citizens no matter where they live in the world.

This growing trend is the biggest number since the IRS began publishing the figures in 1998 and has already reached around 75% of the total number of passports handed in last year.

Not unpatriotic

Critics say 2013 will set a new record for Americans giving up their citizenship to escape onerous US income and estate taxes.

Perhaps the biggest reason for the escalation in the figures is the introduction of the Foreign Account Tax Compliance Act (FATCA) which is seeing increasing numbers of countries sign up.

The idea behind the US law is to reveal overseas assets being held by Americans worth more than $50,000.

FATCA is becoming increasingly controversial as the declaration deadline of January 2014 draws near.

However, tax lawyers in the US say that those dumping their passports should not be seen as unpatriotic or trying to avoid paying their taxes, but instead, the blame should be laid squarely aimed at America’s complex tax regulations.

Complex and confusing rules

Jeffrey Neiman was a federal prosecutor who helped in the US government’s recent offshore banking investigation and he says the rules for Americans, particularly rich ones, are complex and confusing.

“The rules are so complicated that those Americans with good intentions could easily find themselves on the wrong side of the law and it’s for this reason we might be seeing record numbers recounting their US citizenship,” he said.

The ongoing campaign to unveil foreign bank accounts and the assets they hold has already led to more than 40,000 Americans voluntarily declaring their secret accounts to the IRS in a bid to receive reduced fines and penalties rather than face prosecution.

However, US officials suspect that this number is only a fraction of the total held and point to the fact that more than 6 million Americans live abroad, but only 2 million filed tax returns last year.

The post Hundreds Rip Up US Passports To Escape FATCA appeared first on iExpats.

The fight against controversial pension liberation fraudsters has stepped up a gear with one firm working on a legal interpretation of a pension fund’s transfer rules to help protect their clients.

Legal and General is now taking a tougher stance when approached by pension liberation firms requesting that a pension pot be transferred.

They now have a range of responses from a blunt refusal and contacting customers directly warning them that their pension pot will face tax charges of up to 55% and the liberation firm will also charge a hefty fee for their services.

The Legal and General position is also being taken up by fellow pension firms Suffolk Life and Aegon UK.

Legal challenge

They are concerned that their customers’ savings will be devastated to the point of them living their retirement in poverty.

Adrian Boulding, who is head of pensions at Legal and General, said that they believe 1 in 20 transfer requests from pension schemes are from pension unlocking firms.

He added: “We won’t reveal what we look for as this may give liberation schemes an edge but we do ask certain questions and then inform the customer and delay the transfer.”

To back up their position, the pension firm is also working a legal interpretation of two sections of the Pensions Schemes Act 1993.

Sections 95 and 97 of the Act give a retirement saver the right to transfer their pension scheme and the holding firm must send the money to the calling firm within six months or the provider concerned could face a penalty.

Transfer delays

Mr Boulding confirmed that Legal and General drag their feet during the statutory six months until they are certain that the customer understands what they are asking for.

He also pointed out that the delay gives the firm time to answer a legal question over whether the transfer is legal.

Aegon UK receives around 10 suspicious requests a week, and a spokesman said: “If we are suspicious we will inform the client and send information from The Pensions Regulator and also refuse to carry out the transfer.”

The firm believes the procedure for setting up and registering a pension scheme is too easy.

Suffolk Life confirmed that they too often refuse or delay suspicious applications and pointed out that SIPP (Self-Invested Pension Providers) firms also have a difficult task since SIPPs offer flexibility and choice.

The post Pension Firms Declare War on Liberation Scams appeared first on iExpats.

The potential impact of a controversial law aimed at unearthing the overseas financial deposits of US taxpayers has led to one US senator introducing a bill to repeal the Foreign Account Tax Compliance Act (FATCA).

Despite Congress passing FATCA, several issues are causing increasing concern in the corridors of power in the US.

The main problem is that the US Treasury has effectively side lined Congress from involvement in the bill by signing intergovernmental agreements (IGAs) with foreign governments which gives them access to accounts being held overseas by US citizens, but also hands them the same information from financial institutions in America.

As a result, this has raised privacy issues in Washington, with allegations that FATCA infringes on the constitutional rights of US citizens.

Senator Rand Paul, a Republican from Kentucky, has introduced a bill which would block the Treasury from signing IGAs.

FATCA dangers

In a letter to colleagues, Paul also points out that foreign investment is desperately needed to help the country’s economy grow and there is evidence to suggest that FATCA is endangering the estimated £16 trillion invested in the country currently.

He also says that FATCA is a poor way to combat tax evasion.

He said: “It is troubling that FATCA has allowed the Treasury to make decisions independently with foreign nations and over the privacy of US citizens.”

Paul has also highlighted a problem of foreign financial institutions offloading their American customers to avoid having to comply with the new law.

By doing so, those institutions will avoid the hefty penalties which are likely to be imposed on all financial transactions between the US and an institution which has not registered with US tax authorities.

Anti-tax views

The idea is that FATCA will compel banks and institutions overseas to reveal details of any US customers with assets of more than $50,000.

Several countries have already signed up, including the UK, and more are likely to sign IGAs in the coming months.

Paul, who has a reputation for his anti-tax views and has opposed all tax treaties since his election three years ago, is angered by the fact that details of private bank customers in the US will be handed to foreign countries.

He highlights too that the cost of compliance with the law will run into ‘billions of dollars’ and these costs will be passed onto customers.

Paul’s move comes at the same time that the Florida Bankers Association and the Texas Bankers Association filed legal claims against the Treasury and the Internal Revenue Service over the costs of implementing FACTA.

The post Senator Leads Congress Battle To Repeal FATCA appeared first on iExpats.

Bitcoin is money you cannot touch and only ‘virtually’ spend online, but the concept is attracting a lot of intention from investors putting up real cash to back the currency.

Supporters see this as a sign of faith in the currency, but regulatory bodies are now taking a closer interest as interest grows.

In the past few months, millions of pounds have gone into Bitcoin start-ups even though hackers are allegedly manipulating the currency’s exchange rates.

Those accusations have not stopped major venture capital firms pouring money into businesses like CoinLab, Coinbase and Coinsetter.

One of the biggest backers is Twitter backer Union Square Ventures who have invested £3.25 million in Coinbase.

International currency

That investment tops the £1.3 million that venture firm Andreessen Horowitz put into OpenCoin recently.

Their backing comes at a pivotal moment for the fledgling Bitcoin industry, which is not supported by a central bank, has no transaction fees and does not recognise borders, but the currency provides a simple way to buy goods and services online.

Fred Wilson, of Union Square, said: “There will be more money being poured into this space. This is a trigger point.”

Bitcoin gives spenders a virtual wallet to store their currency and lets them pay from the fund.

Bitcoin is incredibly popular, and in the case of Coinbase, has seen 166,000 members sign up since January 2013. In April, they converted £9.8 million of hard cash into Bitcoin.

To put the scale of take-off for Bitcoin into perspective, Coinbase say they only saw £650,000 exchanged in January, while the user base is growing at the rate of 15% a week.

The firm makes its money by charging a 1% conversion fee for turning real world money into Bitcoin and back again.

Growing interest

Growing interest from a range of big name merchants, including Reddit, PayPal and other online ventures keen to avoid the hefty transaction charges from their banks means that Bitcoin could soon become a major player for online shoppers.

However, there is one slight issue to spoil the Bitcoin success story so far. Hackers selling their Bitcoin hauls when the currency market is high, then launching a ‘denial-of-service’ attack on the exchanges to stop them working properly and sit back for the currency to fall.

Once the currency falls to a value they like, the hackers then buy back in again.

One of the biggest exchanges is Tokyo-based Mt Gox which had servers disabled for four hours in one of the attacks.

Bitcoin is still a relatively volatile currency, in part because of the destabilising hacking attacks, which are a concern for traders who have seen the Bitcoin rise in value from £3.25 last summer to £76.33 in May 2013.

The post Bitcoin Rate Soars On Back Of Hard Cash Investments appeared first on iExpats.

Investors have a chance of a glimpse at what Russian’s really think about life and money in their country with two new research projects.

Russia’s quickly growing economy is bringing opportunity but also concerns for its population, according to the Ivanov index.

The survey, which questions 2,300 people in 164 Russian cities which have a population of more than 100,000 people, found that the average family is worried about high inflation, which is currently running at 7%.

The cost of living is a concern for 70% of Russian households who spend, on average, around 40% of their income on food.

In comparison, those in Western Europe spend between 15% and 20% of their income on food.

Car making gets in gear

However more than 40% of those who responded to the survey expressed an ambition to replace their car within the next two years.

That must be good news to the car making firms who have invested heavily in Russia with vehicle sales leaping more than 10% last year, according to the Association of European Business.

Russia currently has a low level of car ownership, relative to other countries, and many of the vehicles currently on the roads are nearing the end of their lives and need replacing.

This situation has led to car industry experts predicting that Russia will overtake Germany as Europe’s largest car maker in the next few years.

The Ivanov survey also found that most Russians are upbeat about the prospects for improving their personal wealth in 2013,  and with the country seeing home ownership of 92% there are good prospects for the property market to around half of those people said there were planning to upgrade to a newer flat.

With more investors increasingly interested in Russia and its prospects for profits the market for researchers is looking lucrative.

Myths about Russia

Now a new Moscow-based team is looking to crowd-funding to help start a project via the Kickstarter website.

It’s called People’s Omnibus and will give researchers access to 600 Russians to carry out market research.

Project leader Igor Sokolov said there were opportunities for small research companies and others with a curiosity in Russian lives to carry out small scale market research projects.

The new scheme will be much cheaper than other research firms and, the organisers hope, will help to dispel some of the myths about Russians and their country.

Researchers will be able to ask any question and not just those related to corporate activity.

The post Meet the Ivanovs – Russia’s Mr and Mrs Average appeared first on iExpats.

Shocking figures have revealed that 12% of British workers aged over 55 have not saved a penny for their retirement, says the government’s Money Advice Service (MAS).

Around 8% revealed that they believed they may never have enough money saved to retire.

The figures underline a serious apathy towards pension saving in the UK – a condition dubbed by MAS as ‘pensionitis’.

Jackie Spencer, a MAS retirement and pension expert, said: “It’s of real concern that more than one in 10 over 50s approaching retired have not given any thought to how they will fund their retirement. It’s worrying that so many people are succumbing to pensionitis.”

“Planning to fund retirement is important and can’t be ignored because retirement is inevitable.”

Never too late to save

The MAS figures also reveal that four out of 10 people aged over 55 are resigned that they will work for as long as they possibly can.

One of the reasons given by the 15 million workers who are not making retirement saving plans is that they do not understand pension planning jargon.

Nearly twice as many admit pensions are confusing.

“It’s never too early for people to begin saving for retirement, and now employees are being automatically enrolled at work place pensions it should provide a solution for many,” said Spencer.

“For anyone who thinks they’ve left it too late, or for those beginning their working life, the Money Advice Service can always help with a range of free tools and tips.”

The MAS survey reveals large regional discrepancies attitudes towards pension saving. More than a third of Scots (35%) admit to not knowing how they will fund their retirement.

Pension jargon

Retirement savers in the South East (30%) and London (27%) rank second and third behind Scotland as the worst pension planners, while Wales has the lowest number of workers with pension concerns (16%).

Few savers appear to appreciate the tax benefits of contributing to a pension, while around 55% of those still working confessed to not knowing how their money is invested.

The proportion of people who couldn’t put a figure on how much they contribute each month towards a pension was 33%.

The jargon being used also confuses people with 36% saying they did not understand what an annuity is and 59% did not realise the size of their pension fund related to how much they were paid in retirement.

An annuity is an investment that pays an income in retirement that is bought with a retirement saver’s pension fund. The more money a saver invests in an annuity typically means a larger retirement income.

The post 1 In 8 Brits Have No Pension Savings appeared first on iExpats.

The looming spectre of deflation is stalking Eurozone economies as prices continue to fall, say economists.

The European Central Bank (ECB) is having less room to manoeuvre in a bid to stop deflation and Europe now faces years of economic struggle similar to Japan’s deflation-ravaged economy.

Such a scenario will drag countries like the UK into the mix, and the real worry is that deflation makes repaying sovereign debt almost impossible.

The upcoming scenario means investors will have pay more attention to companies with strong balance sheets and particularly those exporting to growing markets.

Eurostat, the statistics office of the European Union, has issued a flash estimate predicting inflation to come in at 1.2% for April, which is down from March’s 1.7%.

Inflation at 3-year low

The figure for April is well below expectations from most economists, who expected inflation would drop to 1.6% year-on-year.

If the estimates are correct, this is the biggest monthly drop in inflation since May 2009 and will put inflation at the lowest level since February 2010.

The fall is fuelled by a collapse in energy prices, down 1.7% year-on-year to March.

Economists fear austerity measures in the Eurozone along with a strong Euro, low demand and high employment are creating the perfect background for deflation.

Essentially, economic policies across the Eurozone have been aimed at restoring competitiveness via a favourable inflation differential, which means that inflation is lower in the periphery countries than with trading partners.

Along with austerity and pressure on wages, inflation is falling instead of going according to plan, which was to inflate gently as growth got under way.

However, this is not happening and even Germany is being pushed into deflation.

Devastating deflation

The consequences of deflation in Europe could be devastating because this is the worst possible outcome for those countries which are struggling with massive debts such as Greece, Italy and Spain.

Deflation increases the debt-to-GDP ratio which in turn makes it unaffordable to service sovereign debts.

News of potential deflation is not a surprise to the markets, which have anticipated the risk for some time.

Over the coming weeks, investors and savers alike will be watching to see whether the ECB cuts interest rates in a bid to stave off deflation and boost the economies of the Eurozone.

The rate already stands at a record low of 0.5%.

However, with the slowdown of Germany’s economy affecting all of the Eurozone, the likelihood is politicians and economists will move towards non-standard measures to tackle the problem.

The post Eurozone Braced For New Economic Crisis appeared first on iExpats.