by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
Expat Investor : November 2008
SPENDING time, but I am concerned about buying goods from countries outside the UK – what should I look out for to avoid any unpleasant surprises?” That time of the year is here again where the wonder of Christmas is combined with the race against time shopping for presents. More consumers are expected to shop on line this Christmas than ever before, preferring the comfort of their home to battling it out on the high street. The growing confidence in the speed and the reliability of online retail is bolstered by the development of European legislation specifically tailored to support e-commerce. Under the Distance Selling Directive the EU Consumers are protected when buying goods from any country within the EU. While it is good to know that you are protected by legislation when shopping online with companies based within the EU, the old adage ‘prevention is better than cure’ still rings true. Minimise Internet shopping pitfalls using our Internet shopping checklist below: ? be cautious when you give your credit or debit card details over the Internet. Do not send your credit card details to traders using e-mail or voip internet telephone services as they may not be secure. If you are using your credit card when checking out your shopping cart, find out whether the company has a secure site by checking the website has a closed padlock sign at bottom of the web-browser, and that the web address begins with ‘https’, and not just ‘http’. ? make sure you computer has up- to-date spyware and virus checking software and sign out of any online shop accounts before you leave you computer – this is especially important if you are using a shared computer. ? ensure that the website contains the name, geographical address and telephone number of the trader, in case you need to contact the trader. Furthermore the use of a website with the “co.uk” domain name does not necessarily indicate that the business is based in UK. ? the seller must fully describe the goods for sale, such as condition if the item is second hand or collectable, and orders must be confirmed by the company in writing (normally via e-mail). Make sure the postage charges, any VAT payable and import duty, in the case of buying abroad, are clearly stated by the website. ? read the terms and conditions provided before buying – and make sure the company has a policy for returns and the right to withdraw in case you have changed your mind and you want to return the goods. In case of cancellation find out who pays for the return postage, this is especially important if you buy goods from other EU countries, as postage charges may be high. If the goods are faulty or do not comply with the contract, the trader will have to pay for their return whatever the circumstances. Under the Distance Selling Directive refunds must be made within thirty days. ? check the websites terms and conditions for estimated delivery times. Goods being sent from abroad may take some time to be delivered. Where no delivery date has been agreed, delivery must be within thirty days as prescribed by the 'Distance Selling' Directive for goods sold within the EU. ? if you are uncertain about the reputation of an Internet site, do some research. Many price comparison sites give customer ratings and feedback which can be invaluable when rating companies you have not dealt with before. Alternatively, you can check if the website is included in one of the European trustmark schemes which can help a consumer decide if the company is reputable. ? when purchasing goods from the Internet, if possible, pay by credit card as this may give you additional protection in some circumstances where the price is above £100 but no more than £30,000. ? most importantly, print out the order, and even the description of the item you have bought as it appears on the website at the time of purchase. Print any terms and conditions that appear on the web site, just in case of any disputes or problems later on. Cash-back from a Timeshare? “I have joined a timeshare which has a cash-back scheme and I cannot contact the trader.What are my rights?” Some timeshare or holiday clubs may offer you a cash-back incentive when you join. For example, they may state that after five years you will get a large sum of money paid back to you. Generally you will be subject to the terms and conditions of your agreement and it is very important to familiarise yourself with them. Although verbal agreements made are usually legally binding they can be difficult to prove and if you make any special agreements with the trader at the time of sale then make sure that this is written and signed by the trader. You should check the terms and conditions to see whom the actual cash-back agreement is with as in some situations this will be different to the company who actually provides the accommodation. If you have followed all the terms and conditions and the trader does not pay then this could be classed as a breach of contract. If initial phone, fax or email contact fails then you should consider formally writing to the company. You should send a recorded delivery letter to the company outlining all the issues to date and propose a reasonable outcome within a fixed period of time (that is, 14 days). Also include copies of any relevant correspondence and dates of when you tried to contact them. If you paid with a UK credit card or took out a finance agreement for any part of the contract , then it is likely that you will be covered by the Consumer Credit Act 1974 which states that for any breaches of contract the credit card company can be held equally liable for any breaches of contract. Please note that you can only claim under the Consumer Credit Act 1974 for up to six years after the breach of contract (which is usually when you signed the contract) and that the Consumer Credit Act 1974 applies even when the credit card was used to pay a deposit. Readers can find out more about their consumer rights and seek help with disputes by visiting www.ukecc.net. PROPERTY INVESTMENT How should you own your French property? There are three ways to own a property in France. Here, David Franks, Chief Executive of Blevins Franks, explains what each method entails so you can work out which is right for you. To register for the digital edition, go to There are three main methods of owning French property with vari- ations in each. The advantages/disadvantages of each depend on your specific circum- stances. You should research the various options before you buy a property, since it is not always possible to make changes later. While French succession tax has been abolished between spouses and PACS ((Pacte Civil de Solidarité,a form of civil partnership available to same and opposite sex couples) partners on assets transferred on death, France still applies succes- sion law. French assets devolve first to any natural and adopted children of the deceased in preference to a surviving spouse, including chil- dren from previous relationships. These rules also apply to non- residents in relation to French property in personal ownership, and can also apply to properties in company ownership. Joint ownership For most married couples who do not have children from a previous relationship, the simplest and most economic solution is to buy in joint names and sign a community mar- riage contract. The community marriage con- tract allows jointly owned property to pass to the surviving spouse on the first death without the inter- vention of French succession law. You simply register your mar- riage contract as régime de la commu- nauté des biens with a clause attribut- ing the whole of the community to the surviving spouse and the prop- erty will pass to the survivor. renounce their right to challenge the arrangement. Such a renouncement can be complicated to arrange. There are two basic forms of joint ownership aside from the community marriage regime: indivision and tontine. If you buy en indivision, each half is seen as separately owned by “For most married couples who do not have children from a previous relationship the simplest and most economic solution is to buy in joint names and sign a community marriage contract.” You need to be French resident or a French national to use this method for all assets, but it can be utilised for French properties even if you are non-resident. The contract does not have to have been put in place on pur- chase and so can be applied to existing properties you already own, though you would normally set it up on purchase if you are aware of the option, since it is cheaper to do so. It is not effective against chil- dren of earlier relationships unless your current spouse has legally adopted them or they agree to each spouse and is separately inheritable under French succes- sion law. If you buy en tontine, the survivor takes the property (or shares in a company, if they are owned en ton- tine) and French succession law is by-passed. However children can challenge the tontine arrangement if they feel they are being disinherit- ed. The clause must be inserted into the purchase contract and cannot be added at a later date. Sole ownership This may be advantageous in cer- tain family circumstances where one party has children and the other does not. The children of the partner who dies first will have no entitlement to the property if the other owns the property. One downside is that if you would like to pass assets to your partner’s children, a much higher rate of tax will apply (60% if there is no legal relationship between the children and you). Likewise, if you are not married to your partner and have not entered into a PACS agreement, if he/she inherits the property on your death he/she will have to pay 60% on the value inherited. If you gift half or all the prop- erty to your spouse or PACS part- ner before death, succession tax will be applied on assets over €76,988. Putting the property in the names of your adult children is usually not sensible unless you have a short life expectancy. UK domiciles should seek UK inheri- tance tax advice on this step. Company ownership Ownership via a corporate struc- ture is generally more expensive to set up and administer. French tax is payable on income or gain derived from the property, and there will be personal taxes on extraction of profit from the com- pany. In certain circumstances it can however be advantageous – for example, for a group of people buying the property together or children outside the marriage. This structure is only of benefit if you do not become French resi- dent, and if the property is not to be let. An SCI is a special type of French company created to hold property. Normally this type of company is transparent – the shareholders are effectively treat- ed as if they own the property personally for income tax, capital gains tax and wealth tax purpos- es. It is most beneficial for UK residents who wish to avoid French succession laws, but should not be used if you let the property furnished, or the compa- ny will be trading in any way, since this will make it subject to French corporation tax. A UK company owning French property will pay UK corporation tax on profits generated from renting or selling it. Corporation tax will also be due in France on the same profits, although credit will be given in the UK for any French tax paid. An offshore company in a ‘tax haven’ is subject to an extra French tax charge of 3% of the value of the property each year. www.blevinsfranks.com November 2008 ? EXPAT INVESTOR 23 www.expatinvestor.com November 2008 ? EXPAT INVESTOR 19 /04 4:15 PM Page 4 STATISTICS AND ANALYSES Don’t bank on the inheritance ? 21% said that they will continue to work beyond retirement. The young proved resilient to the current economic difficulties with over a quarter (26%) of those aged 18-35 feeling better off now than 12 months ago and more likely to feel optimistic about the next 12 months than those aged 36 and over. In addition to remaining upbeat about their financial future, over half of those under 36 are keeping an eye on the future and say they plan to save more going forward. Commenting on the findings, A medley of statistics and analyses revealing much about our Exed200811p1.qxd 17/11/08 11:11 AM Page 1 responses to £4.95/ €7.50/US$7.50 £4.95/€7.50/US$7.50 Serving expats for more than 19 years Serving expats for more than 16 yearswww.expatinvestor.com e than 17 years saving, investing and spending our money. More than one in five (22%) adults aged 26-35 years are hoping to cash in their inheritance to fund their retirement, according to research from Standard Life. However,with over half (55%) Investor of those aged 55-65 feeling worse off now than they did 12 months ago and 45% ofsame age bracket predicting they will be worse off in another 12 months time, Standard Life warns not to bank on an inheritance alone to fund retirement. The latest wave of the Standard Nov 2008 Life Savings and Investment Index also found: ? 8% intend to use the money tied up in their property to fund retirement ? 17% plan to move to a smaller property to fund retirement email@example.com June 2005 “There are those that you know you should read, and then there’s the magazine you will read.” In this issue 6 Offshore savings Well-feathered nest-eggs from the current best payers. 14 15 18 24 Estate management The art of giving it all away and minimising IHT. Moving abroad A smooth transfer to Singapore with advice from The Fry Group. Cross-border spenders unite How not to get ripped off when shopping across borders. Offshore trusts What Jersey offshore trusts can do for your financial planning. Regulars 10 Offshore funds 11 Investment news 12 Offshore savings 21 Property investment 22 Offshore mortgage market The UK’s European Consumer Centre is throwing a life-line to those shoppers falling foul of con- merchants as they indulge in a little cross-border spending. UK citizens can log on to find out what their consumer rights are when making purchases at a distance, and how to resolve disputes with retailers. The site also offers some pertinent tips about avoiding the latest scams. The OFT-backed UK European Consumer Centre is actually based in Basildon, Essex. Like its cousin, Consumer Direct, it can be contacted via the telephone or by logging on to its website at www.ukecc.net Here, you’ll find free information on consumer rights in Europe as well as assistance in dealing with any cross-border disputes in which you’ve become embroiled. “We want you to feel as confident when shopping in another country as you do at home,” they say. The information available covers Bringing advisers and investors together Investor Serving expats for more than 17 years £4.95/ €7.50/US$7.50 www.expatinvestor.com air travel, package holidays, timeshare and holiday clubs, international mobile telephone charges, shopping online, car purchase and maintenance, internet auctions, banking and scams. Under the banking section, visitors are briefed on regulations covering cross-border payments including electronic payment transactions, credit transfers and charges. The pages dealing with scams are particularly interesting. Forewarned is forearmed is the motto here, and it stands to reason that well- informed investors will be less likely to fall victim to fraudsters. The UK me&my easy option Enjoy a great rate and easy access. Euro fraudsters named and shamed THIS BOOK COULD SAVE YOU THOUSANDS OF POUNDS EXPAT MONEY is the unique personal finance guide for Brits abroad. It explains simply and clearly how to make the most of your money whenever and wherever you want. THIS BOOK COULD SAVE YOU MANY THOUSANDS OF POUNDS. EXP EXPAT MONEY A new trading standards institute helps consumers get to grips with their cross-border shopping rights, as Expat Investor reports. The Definitive Personal Finance Manual for Brits Abroad HANNAH BEECHAM & JOHN O’MAHONY European Consumer Centre offers the following advice: Do not: ? enter into conversations with organisations that contact you unsolicited. ? respond to unsolicited mails or emails. ? part with any money, to either pay fees or purchase a product in order to claim a prize. ? call a premium rate telephone line. ? give out any personal information such as banking and credit card details or copies of documents such as your passport or driving licence. If you have already sent money or provided bank details, the site suggests: ? do not send any more money. Unfortunately, if you have already parted with money it may be very difficult for you to get it back. ? if you have given your details to a third party that you do not know and trust, contact your bank, building society or credit card company and close your account. If you find you have been caught out, try and help others by contacting Scambusters at the Office of Fair Trading (08457 224499) or by emailing firstname.lastname@example.org.Get your own back by getting the fraudsters on the scams list. You can also write to the OFT, European Enforcement Team, Fleet Bank House, 2–6 Salisbury Square, London, EC4Y 8JX. The OFT will not be able to assist you as an individual but they have enforcement powers to act on behalf of a group of consumers to try and prevent problems recurring. If you have lost money as a result of a scam, this should be reported to your local police or to the Metropolitan Fraud Squad, Wellington House, 67–73 Buckingham Gate, London, SW1E 6BE. If you believe that you may have been the victim of an e-mail scam you can report this at www.econsumer.gov, the International Consumer Protection and Enforcement Network’s (ICPEN) global online database for cross-border complaints. 4 EXPAT INVESTOR ? Three to avoid Topics covered include: ? currency exchange ? offshore banking ? banking abroad ? best buy savings products ? offshore mortgages ? expat investment opportunities ? insurance and health cover ? non-resident status – the expat’s best-kept secret ? dealing with the tax authorities - home and away EXPAT MONEY offers a comprehensive introduction to all aspects of expatriate personal finance and answers those essential money questions you’re sure to encounter. Whether you’re leaving to work, to retire or buying a second home, don’t leave the UK without it! About the author Hannah Beecham – the expat expert – is the most experienced and longest- serving journalist and editor in the expatriate finance sector. She was a founding member of the Financial Times magazine, The International, and for 11 years has been the editor of Expat Investor, as well as offshore finance editor of the International Express. EXPAT MONEY – the only guide to expatriate personal finance matters is published by Summersdale (paperback, £8.99) and available through all good bookshops and internet booksellers or through www.summersdale.com unsolicited text or telephone message telling you that you have won a major prize such as cash, a car or luxury holiday, or a ‘mystery prize’ worth at least £1,000. You are told to urgently ring an 090 number costing £1.50 a minute to find out what you have won. Often there isn’t really a prize or November 2008 the prize you receive has been wrongly described and turns out to be a near worthless book of discount vouchers, or a holiday voucher with stringent restrictions attached. You will often have to pay more money to use the ‘prize’ on top of the cost of the premium-rate phone call. Winning a ‘free’ holiday You may get a phone call at home or a scratch card thrust into your hand claiming you’ve won a free holiday. Be very careful; you will almost certainly have to pay for so-called ‘extras’, such as flights and other add-ons. Your ‘free’ holiday will end up being more expensive than if you had booked it yourself. You may have to go somewhere you don’t want to go at a time that doesn’t suit you, or even go to a six-hour presentation about a holiday club. They’ll emphasise that this is not a timeshare. In one sense they’re right, because you will not necessarily be given a chance to cancel any commitment you make if you have second thoughts, as you would under the regulations which govern the marketing of timeshares. You’ve won a top prize You may receive a mailing or 6.50% eAccess2 Offshore internet banking for expatriates For more information from our advertisers or about products featured in Expat Investor enter the Fast Facts number onto the Reader Reply Service coupon on page 20 or go to: expatinvestor.com Gross/p.a. .. Internet Savings Account .. Great for regular savings Cheque overpayment scams This could be a response to an advertisement or online auction posting you’ve placed, offering to pay for the goods/services you are selling by cheque. At the last minute, the buyer comes up with a reason for writing the cheque for more than the purchase price, and asks you to transfer back the difference after you deposit the cheque. If you deposit the cheque, you lose. Typically, these cheques are counterfeit, but they’re good enough to fool bank staff – when they bounce, you are liable for the entire amount. Don’t accept a cheque for more than your selling price, no matter how tempting the plea or convincing the story. Ask the buyer to write the cheque for the purchase price. If the buyer sends the incorrect amount, return the cheque. Don’t send the goods. Readers can turn to page 18 for guidance on cross-border spending and how to safeguard your consumer rights. expatinvestor.com Interest available Annually, Monthly or Deferred . Minimum balance only £1,000 Deferred interest for tax planning Apply online now at www.bbi.co.im Interest rates are effective from 3 July 2008, variable and quoted gross % p.a. that is, without any deduction of tax. Monthly interest is also available at 6.30% gross p.a. (AER 6.49%). This account is only available to applicants over the age of 18 and is not available to UK residents. Bradford & Bingley International Limited, International eSavings Unit, PO Box 263, Douglas, Isle of Man IM99 2JJ British Isles. EU Savings Directive rules apply to EU resident depositors. It is the responsibility of the depositor to declare any interest received to their relevant tax authority. AER stands for the Annual Equivalent Rate and illustrateswhat the interest rate would be if interestwas paid to the account once a year. Bradford & Bingley International Limited is registered in the Isle of Man No. 052221C. Registered Office: 30 Ridgeway Street, Douglas, Isle of Man, IM11TA, British Isles. Licensed by the Isle of Man Financial Supervision Commission to take deposits. Fast Facts 99000 Andrew Tully, Pensions Policy Manager, says, “With each generation living longer than the last, and the cost of living rocketing, many parents’ plans of leaving behind an inheritance could be foiled. Taking responsibility for the future and not relying solely on a generous inheritance could mean financial freedom and peace of mind in years to come.” Julie Hutchison, Standard Life’s Head of Estate Planning adds, “For those who are able to leave a nest egg for their children and grandchildren, it’s important to check that they are maximising the tax advantages available to them. Any inheritance amounts above £312,000 are potentially taxed at 40%,making a large dent in the potential nest egg. Taking time to write a Will and to seek advice from a qualified financial adviser is time well spent and could possibly save thousands in IHT.” Expat Money– the definitive personal financemanual for Brits abroad Parents fork out £233bn to support their adult kids New research from insurance, pensions and investments group LV= reveals that parents spend a staggering £233bn on supporting their adult children, and are foregoing their own financial freedom to support their children. The study, which was carried out amongst adults aged 40 years and over who have children 18 years and over,found that nine out of 10 parents (94%) continue to contribute financially towards education and other major purchases such as houses and cars, plus living expenses, once their children have reached ‘adulthood’. Over half of all parents surveyed (55%) admitted to helping their adult children with general living costs, indicating that the ‘credit crunch’ and rising living costs are impacting on the finances of adult children. Nigel Snell, Communications Director, tells Expat Investor,“Parents certainly like to financially contribute, if they can, towards large purchases for their adult children, such as weddings and deposits for first homes. However, it seems that the current economic climate is impacting on day-to-day finances too.Parents are the hardest hit, with a large proportion admitting that they are helping to cover their children’s living expenses, as well as meeting their own financial commitments.” Parental contributions Overall parents contribute £21,540 to their children, after they have reached ‘adulthood’, in the areas shown in the table below. Mr Snell concludes, “Our study shows that parents can no longer expect their children to pay their own way once they have flown the nest.More than ever it’s true to say that having children means signing up to a lifetime financial commitment.Many parents will have had to put some plans on hold to manage the costs associated with raising a family, and once their children are old enough, parents should begin to encourage their own children to make small provisions, so that the financial burden can be reduced and parents can enjoy more financial freedom in retirement.” What parents financially helped with What they spend on average First Home Savings and Investments £5,602 63% of parents have contributed more than £3,000 towards their adult child's first home, with 31% contributing more than £9,000. £3,340 64% have contributed more than £1,000 towards their adult children's savings and investments, with 22% donating more than £5,000. First Car Wedding University Fees Travelling £1,702 42% of parents contribute more than £1,000 to the cost of their child's first car, with 15% of parents contributing more than £3,000. £3,111 19% contributed more than £5,000 towards their child's wedding. £2,245 per year, totalling £6,735 (based on a three year degree course) 21% of parents spend more than £3,000 a year on their child's university fees. £1,050 25% of parents contributed more than £1,000 towards their adult child's travel costs. Total £21,540* * This does not include contributions towards general living costs, which 55% ofparents admitted to helping their adult children with or other costs that may contribute towards. The changing face of retirement AEGON research reveals a significant shift in the way 50 to 65 year-olds are viewing retirement, showing how role models such as Harrison Ford and Madonna are turning the ‘baby boomers’ into a generation of ‘grandad-olescents’. Less than one in three (29%) says they intend to stop working when they reach retirement age despite the vast majority believing they would at least “get by” financially if they were to do so. But are these expectations grounded in reality and what financial needs will this generation EXPATEX MONEY MONEY HANNAH BEECHAM & JOHN O’MAHONY EXPAT EXPATEXPAT www.expatinvestor.com To register for Expat Investor digital edition, visit the website at