Expat Informer Cyprus

Cash Management – Safety First

liz — Wed, 29 Jun 2011 06:41:59 +0000

There is still a great deal of concern at the moment regarding the safety of banks. So how can you protect yourself? Whilst many governments have increased their deposit protection schemes to more realistic levels, no one has any idea how long it will take to be compensated if a bank defaults. It is likely to take several months but it could also be years before you have access to your money again.

The sensible approach is spread your money amongst several banks. The amount of deposit with each bank should not exceed the compensation limit (normally double for joint accounts) in the jurisdiction of the bank’s domicile. The main problem with this is the aggravation and time it takes to open a number of accounts with different banks. Then there is the problem of going through the rigmarole again each time one of the banks becomes uncompetitive.

It is possible to overcome these problems by using an offshore structure that will allow you to hold several different bank accounts under one umbrella. There is only one application to complete and the provider then opens the requested accounts with the various banks. If a bank becomes uncompetitive, a simple faxed instruction is all that is required to close the account and open another. Not only that, the interest earned is not subject to withholding tax under the European Union Savings Tax Directive or the Contribution for Defence in Cyprus.

Other investments can also be held making this an administratively simple and safe home for your money.

If you would like to know more, please contact

Mark O’Shea Cert PFS, TEP, Alexander Beard Group, Limassol,

Tel: 25348888 or 9926 8073, Email: mvo@abg-int.com or

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Is Your Estate In A State?

liz — Tue, 24 May 2011 08:38:52 +0000

By Mark O’Shea of the Alexander Beard Group

One aspect that is often overlooked when living the expatriate lifestyle is what happens on death when you have assets in different countries. Normally you would have a will (if not you should!) in countries where you have property, but what about other assets such as bank accounts and investments that are often held offshore? These should also be covered by your will but it is not often realised that it will still be necessary for your executors to obtain probate in the countries where the assets are located.

Probate can only be issued once the legal process has been completed to prove that the beneficiaries are legally entitled to inherit. This may not necessarily be a huge problem but it can take many months and be expensive, as a lawyer in the country usually has to be involved. Remember also that additional hassle is the last thing loved ones want at a time of bereavement.

Having bank accounts in joint names will normally overcome the problem on the first death but probate will be still required on the second death. However, this may not always help as inheritance laws can differ from country to country. In certain countries, such as Cyprus, the laws dictate that the surviving partner does not automatically inherit. The account is not considered as being owned jointly but that each partner owns 50%. If the bank is informed of the death of one of the account holders this can result in the account being frozen until probate has been granted and the courts have decided who is legally entitled to the 50% share. This can happen in Cyprus, even if a will is in place. Where there is no will, the children will be entitled to inherit part of the money under the forced heirship rules.

It is possible to hold deposit accounts in a structure that can overcome this problem.

As far as investments are concerned these can be covered by a simple arrangement that will negate the need for probate. You should also ensure that life insurance policies are held in trust as this avoids probate and can also take the death benefit out of your estate for UK inheritance tax purposes. This can often be sorted out at minimal or nil cost.

UK Inheritance Tax (IHT) is paid when an amount in excess of £325,000 is left to anyone other than a UK domiciled spouse. Mixed nationality marriages and unmarried couples could therefore have a tax liability on the first death. The tax is 40% of the amount in excess of £325,000. The tax is assessed on worldwide assets for anyone who is UK domiciled, even if you don’t live in the UK. For those who are not UK domiciled, the tax is assessed on any assets in the UK.

You should be aware that any PEP’s and ISA’s are subject to IHT. Also, it is not often realised that the dividends and interest from these are subject to the Special Contribution for Defence tax in Cyprus.

Mark is a member of the Society of Trust and Estate Practitioners and the Personal Finance Society in the UK.

We, at Expat Informer have years of International Financial Services experience. If you have any questions or would like impartial, up-to-date advice please do not hesitate to contact us.

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Barcelona – On A Wing And A Bus

liz — Tue, 24 May 2011 06:14:51 +0000

Ryanair – ‘Direct from Larnaca to Barcelona for Only €8’!

I didn’t really believe it when I was told about it and when I read the news feature it did state that Barcelona was not on as a special offer. However, a direct flight from Cyprus to Barcelona was something that was definitely interesting to me so I decided to check it properly.

New Years Eve in Barcelona was the aim so I went online to check and found the flights that were suitable. Flying out on Wednesday the 29^th and coming back Sunday the 2^nd seemed perfect. The outward flight was a bit late at night but not too bad and the total cost of €429 .14 (including one piece of luggage @ 15 kilo) was no where near the original €16 suggested, but it was still good value so I booked it.

Next was the hotel, and I wanted somewhere decent in the City so started checking a few sites only to find that there were cheaper places to book than Tripadviser and expedia, I got an excellent deal through Yeego.com that was €100 cheaper than another discount site! I did make sure it was the same hotel I selected as I have had experience of hotels having the same name but being very different!

All in all I had spent a lot more money that I wanted to but I was happy as we had always wanted to visit Barcelona but we never managed to get there in the past.

My wife was delighted to be going and immediately checked a few things online, pointing out that the ‘Barcelona’ flight from RyanAir that I had booked lands in Girona, over 100km away from where we wanted to be! So if the flight is actually on time we will arrive at 22.25 and hopefully be out of the airport before 23.25 with 103 km to go to Barcelona. Not something I would have planned to do and I do feel more than a little misled by Ryanair’s newspaper description of flying direct to Barcelona!

We boarded at Larnaca and as it would happen we did get to sit next to someone who claimed they paid €8 for their flight, so it would appear that if I had taken the risk and waited we could have got there for next to nothing!

Full marks to Ryanair for getting us there on time and despite the distance, the bus was a smooth and comfortable way to get the rest of the way to Barcelona, it leaves the airport very regularly and it took about an hour. No problem with the taxi to the hotel, they have meters that work! (forget the Metro, it finishes at midnight)

We stayed at the NN Barcelona Universal Hotel, it was well located but our first room was a bit noisy as we were on the main road side. I asked to change rooms and the receptionist was very pleasant and moved us with apologies. The next room was nice and quiet except that it suffered the same as the first one, mattress protectors that creaked every time I moved, if you’re a light sleeper you may have problems, but if you’re incontinent, this is the place for you.

There’s plenty to do and see in Barcelona so you may find yourself walking a fair distance, so take some comfortable shoes. If you are going to visit Gaudi’s Park Guell and decide to go by Metro you have to walk the last 200metres up a very steep hill, and if you are not in peak condition it could be dangerous so check your medical insurance!

Coming back to Cyprus was uneventful, taxi to the bus station and then straight to the airport by bus, but make sure you don’t try and get on the bus with your hand luggage, the driver wouldn’t allow it.

The airport proved to be a complete shambles, first they got everyone queueing at the wrong gate, so when they finally changed it all those at the front ended up at the back of the new queue. They then split the queue into two and expected everyone to remain in their line as they opened only one gate, didn’t they realise we were flying to Cyprus?

Anyway, we made it back and were on time again!

Verdict

Barcelona – Well worth the effort and we didn’t see or hear of any of the famed pickpockets or handbag snatchers!

RyanAir – would have been better if they had mentioned they had moved Barcelona but I would use them again, especially if I was booking last minute and could get a really low price. I would pay the extra for priority boarding on the way back as it was not well organised at the airport. Great value.

NN Barcelona Universal Hotel – despite the creaking mattress covers I would stay there again

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Government Watchdog Blows £4.7 Million on Hotel Rooms!

liz — Fri, 29 Apr 2011 08:46:20 +0000

In the past 3 years the Spending watchdog the Audit Commission spent £4.7 million alone on hotel rooms for staff!

They have also spent £ 20,000 in the last 2 years on luxuries such as meals in Michelin star restaurants including Marco Pierre White’s L’Escargot, frequented by the Rolling Stones Mick Jagger, the Daily Mail reports.

Local government minister Grant Schapps said: “It seems the Audit Commission was not applying checks and balances on itself that it preached to councils.

“What is so disturbing is that their expenses read like a shopping list for some lavish party.”

The figures were revealed in an answer to a parliamentary question by conservative MP Eric Ollerenshaw.

An Audit Commission spokesperson said; “In common with many public bodies the Audit Commission uses government procurement cards for low value transactions or where a purchase order is impractical.

“Between April 2008 and March 2010 we processed 8,818 transactions at an average cost of £125. All purchases were for legitimate business purposes.

Expat Informer Comment:

Well done to Eric for asking the question. Fine dining, cinema tickets, doughnuts, clothing, gym equipment, sweets and music from HMV might well be essential purchases for the Audit Commission but about £10,000 a week seems a bit excessive!

It’s not surprising that this body is due to be axed in the government’s Quango Cull, it should have happened a long time ago.

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10 Tips to Stay Healthy

liz — Sun, 03 Apr 2011 08:19:58 +0000

In a world where there is so much temptation it would be so easy to stray from the path of good health. Investing in a healthy lifestyle today will pay dividends in the future. Read my 10 tips to stay healthy and hopefully you will decide to include them in your everyday routine and reap the benefits!

1. Drink Water

Every cell in the body requires water to function. Keeping your body lubricated provides a host of benefits and you will reap the rewards immediately. Water is an important factor in weight loss as it helps to break down fat cells.

Try to spread your water consumption evenly throughout the day and aim to drink at least 8 glasses.

You will find your skin will look much brighter and healthier, you will have more energy and your concentration levels will be higher.

2. Be Positive

Don’t underestimate the power of positive thinking. It’s amazing that attitude can have such an effect on your health. Levels of confidence and self-esteem will rise and people will want to be in your company.

Your ability to make decisions will be enhanced and life will become enjoyable instead of a chore.

3. Exercise

Exercise is great for your physical and mental wellbeing. If you work your heart with cardio exercise your metabolism and blood flow rate will increase and you will feel energised.

Exercising will help you sleep better, get you looking and feeling great and so improve your self-esteem leading to a happier healthier YOU!

4. Make Time for Yourself Every Day

Do you lead a hectic lifestyle where you are juggling work, family and social commitments? Are you finding it hard to find time for YOU?

It is so important to take some time out of your busy schedule for yourself. Not only will you benefit but every other aspect of your life will benefit too.

5. Eat a Healthy Diet – Don’t Skip Breakfast

Breakfast is by far the most important meal of the day and it can give you the fuel and energy to get through the toughest of days. A healthy breakfast will kick start your metabolism, get your body working and wake up your brain.

A healthy diet will boost your immune system and give your body the nutrients it needs for peak performance.

Eating the ‘wrong’ foods can make you overweight, sleepy and miserable.

6. Smile and Laugh

If something really annoys you and stresses you out, try to see the funny side (there is usually one if you look hard enough!) because a good laugh is a great stress buster. Not only that, laughter is exercise, especially a good belly laugh! Have you ever cried with laughter? How great do you feel afterwards?

You must have heard ‘laugh and the whole world laughs with you – cry and you cry alone’ – how true is that?

Does it take more muscles to smile or frown? Who cares? Smiling and laughing are contagious – Be happy and those around you will be too.

7. Sleep

It is so important to get a good night’s sleep. While you are sleeping your body is performing vital maintenance work, boosting your immune system and recharging your brain. With adequate sleep you will feel more motivated, less stressed and more alert.

8. Control Stress

Many people thrive on stress but when it starts to affect other areas of your life and your ability to cope it may be time to reassess your stress threshold.

When you are constantly stressed your body experiences numerous changes affecting your mood, your blood pressure, your digestion and your ability to make decisions. Your skin will become dry and you may start to suffer with headaches and migraines.

If you feel snowed under and are having trouble coping, make a list and work through it methodically. Get some fresh air and make sure you eat and drink regularly. Exercise is a proven stress buster and it is amazing how much more clearly you can think after a bit of time away from your pressured environment.

9. Get Regular Health Checks

Health checks shouldn’t be exclusively for when you are feeling unwell. With regular screening any irregularities can be dealt with early often before you experience any symptoms. Remember, prevention is better than cure so book your health check today!

In the UK many health screenings are provided free of charge so there is absolutely no reason not to get them carried out.

10. Keep Your Mind Active

Physical and mental activity is crucial for a healthy brain. It is important to keep your mind active and challenged to maintain brain function.

If your brain is stimulated by learning new things, good conversation, playing games or doing puzzles it will keep sharp and alert.

Stave off dementia and memory problems by keeping socially, mentally and physically active.

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Written by Liz Mouncey of Bar Blue Limassol.

Offshore Investment Guide

liz — Thu, 03 Mar 2011 08:38:58 +0000

Why Offshore?

Tax Matters For tax purposes, FSA-Recognised Offshore funds are classified into one of two categories, and this determines what treatment investors’ returns will receive, and tax planning options.

1. ‘Qualifying’, or ‘Distributing’ Funds.
The first category is a ‘Qualifying’, or ‘Distributing’ fund, which must distribute at least 85% of its income to investors. Distributions are paid gross of tax, and UK investors are left to declare the income in their annual tax returns. The benefit here is one of cashflow: until the tax is paid, and depending on the timing and frequency of distributions, the money is better off in the investor’s account than being deducted at source.

Upon disposal, whether through sale or by switching to another investment, a capital gain or loss will be crystallised. Losses are allowable against the investor’s overall Capital Gains Tax (CGT) computation, and gains may be mitigated by both Taper Relief and the investor’s annual CGT allowance.

2. ‘Non-Qualifying’, or Accumulation Funds.
The second category is perhaps better known as a ‘roll-up’ fund. No income is distributed, the fund’s gains being re-invested to augment the value of the investors’ holdings. Unlike the accumulation units of UK funds, no attribution of a share in these gains is made to the individual investor, and so no liability to tax is incurred for the duration of the holding.

No doubt because the investor has enjoyed something of a tax-paying holiday, on disposal of this kind of investment the Inland Revenue debars access to the relief normally available on capital gains, and classifies the return as an ‘Offshore Income Gain’. Effectively, it will be subjected to income tax at the investor’s highest marginal rate, but at worst the exercise has enabled the investor to defer crystallisation of the tax liability until a point chosen by him or her.

In both these instances holdings in the name of a non-earning spouse will lessen the liability. Further, the investor can plan disposals to coincide with an anticipated move into a lower tax bracket – upon retirement, say. And if the proceeds are not repatriated at all – witness the increasing number of people retiring abroad – the UK tax regime can be sidestepped completely.

Confidentiality While conceding the need for greater degrees of co-operation with onshore authorities, the offshore centres’ tradition of protecting investors’ privacy still persists. If they are implementing measures necessary to maintain a reputation for probity, on money-laundering for example, and if they are co-operative when there is evidence of criminal activity, they will nevertheless actively resist any attempts at ‘fishing expeditions’ on the part of onshore tax authorities.

It is this confidentiality, and an asset repository one step removed from mainstream life, that can protect those who are subject to a risk of litigation: business proprietors, doctors, lawyers and people perceived to have substantial net worth. In our increasingly litigious society, it is not always the person directly causing an actionable event that gets sued. Litigants, maybe even frivolously, are likely to pursue those with loose connections to the chain of events, because they are seen as having deep pockets. And with increasing compensation levels, liability insurance may be insufficient to cover an award. If assets are less clearly identifiable or easy to recover, this can deter such actions, or at least circumscribe losses.

Frequently Asked Questions

How do I invest? While shares in many Offshore funds are available by direct application to the managers, the decision to invest in them is likely to be made within the context of broader financial planning. This, plus the desirability of expert guidance, makes an approach through an appropriate financial adviser highly to be recommended.

What happens then? Sit back. Your chosen investment vehicle will tell you, through its prospectus and subsequent communications, what your options are. Your own planning, along with the recommendations of your financial adviser, will help to determine if and when it’s time to make any further move.

How do I monitor performance? One of the conditions of FSA recognition is that the share value of your investment must be published via an accessible organ of record. Since you are looking at Trustnet, you are already connected to our extensive and constantly updated database. There are also plenty of paper-based financial publications available; one that covers this area with clarity and depth is the magazine International Investment.

Can I change from one fund to another? This depends on the constitution of your particular fund, and it’s important to understand what your options are from the outset. Most major management groups recognise the need to switch between lower and higher performance, with lesser or greater volatility, according to the investor’s evolving station in life and attitude to risk. As a result, a common structure is the ‘Umbrella’ fund, within which there will be established a number of sub-funds covering a range of asset classes and geographical areas. The ability to switch between these sub-funds is usually restricted to a limited number of changes per year, but free of charge.

How do I sell? As with investments in traditional UK Unit Trusts and OEICs, there is no publicly-traded market in the shares in these instruments. They have to be sold back to the managers who issued them and who, for the sake of clarity, are obliged to take them at their published prices.

What happens if something goes wrong? As in all such matters, prevention is better than cure, and it’s important to be well researched and advised from the outset. There are legal safeguards to protect your investment, and official regulatory bodies to enforce them – the fund literature should make clear what and who these are. Recourse in the first instance, though, is probably best sought through the intermediary or provider who set up the investment.

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