Page 16

taxation

finance

is it Secret, is it Safe? With the focus of the UK HM Revenue & Customs (“HMRC”) targeting tax avoidance and the moves in European jurisdictions to ‘out’ tax evaders and so called ‘fiscal ghosts’, Steve Bold of The Family Office Europe, a practice dedicated at assisting UK expats, explains some of the tax implications of moving abroad and living in Gibraltar and Spain. In Lord of the Rings Gandalf, when asking about the ‘One Ring’, asks “Is it secret, is it safe?” This phrase aptly describes the conundrum facing many UK expats in Gibraltar and Spain. For many years now UK expats have been merrily moving to sunnier climes to take advantage of friendlier tax regimes in the knowledge that HMRC would find it difficult to impose tax on any income or appreciation in the value of their assets or investments. However, many have been living on borrowed time. So what can be done to ensure that, although their position is no longer necessarily secret, at least their assets can be made safe from unwanted raids by HMRC or even the Spanish Tax Authorities?

What has changed?

Over the past 10 years, there has been a sea change in the way HMRC and other jurisdictions have approached so called tax

16

avoidance by its citizens. In essence, a pro-active and aggressive information gathering capability has been implemented and expanded upon. Unfortunately, whilst treading this path, the policies have had unexpected and unwanted side effects on legitimate tax planning.

gains to HMRC. The European Savings Directive ensured that EU banks had an obligation to disclose account details at the request of another Member State and, more recently, the USA led Foreign Account Tax Compliance Act (“FATCA”) legislation is gaining momen-

The Spanish Authorities announced legislation in 2012 that requires any person living in Spain to disclose their worldwide assets This began with the Offshore Disclosure Facility morphing into the Liechtenstein Disclosure Facility and the Swiss Accord. Numerous UK centric opportunities followed for doctors, plumbers, teachers and other professions to take advantage of a favourable voluntary disclosure of non-taxed income or

tum. In the 2013 Budget George Osborne reaffirmed the UK’s policy to target non-compliant UK expats and follow the lead of the USA. The US FATCA is being mirrored by the UK in what is dubbed “Son of FATCA”. This will require foreign banks and

financial institutions to disclose details of accounts held by UK individuals including balances, receipts, and withdrawals to HMRC. Furthermore, withholding tax on income from UK financial assets held by the foreign banks or financial institutions may be levied. Failure to report these details to HMRC carry the risk of hefty penalties on understatements of income if undisclosed. The Spanish Authorities announced legislation in 2012 that requires any person living in Spain to disclose their worldwide assets. Living in Spain simply means being physically present in Spain for more than 183 days per annum. Many expats meet this requirement despite claiming residence elsewhere. Worldwide Assets includes a long list of bank accounts, trusts, company shareholdings, investments such as offshore bonds and so on. Pensions are exempt from reporting but if this “big

GIBRALTAR MAGAZINE • MAY 2013

The Gibraltar Magazine - May 2013  
The Gibraltar Magazine - May 2013  

Gibraltar's fabulous business and leisure magazine. Crammed full of great features from finance to football, from fashion to arts. Enjoy i...