With the ever changing economic climate of the modern world, the old days of yacht crew being able to hide from the tax man are slowly disappearing. It is no longer a viable option to just bury one’s head in the sand and say “I’m offshore and not in my own country so don’t need to worry about paying tax”. New legislation and the fact that many governments are now slowly waking up to this so far untapped world of money mean that the above quote is no longer a viable option for the modern day yacht crew no matter where they are living or working.
New legislation has been brought in to place so that countries and their tax regimes are able to share information about foreign nationals between each other, with over 100 countries already committed to the Common Reporting Standard developed by the OECD, the need to be clued up on various tax implications and how your money is invested is even more important. The information that is shared is not just on those that tax authorities suspect of tax evasion it will include everyone, that is wether you are tax compliant or not. The information that is to be shared includes: account balances, interest, dividends, sales proceeds from financial assets.
This new information sharing system is due to come in to effect in 2016, with the information collected then ready to share in 2017, with 58 countries committed to be ready by then, including Spain, the rest of the EU, Isle of Man, Jersey, Guernsey, Gibraltar, Cayman Islands, Iceland, Liechtenstein, San Marino, Argentina and South Africa. A further 38 will start in 2018.
Within the EU itself the Common reporting standard will be implemented by the Administrative Co-operation Directive, a system which provides for the automatic information sharing of interest, dividends and other investment income, account balances, sales proceeds from from financial assets, income from employment, life insurance, pensions, directors fees and possibly most importantly property. This last one could have massive implications for a large number of yacht crew who have used their money to buy property in Europe, with a fair majority unaware that having bought property in say Palma their tax domicile may be affected.
The loss of financial privacy is a significant change and affects everyone who lives in one country and has financial assets in another. But what won’t change is the the fact that every individual can structure their finances in a tax efficient manner, this is also something which is a valuable piece of advice if you decide to leave the yachting industry and decide to settle somewhere. As Roy Duns of St James’ Place wealth management says “For those crew who have planned in advance and have pensions and/or investments there is a need to see how they will fit in to the tax regime of wherever you are going to live . An example of how not to do things are the many British citizens who go to live in Spain and become Spanish tax resident whilst retaining their existing UK based investments, only to find that what were tax efficient investments in the UK are just the opposite in Spain .The lesson here is that you need to ensure in advance that the pensions/ investments that you hold are appropriate for the tax regime under which you are going to live and if not do something about it !
If all the above sounds too daunting , do not be deterred from taking action , simply take specialist advice from a reputable adviser.
For more information on how to plan for the future please email email@example.com.