The answer is that
it depends on your residency status for tax purposes. Put
simply, if you would, in the normal course of events, be liable
for UK tax, say, then you will have a withholding tax levied
on your offshore money. If you’re liable for taxation
in a non-EU, non-US country, you should still, of course,
be paying tax on your money at some stage – usually
when you repatriate it. But in that case, the withholding
tax should not apply.
I use the word
‘should’ advisedly. Advised, to be specific, by
a leading international tax expert here in the UK whom I spoke
to recently about the issue. Some mechanism, he said, should
be put in place – some sort of declaration signed by
the investor or his advisors – to determine whether
your deposits will be liable for the withholding tax or not.
So: who are you?
Where are you resident? Where should you be paying tax –
in an EU country? The answers to these questions will determine
whether you’re caught by the withholding tax.
What is notable
is how few people know what is really going to happen. As
I mentioned in the article last month, a lot depends on what
Switzerland does. Not many people are expecting the Gnomes
to dismantle their banking secrecy completely. Next month’s
edition of Investment International will carry a series of
answers by leading Guernsey industry players to the questions
asked by my letter writers.
On to other matters.
I’ve either picked a propitious or a terrible time to
look at buying property, depending on your view of property
as an investment. In the UK, repeated predictions of doom
in the housing market never quite seem to come true, despite
higher real house prices today than just prior to the last
big crash. The governor of the Bank of England recently said
that house prices were too high, and some sign of slowdown
now appears to be happening.
The amount lent
by banks and building societies was lower in June than May,
and looks like it may continue in that trend. What this should
mean is better deals for buying in the UK. If you’re
looking to buy outside the UK, everything will depend on the
housing market where you are. Our property writer, Saundra
Satterlee, writes in this issue on how best to go about buying
a property back in the UK on a buy-to-let basis. (p34). On
Page 32, Tim Hyam looks at the firms which offer mortgages
specifically to expats who want to buy abroad.
