Penelope Wise Blogs

Penny Wise but not Pound Foolish! But remember: I am not offering investment advice. My comments are just for your general information; I do not recommend investments, and you should take professional advice before entering any investment contract.
Penelope blogs on investment and financial services around the world: mainstream and alternative. Contact: penny@lowtax.net

13 February 2011

My old aunt Gloria died a few weeks ago in Menton, where she had an apartment for the last twenty years of her life. We had been very close since I was a child, and it was very upsetting, although she knew it was coming and didn't seem that bothered. I went over for the funeral, and afterwards there was a scene in a notary's office, just like something out of a French version of Dickens, when we heard what she had left us. Gloria wasn't mega-rich, but she wasn't particularly poor, either. Tell the truth, I wasn't really expecting anything much, because she had children with their own families, who are much more deserving than me. I would have been more than happy with a ring or two and perhaps one of the family pictures off her dining-room wall. Well, I got those (she had already told me, even asked me which ones I wanted), but I was gob-smacked to get a lot of euros as well in a bank account in Monaco, 'as a token of my appreciation for her friendship over so many years', said the will. In French, of course. It's true I had visited Gloria several times a year for longer than I can remember, but I did it because she was good fun.

Anyway, here I am with more euros in one place than I ever expected to see, and wondering what to do with it. Have lunch, is the answer, of course, as usual, and in this case with Jeremy, who knows everything about everything. We met up in Paris on my way back to London and ate at Maxim's. It never palls and the food just seems to get better and better. The maitre d knows Jeremy of course, and even pretended to remember me, so we had that fantastic table in the window. Eat your heart out, world!

I pay my taxes in the UK, and I am even truthful about the income I get from investments in Switzerland and Canada; but like a lot of other people in the UK I am really beginning to wonder. I'm a writer, and writers can write anywhere, right? What am I doing slaving away in the cold and drizzle just to pay off Gordon Brown's debts? My partner, Jack, retired not long ago; he has a small yacht at Bosham, and keeps nagging me to join him on a Mediterranean cruise. We do enjoy being on the yacht together, it's a fact.

Jeremy, on the other hand, doesn't seem to live anywhere. He has places to live, yes: I know about a flat in Cyprus, a house in New Zealand and a boat, and there may be others. "So do you pay tax, Jeremy?" I asked him quite brazenly after the first couple of drinks (vintage Moet: the ordinary stuff is a bit thin and sharp for my taste but go back ten years and it's one of the best).

"I try to," said Jeremy, laughing, "but when you live as I do it's quite difficult."

"What do you mean?" I persisted, "I'm seriously thinking about leaving England and I really need to know how to organize myself."

"I didn't plan it this way," he said more seriously, "it just happened as a result of the projects I get involved in all over the world. Take Cyprus, for instance: I was there for four or five years and I did fulfil the criteria for residence. I went to an accountant and asked him to register me for tax. He was a very up-market figure, knew the President and the Chairman of the Central Bank, all that. He looked at me funny and said: 'What do you want to do that for?' Anyway I made him agree to get on with it and we filled in a form together. About a year later - I had forgotten all about it, actually - I met him in the street and asked him how it was going. 'Oh,' he said, 'yes, sorry, I must get on with it.' Anyway, after three years of that he did go to the tax authority and they said I had to be officially resident before they could take money from me. I was already about to leave Cyprus, so I gave up."

"And what about the yacht?" I asked, "How does that figure?" I know that Jeremy spends about half the year swanning about the Mediterranean in his yacht, and sometimes has a crew sail it to New Zealand or the Caribbean. I can't imagine that for myself, but I could stretch to a small yacht in the Med, especially if I sell my flat in London.

"When you're on the yacht," explained Jeremy patiently, "you aren't anywhere, from a tax point of view. Obviously if you moor in Chichester and live on your boat all the time, you're resident in the UK, so you've won nothing. But if you sail around the place, not spending long in any one marina, you have to pay fees of course, but tax isn't on the agenda. I tend to sail to places where I've got money, so that I can sit down with the manager over a coffee. Everything is so much easier that way. There are rules, of course, but when you're there in person they just don't seem to matter as much."

"And where is that, then?" asked I, imagining he was going to say Monaco or Nassau.

"Cyprus," he said, surprisingly. "There are good marinas, not too expensive, and they speak English. Dubai; there's no tax anyway and it's the most cosmopolitan place in the world. Hong Kong, although it's a bit hard to get to, and I do tend to fly there from New Zealand. Vanuatu: that's a really laid back place. Nevis; they're trying really hard to climb into the big-time and you can get fantastic deals. I'm thinking about getting a passport there."

"Oh," I said, nonplussed.

"You need practical advice, then," said Jeremy after I had explained my problemette and the number of noughts involved. "You can easily afford the Mediterranean yacht idea, and you could have a flat in Cyprus and another in Dubai. Actually it's a really good time to buy, especially in Dubai. Or you could rent; it's really cheap at the moment. But whatever you do, get the money out of euros and preferably out of Europe. Dollars are no good, either. You may get a good interest rate, but all these currencies are just going to go down the tubes."

I looked at him questioningly.

"It's the debt," he said, "they're all bankrupt. The euro-zone, the UK, America."

"But Cyprus is in the euro-zone?" I ventured.

"You can have a Swiss Franc account anywhere," he said, a bit patronisingly. "Or even a renminbi account nowadays, especially in Hong Kong. And you don't have to keep the money in cash; there are plenty of investment funds denominated in safe currencies as well. Cyprus still has a quite non-European attitude to things. You'll see. It's not like the Channel Islands or Luxembourg, with the regulators crawling all over you."

Jeremy could see I was biting. "Why don't you come to Dubai next month? Bring Jack with you. I'll take you to see some of my advisers. Believe me, you won't regret it."

The warm glow of Maxim's and Jeremy's enthusiasm lasted me all the way back to St Pancras International, and in the taxi going home to Chelsea, with sleet lashing at the windows I started to plan.

"Now then, Jack, about that cruise . . . "

More blogs from Penelope Wise

Not Another Wretched Pin-Code To Remember!

Ethical Moonshine

Shall We Take A Glass Together?

A Walk In The Forest

No Pensions, Please, We're British

The Ex-Wives' Charter, Norwegian Style

To Will Or Not To Will?

Time To Get Out Of Money?

There's No Fool Like A Gold Fool

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