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Expert View: How To Buy Property Abroad

Tax rules frequently change, as they have in France, so buyers need to be careful not to get caught , says Armando Rosselli, head of tax and wealth structuring at Coutts. Big Apple: buying in prime cities requires tax planning Photo: Alamy By Armando Rosselli 8:00AM BST 13 Jul 2013 For our clients – many of whom prefer European destinations, notably France and Spain – estate planning comes to the fore. Inheritance rules differ between countries. In France, for instance, Napoleonic succession laws mean that there is a compulsory obligation to leave a certain proportion of a property to children. Advice will often be required to structure the purchase of the property – this will normally include individual or joint ownership or more complex structures such as corporate or fiduciary vehicles. Furthermore, in many circumstances local estate taxes remain payable, even if property owners remain residents of the United Kingdom for tax purposes. Most UK residents, even if relocating, will retain their UK domicile and will still suffer UK inheritance tax as a result. Relief against local inheritance taxes will usually be available via a double tax treaty agreement between the UK and the country where the property is located – but it goes to show why advice in both jurisdictions is vital. When our clients buy a French property, we bring together a UK lawyer and a reciprocal lawyer in France to facilitate the transactions, discuss estate planning and to liaise with conveyancers, known as notaires. There’s another reason to have experts on hand – tax rules frequently change, as they have in France, so buyers need to be careful not to get caught out. Buyers also need to be aware that property taxes may be due. Florida, for example, tends to have higher property taxes than many overseas destinations. We find that for many an overseas buyer it is a trade-off between an emotional purchase and wanting to live in a certain jurisdiction, balanced against the tax and costs they have to pay to live there. Whichever location you choose, whether it’s Florida, France, Portugal or Spain, you will find different planning regulations, succession laws and costs. Like any other investment, get all your ducks in a row before you sign on the dotted line – or you could end up with property or land without clear ownership, or not paying the correct amount of tax. First, overseas property buyers need to consider if the time they will be spending at their new overseas property could constitute taxable presence, and check whether there are double tax treaties in place that could relieve this, or whether other aspects might affect their individual tax status. Second, there could be local property taxes or duties applying on purchase and on an ongoing basis, which should be taken into account while considering the investment. In some jurisdictions, residents might only be allowed to buy residential property. Naturally, when it comes to buying property overseas, one of the key questions is financing. Should a property buyer borrow in the currency of the property’s location – and what are the ramifications if you do? If this route is chosen, there will be a currency exchange risk. This risk can be accentuated if someone borrows in the local currency, say euros, but all or most of their income is in a different currency, say sterling. If sterling falls markedly against the euro, a consequence would likely be that your loan repayments would increase, causing cash-flow problems. Foreign currency loans and assets might also have UK capital gains tax implications. We have strict lending criteria on overseas mortgages – it is vital that clients understand what they are getting into. While our clients tend to opt for the traditional expat countries for long-term occupancy, we are seeing different trends for those looking at buying a second home. Barbados is fast becoming the holiday home destination of choice, although some of our younger clients are turning to Ibiza. Others are looking at alternative options. For example, we had a client looking to buy a villa but who ended up buying a yacht. He now has a “floating villa” and can holiday in Barbados, Italy, Spain and Portugal – enjoying a variety of quality restaurants, beaches and resorts. It’s a decent solution – although yachts can be expensive to run and consideration still has to be given to tax and ownership. Whether people opt for a farmhouse, a villa or even a yacht, it is important not to let your heart rule your head. Consider the implications and take advice – it will help you keep your house in order. Armando Rosselli is executive director, head of tax and wealth structuring at Coutts Continue reading

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Global netizens worried over US spying

Global netizens worried over US spying (AP) / 8 June 2013 News that the US government has been snooping on Internet users worldwide came as little surprise to global netizens, who said they have few expectations of online privacy as governments increasingly monitor people’s digital lives, often with Internet companies’ acquiescence. Privacy activists concerned over the US National Security Agency’s selective monitoring of Internet traffic called on people to take measures to better protect their digital data ranging from emails to photos to social network posts. But most people eschew encryption and other privacy tools and seemed resigned to the open book their online lives have become. “It doesn’t surprise me one bit. They’ve been doing it for years,” said Jamie Griffiths, a 26-year-old architect working on his laptop in a London cafe. “I wouldn’t send anything via email that I wouldn’t want a third party to read.” This combination photo shows (clockwise from top L) Microsoft CEO Steve Ballmer at the Bill Graham Auditorium in San Francisco; Google’s headquarters on 8th Avenue in New York; people walking past the Apple Store at Grand Central Terminal in New York; the “Like” icon at the Facebook main campus in Menlo Park, California. US spies are secretly tapping into servers of nine Internet giants including Apple, Facebook, Microsoft and Google in a vast anti-terror sweep targeting foreigners, reports said on June 7, 2013. AFP From Baghdad, to Bogota, Colombia, many said they already carefully censor what they write online and assume governments are regularly spying on online activity, be it as part of global counter-terrorism or domestic surveillance efforts. “The social networks and email have always been vulnerable because tech-savvy people know how to penetrate them,” said Teolindo Acosa, a 34-year-old education student at Venezuela’s Universidad Central who was leaving a cybercafe in Caracas. Leaked confidential documents show the NSA and FBI have been sifting through personal data by directly accessing the US-based servers of Google, Facebook, Microsoft, AOL, Skype, PalTalk, Apple and YouTube. Following Thursday’s revelation, US President Barack Obama said Friday that the surveillance did not “target” US citizens or others living in the US — which does not mean their communications were not caught up in the dragnet. But that didn’t dampen the outrage of people who resent what they consider Washington’s self-anointed role as the world’s policeman. “To the United States, everyone is suspicious, even the pope!” said leftist Colombian Sen. Alexander Lopez. “Everyone is under observation these days and this should be taken up by the United Nations.” Lopez said he has no plans to close his Google and Microsoft email accounts. He figures he’ll be spied on no matter what he does. The revelation of global data vacuuming could hurt US technology companies if Internet users become disillusioned and abandon them in favor of homegrown alternatives that offer greater security. US privacy activist Christopher Soghoian said he finds it “insane” that so many politicians outside the United States use Google gmail accounts. “This has given the NSA an advantage over every other intelligence system in the world. The Americans don’t have to hack as much, because everyone in the world sends their data to American companies,” he said. Hossam El Hamalawy, a blogger with Egypt’s Revolutionary Socialists, one of the Egyptian groups that helped spearhead the 2011 uprising, said the dearth of locally developed Web tools means many around the world are simply stuck with US sites, even if they know the government is monitoring them. “The problem is that there is no alternative,” he said. “If you don’t use Facebook, what is the alternative social network available for the Internet user who is not an IT geek?” Soghoian predicted an increasing push by governments and companies in Europe in particular, where privacy has been a much bigger issue for voters than in the United States, away from storing data in US-based server farms. Indeed, under US law it is not illegal for the NSA to collect information on foreigners. The disclosure of the NSA data-vacuuming program known as PRISM is only the latest “of many US government programs created to infringe on personal freedoms,” said Carlos Affonso Pereira de Souza, a technology policy professor at FGV think tank in Rio de Janeiro. Going back well into the 20 th century, the United States, Britain, Canada, Australia and New Zealand ran a secret satellite communications interception network that became known as Echelon and searched information including telexes, faxes and emails, according to experts including US journalist James Bamford. The system was the subject of a 2001 European Parliament inquiry. According to a UN report released this week, such surveillance has been on a global upsurge with governments increasingly tapping into online personal data and even discouraging online anonymity by passing laws prohibiting it. The UN report said such activity has been expanding as technology advances, and that countries should prioritize protecting people’s online rights. “In order to meet their human rights obligations, States must ensure that the rights to freedom of expression and privacy are at the heart of their communications surveillance frameworks,” the report reads. Its author, Guatemalan Frank La Rue, calls for legal standards to ensure “privacy, security and anonymity of communications” to protect people including journalists, human rights defenders and whistleblowers. Civil libertarians in the United States were much more upset about a different revelation published Wednesday, that the NSA has been collecting the phone records including the calls, numbers, times and duration of all US citizen customers of the telecommunications giant Verizon. Continue reading

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Accelerating The Clean Energy Revolution With CA’s Cap-And-Trade

une 3, 2013 By Emily Reyna Emily Reyna Senior Manager of Partnerships & Alliances for CA’s Climate & Air Team, Environmental Defense Fund Six months ago, California launched the largest economy-wide cap-and-trade program in the world, in what many have deemed a grand experiment . Many people watched nervously as the market unfolded, despite California having applied the lessons   learned from the growing pains of the EU ETS and from six years of crafting the market rules in consultation with the state’s – and the world’s – leading experts. Results from the first and second auctions eased those initial fears and today’s results continue to affirm the presence of a strong and viable market. That’s good news for California. Auction Results The third auction held on Thursday, May 16 th offered 14.5 million 2013 allowances for sale and 9.56 million 2016 allowances. So, what happened? Summary Allowance year Allowances offered Allowances sold Settlement price 2013 14,522,048 100% $14.00 2016 9,560,000 78.6% $10.71      Participation: Overall participation was high, with almost 1.8 times more credits bid on than were sold. A diverse array of 81 entities were approved to bid in the auction. Current (2013) vs. Future (2016) vintage allowances: All of the 2013 allowances sold, while almost 80% of the 2016 allowances sold, an indicator that there is solid confidence the program will still be around. Entities are keeping their options open in not buying all available allowances for use three years out, which makes sense given the multiple options for achieving compliance. Clearing price: As expected , the clearing price for 2013 allowances was high, settling at approximately 30% above the auction price floor of $10.71. Because 2016 allowances did not sell out, their clearing price remained at the floor of $10.71. Auction proceeds: By selling more than 10 million state-controlled allowances, California’s third auction raised over $117 million – that will be used to advance the goals of AB 32, to reduce climate pollution. The budget is still being finalized for this year, but at least 25% of the auction proceeds (or $64 million to date) must benefit disadvantaged communities. Three Reasons the Momentum Is Here to Stay California’s program is proving to be a strong model for replication elsewhere : Others are watching California’s program closely. In a short period, a price on carbon has been established, all credits at the first three auctions were sold above the floor price, and most importantly, we have begun the process of breaking California’s dependence on fossil fuels and seen a decrease in carbon emissions. Next year, Quebec will link with California’s market – a first step towards a broader carbon market, and potential blueprint for other states and provinces to join the program. Innovation : Smart companies are innovating to reduce their emissions. For example, Kroger Company uses an anaerobic digester in Compton, California to convert spoiled food to energy , generating 13 million kilowatt-hours of electricity a year. Unleashing this type of innovation accelerates the clean energy revolution and puts us further along the path to meeting the state’s aggressive climate goals. Future Leadership : Today, EDF kicked off its sixth year of EDF Climate Corps , an innovative fellowship program that places grad students in companies, cities and universities to identify energy savings within those organizations. This year, 116 graduate students will be working in over 100 organizations this summer — 19 in California — including Apple, Adidas and the Los Angeles Community College System. Many of the alumni continue the work they do in corporate, public and non-profit spaces to address the largest environmental issue of our time. As Van Jones said at the Greenlining Institute Summit recently, “Young people are fighting for us.” We have solid reasons to be optimistic about California’s carbon market, and the continued growth of the clean energy economy. The skeptics aren’t staying silent, but their case is losing steam. After all, facts are facts, and for Emily Reyna is the Senior Manager of Partnerships and Alliances for California’s Climate & Air team in the San Francisco office. In this role, Emily is responsible for engaging and forging common ground with businesses and other key stakeholders to further EDF’s work on implementation of California’s Global Warming Solutions Act (AB 32). Emily previously worked in EDF’s Corporate Partnership’s Program on EDF Climate Corps , an innovative program that places specially-trained MBA and MPA students in companies, cities and universities to build the business case for energy efficiency.California, today’s auction results proved once again the numbers are on our side. Continue reading

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