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Expat Finance Guide PDF Print E-mail
Thursday, 04 December 2008 16:29

Expat Finance Guide

Accountancy services
“Your accountant does not necessarily need to be an expert in offshore finance,” says David Franks, managing director of specialist firm Blevins Franks. “What he needs is to understand the different tax laws in the country where you are living and your country of origin.”

Of course, you do not have to get an accountant, but if you do, he should be able to help you in numerous ways, including inheritance tax avoidance and the creation of offshore trusts.

Accumulation fund

A fund that ‘accumulates’ value rather than paying dividends. By keeping the value within the fund, you will not add to your income tax bill, but you could add to your capital gains tax bill.

Expat Finance Guide & Antiques

Two antiques investing golden rules: don’t buy things you don’t like and purchase the best quality you can afford.

Websites are starting to provide useful research tools on the subject and some have live auction rooms. Try the following (with a www. prefix):,, or

Asset allocation

Financial institutions to whom you entrust your hard-earned money take an overall view of how the world’s various markets are going to perform. They allocate their assets accordingly.

This view then filters down and affects all the weightings on all the portfolios the institutions offers. So, if Forsyth thought Japan was on the precipice of a depression, all of its assets would be weighted outside the country - as much as the portfolio’s rules permitted.

Expat Finance Guide & Banking


The cornerstone of all sensible investment strategies. Low risk - provided you avoid non-reputable banks in non-reputable jurisdictions - coupled with steady returns.

The bulk of the world’s offshore retail banking operations tend to be located in places like Guernsey, Jersey and Isle of Man, while Gibraltar is also a popular destination.

However, for investors who are based further afield, there are also numerous offshore branches in areas like Hong Kong and the Middle East.

Bear & Bull

“Bears are pessimistic about the future of the market - and therefore advise you to sell their investment,” says Scottish Life International’s marketing director, Neil Lovatt. “Bulls on the other hand are positive about the future of the stockmarket and advise you to buy or hold your investment.”

The term bear seems to have evolved from an old Trappist Expression about “selling the bear’s skin before you’ve killed it”. Answers on a postcard for the origin of ‘bull’!

Expat Finance Guide & Bermuda


This offshore centre does not offer much of a retail service for either mutual funds or offshore banks, meaning offshore companies is one of the jurisdiction’s big retail enterprises.
Bermuda is also becoming a leader for hedge funds, although many of the best are already closed to new or retail money.

Bid/offer spread

The difference between the bid price at which managers will buy a unit-linked investment and the offer price at which they will sell the investment.


When a government or a company wishes to raise capital, it issues bonds, offering a fixed payment over a specified period in return.
There are different classes of bond, which depend on the security of the issuer. Government bonds from countries with secure economies are the most stable. Similarly, corporate bonds from secure blue-chip companies tend to be safe bets.
Small companies and insecure governments also offer bonds that are less secure. These are often called junk bonds and can be extremely volatile but potentially more profitable.

Expat Finance Guide & Capital Gains Tax

Capital gains tax

A tax levied in the UK (and elsewhere) on the capital appreciation of an asset from the time it is purchased and the time it is sold.
The UK Budget in 1998 introduced rules so that you will remain liable for UK CGT when you sell assets, where you have not been resident or not ordinarily resident, for less than five tax years. The UK CGT allowance for 2001-2002 is £7,500.

Compensation schemes

In the UK there is a depositors’ and investors’ protection scheme that will pay you money in the event of your bank or investment house going bust.
Since, in the world of offshore banking, some of the banks can be smaller and potentially more unstable, it is helpful that many centres are developing compensation schemes.

Both Gibraltar and the Isle of Man offer banking compensation schemes which, they claim, are on a par with the UK’s. Jersey and Guernsey have been building up their compensation schemes in recent years, too.

Expat Finance Guide - Derivative


The great mistake many investors make about derivatives is thinking they are some sort of asset in their own right. They are not - they are an investment tool.

Derivative investors are betting on the direction of the markets. If they bet it will go down, they take a PUT option and will benefit from a market fall. If they buy a CALL option they think it will go up.

“On their own, derivatives are very high risk,” says Scottish Life International marketing boss, Neil Lovatt. “But when combined with other investments they can allow investors to manage their risk extremely efficiently.”

Designated territory

Jersey, Guernsey, the Isle of Man and Bermuda are all ‘designated territories’. This means that, although none is part of the European Union, all are allowed to market their collective investment schemes (offshore funds) in the UK, with FSA approval.

Expat Finance Guide - Distribution Fund

Distribution fund

A distribution fund is a fund that pays investors dividends rather than reinvesting all capital gains. Such funds are good for investors who need to avoid capital gains tax and maintain liquidity, not necessarily so good for those with already high income levels. (see ‘Accumulation funds’).


While an individual may be resident in more than one country, or have no nationality or dual nationality, under English law, you can only have one domicile.

This is your permanent and natural home and the one to which you will eventually return. It is determined by origin, dependence or choice.
If you manage to lose your UK domicile by choice (this is not easy) then you will be free of UK inheritance tax.

Expat Finance Guide - Dublin


In the 1980s, Dublin became known as an offshore finance centre after the Irish government gained permission to create a low-tax business zone.
These days, the country’s taxes are being harmonised, meaning it is technically not really an offshore centre at all. But Dublin is popular with European citizens who wish to take advantage of the funds domiciled there, which are still offered with better tax rates than elsewhere on the Continent.




Last Updated on Tuesday, 06 January 2009 14:34

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