Monday, October 7, 2013
Thursday, September 19, 2013
Jarl Moe Tax Seminar Live On Stage
Check out one of the many videos you can find on Jarl Moe On Stage.
The below seminar was taken in London in front of around 1,500 people.
The below seminar was taken in London in front of around 1,500 people.
Wednesday, May 11, 2011
Property In Cyprus Interview with Jarl Moe
Property In Cyprus
The property prices in Cyprus are quite good at the moment making Cyprus one of the prime investment locations due to he economy going down so does the property prices.
Check out the Jarl Moe interview about the Cyprus Property Market.
http://www.blip.tv/file/1272339/
The property prices in Cyprus are quite good at the moment making Cyprus one of the prime investment locations due to he economy going down so does the property prices.
Check out the Jarl Moe interview about the Cyprus Property Market.
http://www.blip.tv/file/1272339/
Wednesday, March 9, 2011
China Adding to $1 Trillion of U.S. Debt Caps Rise in Rates
China Adding to $1 Trillion of U.S. Debt Caps Rise in RatesInvestors outside the U.S. have boosted their holdings of longer-maturity Treasuries to the highest level since the credit markets froze in 2008, helping curb rising yields amid concern inflation is accelerating.
International buyers held 90 percent of their $4.44 trillion of U.S. government debt in notes and bonds as of December, the same as in September 2008 when Lehman Brothers Holdings Inc. collapsed, Treasury data released last week show. The ratio fell to 83 percent in October 2009 as investors sought the safety of Treasury bills with the U.S. economic recovery still in question.
The shift toward long-term debt shows bond buyers outside the U.S. agree with Federal Reserve Chairman Ben S. Bernanke’s assessment that inflation will be contained even as global food and energy prices soar. Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., warned last week that yields on Treasuries are too low with inflation accelerating and the central bank planning to complete $600 billion in asset purchases in June.
“Inflation in the U.S. isn’t a big problem,” said Zeal Yin, who buys Treasuries for Shin Kong Life Insurance Co. in Taipei, Taiwan’s second-largest life insurer with the equivalent of $50.6 billion in assets. Yin said he purchased U.S. government debt last week. “I’m bullish.”
Stocks Beat Bonds
The yield on the benchmark 3.625 percent note due February 2021 rose eight basis points, or 0.08 percentage point, to 3.49 percent last week, and climbed two basis points to 3.51 percent at 11 a.m. in New York, according to BGCantor Market Data.
Ten-year yields increased in each of the past six months, the longest stretch since the period ended June 2006, according to data compiled by Bloomberg. U.S. government securities have lost 0.4 percent this year, according to Bank of America Merrill Lynch’s U.S. Treasury Master index. The Standard & Poor’s 500 Index has climbed 5.1 percent during the same period as confidence in the economic recovery grows.
“We increased the portion of foreign-currency-denominated bonds, mainly Treasuries, because of the higher interest rates,” said Satoshi Okumoto, a general manager in Tokyo at Fukoku Mutual Life Insurance Co., which has the equivalent of $67.1 billion in assets. “When we need to increase our foreign- currency bonds significantly, the U.S. is the only place to put the money because of the liquidity.”
China’s Shift
The amount of marketable U.S. debt outstanding surpassed $9 trillion last month. Retaining demand from international buyers, who own half of the Treasury debt outstanding, is key to keeping borrowing costs from surging as the Obama administration seeks to finance cumulative budget deficits that the White House estimates will exceed $4 trillion through 2015.
Interest expense will rise to 3.1 percent of gross domestic product by 2016, from 1.3 percent in 2010, according to administration estimates. While yields on the benchmark 10-year note are up, they remain below the average of 4.13 percent over the past decade.
The Treasury will sell $66 billion of three-, 10-and 30- year securities over three days beginning tomorrow. Last month, indirect bidders, the class of buyers that includes foreign central banks, bought a record 71 percent, or $17 billion of the $24 billion in 10-year notes offered at the auction.
China, the largest investor in U.S. government debt after the Fed, increased longer-term notes and bonds by 39 percent to $1.145 trillion in December from a year earlier, while its stake in bills declined 78 percent to $15.4 billion, the most recent Treasury data show.
‘Extremely Supportive’
The nation bought more U.S. bonds even as its leaders criticized Bernanke’s plan for the Fed to buy $600 billion of Treasuries by June. Jesse Wang, executive vice president of China Investment Corp., the country’s $300 billion sovereign wealth fund, said Jan. 15 that devoting too much of its reserves to U.S. assets such as Treasuries was too risky.
“They remain extremely supportive for the Treasury market,” said Priya Misra, head of U.S. rates strategy at Bank of America Merrill Lynch in New York, one of the 20 primary dealers that trade with the Fed.
Japan, the second largest holder of Treasury debt, increased its investment to a revised $882.3 billion, the highest ever, from $765.7 billion a year earlier.
Longer-term U.S. bonds offer the highest yields relative to short-maturity debt of any Group of Seven nation, data compiled by Bloomberg show.
Yield Curve
The yield curve showing the difference between rates on two- and 10-year notes was 2.81 percentage points, after reaching a near record 2.93 percentage points at the start of February. The gap in Germany is 1.51 percentage points, 2.23 in the U.K. and 1.06 in Japan.
The curve will narrow to 2.63 percentage points by year-end and to 2.26 points by mid-2012, based on the median estimate of more than 40 economists and strategists surveyed by Bloomberg.
Strategists say the expectations show investors see little chance of inflation accelerating anytime soon. Returns on 30- year Treasuries, the most vulnerable to rising consumer prices because they have the longest maturity, gained last month for the first time since August, returning 1.51 percent, compared with an average loss of 0.09 percent for all Treasuries, Bank of America Merrill Lynch indexes show.
“The yield curve dynamics will change dramatically” in the U.S. as the gap narrows, John Richards, head of North American Strategy at RBS Securities Inc., said at a forum in Tokyo on March 3. “I call this the beginning of the great compression of short-term and long-term rates.”
Inflation Experience
Oil costing more than $100 a barrel and record high food prices probably won’t cause a permanent increase in inflation and borrowing costs are likely to stay low, Bernanke said March 1 in his semi-annual monetary policy testimony before Congress.
Experience with such price gains in recent decades, along with currently stable labor costs, suggest a “temporary and relatively modest increase in U.S. consumer price inflation,” Bernanke said in Washington.
While the consumer-price index jumped 0.4 percent in January, the core measure, which excludes food and energy, rose 0.2 percent in January, in line with the average monthly gain of 0.16 percent over the past 10 years, figures from the Labor Department showed Feb. 17.
“Bernanke tends to think this doesn’t matter --at least in terms of headline versus the core -- we do,” Gross said in a March 4 interview on “Bloomberg Surveillance” with Tom Keene.
Cutting Treasuries
Gross cut holdings of U.S. government and related debt in Pimco’s $237 billion Total Return Fund to 12 percent in January, the least in two years. He recommends higher-returning assets such as emerging-market debt and corporate bonds.
The difference in yields between 10-year notes and Treasury Inflation Protected Securities, or TIPS, was 2.50 percentage points on March 4, the highest since July 2008. The spread, which reflects the outlook among traders for consumer prices over the life of the bonds, averaged 2.43 points in the five years before the credit crisis.
“We would not be a buyer of Treasuries at these levels,” said Andy Richman, who oversees $10 billion as a director of fixed-income at SunTrust Bank’s Wealth and Investment Management in Palm Beach, Florida. “Inflation is becoming more of a problem than it has been. The truck of inflation moving down the road is getting closer and closer.”
Treasury yields have also risen on confidence that President Barack Obama’s $858 billion tax compromise in December and the Fed’s monetary policies have put the economy on a more stable path to recovery.
Job Gains
The U.S. added 192,000 jobs in February, a report from the Labor Department showed March 4, up from a revised 63,000 in January. Economists in a Bloomberg News survey had forecast the economy would add 196,000 jobs. The unemployment rate dropped to 8.9 percent, the lowest level since April 2009.
While Bernanke said inflation remains subdued in the U.S., European Central Bank President Jean-Claude Trichet said March 3 the ECB may raise interest rates next month for the first time in almost three years to fight mounting inflation pressures.
The European Union’s central bank boosted its inflation and growth forecasts, saying consumer price gains will average 2.3 percent this year, up from a December forecast of 1.8 percent and exceeding the ECB’s 2 percent limit.
Wednesday, July 7, 2010
NEW VAT RULES IN THE EU - Are you aware?
As part of a large scale, phased, amendment of the VAT rules at a European level, a large number of EU VAT rules will change with effect from 1 January 2010. The most significant change concerns the rules for determining the place where a service is supplied according to the VAT rules, and which country can therefore tax these services (the "place of supply" rules). In 2011, 2013 and 2015 a number of smaller changes will follow. In addition to simplifying some of the existing rules, the changes also create new obligations, particularly from an administrative point of view.All EU member states must implement these European rules into their national legislation. Accordingly, the proposed amendments to the Dutch VAT legislation have been published and are examined below.
Place of supply of services from 2010
Until 1 January 2010, the place of supply of services is where the service provider is established for VAT purposes, according to the ‘basic rule’ (specific rules exist for certain services). With effect from 1 January 2010, this ‘basic rule’ will change: for services provided to businesses (B2B services) the new ‘basic rule’ is that these services are deemed to be supplied where the recipient of the services is established (reverse charge mechanism).
The service provider will not charge VAT but the recipients of these services will have to account themselves for the VAT payable on these services in their local VAT returns under the reverse charge mechanism. This VAT is deductible in the same VAT return according to the normal rules. As a result of this new ‘basic rule’ for cross-border B2B-services, in many cases VAT will no longer have to be charged (and reclaimed).
The changes to the rules that determine the place of supply of services to non-business customers (B2C services) are less far-reaching.
Listings
With effect from 1 January 2010, businesses that supply ‘basic rule’ services to businesses in other EU countries will have to periodically report these services by submitting a listing electronically to the tax authorities. These services must be broken down by value per VAT number for each service recipient. Services that are exempt in the recipient’s country should not be included in the listing.
The listing should be submitted monthly to the Dutch tax authority, but all businesses may opt to submit quarterly listings. This choice should be communicated to the Dutch tax authority in a timely manner.
Refund of foreign (EU) VAT
With effect from 1 January 2010 it will be easier for EU established businesses to reclaim foreign (EU) VAT. The new procedure is also applicable to foreign (EU) tax paid in 2009. Where previously businesses had to send a number of documents and all original invoices by mail to each individual foreign tax authority, Dutch established businesses can, from 2010, apply for a refund of foreign (EU) VAT with the Dutch tax authority via the internet. The Dutch tax authority will assess the refund applications and forward them to the relevant foreign tax authorities.
From 1 January 2010, the costs on which VAT is reclaimed will have to be classified according to ten categories (nine specific categories and a general category). In addition, the applicants must include details of their deductible VAT method of calculation (if applicable) in the country of establishment. In addition, the foreign tax authorities will be required to process requests within a certain time. If they exceed the specified time (different time limits will apply in different circumstances), they will have to pay interest to the applicants.
Tax point – when is VAT due?
An additional rule will be introduced into the Dutch VAT legislation regarding the time at which VAT should be accounted for, i.e. the tax point. Where the service recipient is required to account for VAT under the reverse charge mechanism (as explained above), the tax point will be the moment when the service is provided.
In most cases, recipients of these services will not know (or will have no way of knowing) at what moment the services are provided or the value. They will usually rely on the invoices issued by the service providers. If they receive these invoices after the moment at which the VAT was due according to the new rule, strictly, they will be late in accounting for this VAT.
This new rule will have the most significant impact for businesses that cannot fully deduct input VAT, as these businesses will actually have to pay (part of) the VAT due on these services. Businesses with a right to fully recover input VAT can normally fully deduct the VAT accounted for on these services in the same VAT return.
In addition, where these services are supplied cross-border within the EU, there is a chance that mismatches will occur between the VAT accounted for in the VAT returns of the recipients and the services reported in the listings submitted by the service providers. This could result in enquiries from the tax authorities.
Important: what to do now?
The date of 1 January 2010 has passed and many are not aware of the new rules, it is a lot that needs to be done:
Both for determining the place of supply of services as well as for completing the new listing, businesses will have to establish whether their (EU) clients are VAT taxable businesses.
For this purpose, clients will have to provide businesses with their VAT identification numbers and these numbers should be checked by the service providers with the Dutch tax authority. When a customer provides a business with its VAT identification number, and the business has checked this VAT number with the Dutch tax authority, the business may assume that it will provide its services to a VAT taxable business.
Businesses will have to adjust their ERP systems to accommodate the new rules. This applies not only to the place of supply, but also, for example, when invoices include a reference to specific sections of the relevant legislation. ERP systems should also allow compilation and easy access to all data relevant for completing the new listings.
The procedures for reclaiming foreign (EU) VAT will have to be adjusted.
Everyone in your business that is involved in processing and raising invoices, and the completion and filing of VAT returns and listings, should be familiar with the new rules in time to implement new procedures and be fully compliant.
Good luck!
Jarl Moe
Jarl Moe
Thursday, June 17, 2010
Cyprus to increase their corporation tax
THE GOVERNMENT said yesterday it plans to raise its corporate tax rate, one of the lowest in the EU, by one percentage point to 11 per cent for two years to contain a deficit that is more than double EU limits.
The announcement, which drew the ire of businesses, came a day after the EU formally took disciplinary action against Cyprus for a projected deficit of 7.0 per cent in 2010, well above a limit of 3.0 per cent under EU rules.
"This will be (valid) for two years. It is a temporary measure to improve the budget position," Finance Minister Charilaos Stavrakis told Reuters. Businesses said the tax rise could stifle the island's nascent recovery from its first recession in more than three decades.
The government said it would submit legislation raising the tax to 11 from 10 per cent for parliamentary approval this week.
Stavrakis said the higher tax would bring in an extra €73 million for the government, based on calculations of some €730 million in corporate tax earnings in 2009.
Tax revenue has been crimped by the poor performances of the real estate and tourism sectors. Cyprus's economy contracted by 1.7 per cent in 2009 but stabilised in the first quarter of this year.
The tax measure will affect local firms and hundreds of international companies which take advantage of Cyprus' low-tax status.
"This is like killing the sacred cow of our economic model," said Stelios Platis, an independent economist.
"Businesses have relocated here because of our stable tax regime and low taxes. If you create instability this is the wrong thing to do. It is definitely wrong," he said.
Local and foreign companies have paid 10 per cent corporation tax since 2002 after Cyprus scrapped a 4.25 per cent tax on offshore companies under pressure from the EU, which it joined in 2004.
By phasing out the discrepancy, it also brought down the tax rate for domestic companies to 10 per cent from 20 and 25 per cent, depending on their turnover.
The employers and industrialists federation, (OEV), said the measure was short-sighted. It said the construction industry would be hard hit as the finance ministry is also planning to introduce a new calculation of tax in real estate transactions.
Until now property tax has been calculated on the basis of 1980 land values but in future will reflect current market values for properties worth €170,000 and above. The plan has yet to obtain parliamentary approval.
"While other countries are taking measures to drastically cut spending, including the state payroll, Cyprus is unfortunately opting to tax businesses, harming our credibility as an international business centre," OEV said.
The announcement, which drew the ire of businesses, came a day after the EU formally took disciplinary action against Cyprus for a projected deficit of 7.0 per cent in 2010, well above a limit of 3.0 per cent under EU rules.
"This will be (valid) for two years. It is a temporary measure to improve the budget position," Finance Minister Charilaos Stavrakis told Reuters. Businesses said the tax rise could stifle the island's nascent recovery from its first recession in more than three decades.
The government said it would submit legislation raising the tax to 11 from 10 per cent for parliamentary approval this week.
Stavrakis said the higher tax would bring in an extra €73 million for the government, based on calculations of some €730 million in corporate tax earnings in 2009.
Tax revenue has been crimped by the poor performances of the real estate and tourism sectors. Cyprus's economy contracted by 1.7 per cent in 2009 but stabilised in the first quarter of this year.
The tax measure will affect local firms and hundreds of international companies which take advantage of Cyprus' low-tax status.
"This is like killing the sacred cow of our economic model," said Stelios Platis, an independent economist.
"Businesses have relocated here because of our stable tax regime and low taxes. If you create instability this is the wrong thing to do. It is definitely wrong," he said.
Local and foreign companies have paid 10 per cent corporation tax since 2002 after Cyprus scrapped a 4.25 per cent tax on offshore companies under pressure from the EU, which it joined in 2004.
By phasing out the discrepancy, it also brought down the tax rate for domestic companies to 10 per cent from 20 and 25 per cent, depending on their turnover.
The employers and industrialists federation, (OEV), said the measure was short-sighted. It said the construction industry would be hard hit as the finance ministry is also planning to introduce a new calculation of tax in real estate transactions.
Until now property tax has been calculated on the basis of 1980 land values but in future will reflect current market values for properties worth €170,000 and above. The plan has yet to obtain parliamentary approval.
"While other countries are taking measures to drastically cut spending, including the state payroll, Cyprus is unfortunately opting to tax businesses, harming our credibility as an international business centre," OEV said.
Saturday, December 27, 2008
The United Kingdom against personal offshore accounts:
This heading should be the correct heading for all the offshore talk in the media lately in the UK.
You see, all the people they are talking about in the below article are people who actually registered offshore bank accounts in their NAME.
Of course, if you open an offshore bank account in YOUR NAME, you are the one that have to pay tax on it, even though the account is not in your country.
My company TaxWizards www.thetaxwizards.com teach you how to legally set up offshore accounts in a COMPANY NAME so you and the account legally are separated!
Contact me for more information on this topic.
Happy holidays!
Best wishes
Jarl Moe
UK Tax Revenue in new offshore tax trawl
The Revenue thinks it can retrieve hundreds of millions of pounds more
HM Revenue & Customs (HMRC) will launch a second campaign next year to get tens of thousands of people to pay tax on money hidden in offshore bank accounts.
The "offshore disclosure facility" will target account holders in about 300 banks and building societies which have offshore operations.
The first campaign last year, aimed at customers of the big five high street banks, raised £450m from 45,000 people.
The Revenue says some tax dodgers it uncovered last year will be prosecuted.
"The intention of the new facility will be to provide an opportunity for account holders to inform us of their own accord of any unpaid tax or duties and to settle their debts in a similar way to the original offshore disclosure facility," said a Revenue spokesman.
Fines capped
The incentive for people to come forward will be a limit on the fine they might face, plus the threat of prosecution and much higher fines if they do not confess.
There must be some high-value targets the Revenue want to come clean
Chas Roy-Chowdhury, ACCA
Theoretically, the Revenue can fine miscreants up to 100% of the unpaid tax.
Last year, the penalty was capped at just 10% to encourage confessions, but this time around it will be higher, probably between 20% or 30% of the tax due.
Ronnie Ludwig, of accountants Saffery Champness, said this did not give sufficient encouragement to people to pay their taxes.
"The previous deal was not sufficiently generous to encourage people to come forward, so I anticipate a smaller response this time" he said.
The Revenue's latest move will not be a tax "amnesty", as all the tax and interest on it will still have to be paid in full.
It will not say how many people it thinks still have money hidden in the offshore accounts of the financial institutions it will target next year, although it clearly expects the figures to run into the tens of thousands.
"The effectiveness of the last campaign seems to have been a bit patchy," said Chas Roy-Chowdhury of the Association of Chartered Certified Accountants (ACCA).
"There must be some high-value targets the Revenue want to come clean," he added.
Suspicions
Last year the Revenue flushed out a list of 400,000 accounts it thought might be suspicious.
We are carrying out criminal investigations and we will bring some prosecutions before the courts in the New Year
Revenue spokesman"Many of the customers for whom HMRC received information had already paid any tax due on funds invested and interest arising in the offshore accounts and had nothing to disclose," explained the Revenue spokesman.
Of the 100,000 or so people about whom it still had suspicions, 45,000 came forward and eventually paid £450m between them.
But about 50,000 others are still being investigated and some of these will soon be prosecuted.
"HMRC has made follow-up checks of the disclosures made and has started a programme of checks on those who did not take the opportunity to come forward," the Revenue spokesman said.
"In the most serious cases, we are carrying out criminal investigations and we will bring some prosecutions before the courts in the New Year," he added.
Confessions
The Revenue will write to the latest tranche of banks and building societies, asking them to reveal the names and addresses of all its UK residents who have offshore accounts.
It will then write to them directly asking them to pay any unpaid tax.
Among the people who confessed last year were:
• someone who disclosed over £60,000 from a failure to declare rental income from a holiday home
• a woman worked all over the world and returned to the UK several years ago. She forgot about her offshore bank accounts where money was left after selling her last home overseas. Liability will be in the region of £44,000
• someone who sold a property portfolio, placed funds offshore and never declared them. Disclosure was about £1.7m
• a business man who diverted profits of about £1.3m into a Channel Islands bank account
• an employee with a disclosure of £200,000 to make, who placed a lump sum and dividends in a bank account offshore
• a businessman who diverted profits in excess of £800,000 into a number of offshore accounts
• a plumber who had paid about £10,000 from informal jobs into an offshore account
• a self-employed man who invested a £50,000 inheritance lump sum offshore.
This heading should be the correct heading for all the offshore talk in the media lately in the UK.
You see, all the people they are talking about in the below article are people who actually registered offshore bank accounts in their NAME.
Of course, if you open an offshore bank account in YOUR NAME, you are the one that have to pay tax on it, even though the account is not in your country.
My company TaxWizards www.thetaxwizards.com teach you how to legally set up offshore accounts in a COMPANY NAME so you and the account legally are separated!
Contact me for more information on this topic.
Happy holidays!
Best wishes
Jarl Moe
UK Tax Revenue in new offshore tax trawl
The Revenue thinks it can retrieve hundreds of millions of pounds more
HM Revenue & Customs (HMRC) will launch a second campaign next year to get tens of thousands of people to pay tax on money hidden in offshore bank accounts.
The "offshore disclosure facility" will target account holders in about 300 banks and building societies which have offshore operations.
The first campaign last year, aimed at customers of the big five high street banks, raised £450m from 45,000 people.
The Revenue says some tax dodgers it uncovered last year will be prosecuted.
"The intention of the new facility will be to provide an opportunity for account holders to inform us of their own accord of any unpaid tax or duties and to settle their debts in a similar way to the original offshore disclosure facility," said a Revenue spokesman.
Fines capped
The incentive for people to come forward will be a limit on the fine they might face, plus the threat of prosecution and much higher fines if they do not confess.
There must be some high-value targets the Revenue want to come clean
Chas Roy-Chowdhury, ACCA
Theoretically, the Revenue can fine miscreants up to 100% of the unpaid tax.
Last year, the penalty was capped at just 10% to encourage confessions, but this time around it will be higher, probably between 20% or 30% of the tax due.
Ronnie Ludwig, of accountants Saffery Champness, said this did not give sufficient encouragement to people to pay their taxes.
"The previous deal was not sufficiently generous to encourage people to come forward, so I anticipate a smaller response this time" he said.
The Revenue's latest move will not be a tax "amnesty", as all the tax and interest on it will still have to be paid in full.
It will not say how many people it thinks still have money hidden in the offshore accounts of the financial institutions it will target next year, although it clearly expects the figures to run into the tens of thousands.
"The effectiveness of the last campaign seems to have been a bit patchy," said Chas Roy-Chowdhury of the Association of Chartered Certified Accountants (ACCA).
"There must be some high-value targets the Revenue want to come clean," he added.
Suspicions
Last year the Revenue flushed out a list of 400,000 accounts it thought might be suspicious.
We are carrying out criminal investigations and we will bring some prosecutions before the courts in the New Year
Revenue spokesman"Many of the customers for whom HMRC received information had already paid any tax due on funds invested and interest arising in the offshore accounts and had nothing to disclose," explained the Revenue spokesman.
Of the 100,000 or so people about whom it still had suspicions, 45,000 came forward and eventually paid £450m between them.
But about 50,000 others are still being investigated and some of these will soon be prosecuted.
"HMRC has made follow-up checks of the disclosures made and has started a programme of checks on those who did not take the opportunity to come forward," the Revenue spokesman said.
"In the most serious cases, we are carrying out criminal investigations and we will bring some prosecutions before the courts in the New Year," he added.
Confessions
The Revenue will write to the latest tranche of banks and building societies, asking them to reveal the names and addresses of all its UK residents who have offshore accounts.
It will then write to them directly asking them to pay any unpaid tax.
Among the people who confessed last year were:
• someone who disclosed over £60,000 from a failure to declare rental income from a holiday home
• a woman worked all over the world and returned to the UK several years ago. She forgot about her offshore bank accounts where money was left after selling her last home overseas. Liability will be in the region of £44,000
• someone who sold a property portfolio, placed funds offshore and never declared them. Disclosure was about £1.7m
• a business man who diverted profits of about £1.3m into a Channel Islands bank account
• an employee with a disclosure of £200,000 to make, who placed a lump sum and dividends in a bank account offshore
• a businessman who diverted profits in excess of £800,000 into a number of offshore accounts
• a plumber who had paid about £10,000 from informal jobs into an offshore account
• a self-employed man who invested a £50,000 inheritance lump sum offshore.
Tuesday, December 11, 2007
Tax or Capital Gain on options
OPTIONS TAX
I
have had some clients asking me about capital gain on options.
My
short answer to this question is that there is no capital gains payable if you
use a Cyprus Ltd company to buy shares or options or futures.
Cyprus
do not tax any of the above.
If
you are a developer and build and sell properties this is of course income, and
will be taxed as income and not capital gain.
Best
wishes
Jarl
Moe
Saturday, December 8, 2007
Ways to Reduce Your Taxes in USA
The goal of tax planning...
is to arrange your financial affairs so as to minimize your taxes. There are four basic ways to reduce your taxes, and each basic method might have several variations. You can reduce your income, increase your deductions, and take advantage of tax credits.
Reducing Income
Adjusted Gross Income (AGI) is a key element in determining your taxes. Lots of other things depend on your AGI (or modifications to your AGI)-- such as your tax rate and various tax credits. AGI even impacts your financial life outside of taxes: banks, mortgage lenders, and college financial aid programs all routinely ask for your adjusted gross income. This is a key measure of your finances.
Because your adjusted gross income is so important, you may want to begin your tax planning here.
What goes into your adjusted gross income? AGI is your income from all sources minus any adjustments to your income. The higher your total income, the higher your adjusted gross income. As you can guess, the more money you make, the more taxes you will pay. Conversely, the less money you make, the less taxes you will pay. The number one way to reduce taxes is to reduce your income. And the best way to reduce your income is to contribute money to a 401(k) or similar retirement plan at work. Your contribution reduces your wages, and lowers your tax bill.
You can also reduce your Adjusted Gross Income through various adjustments to income. Adjustments are deductions, but you don't have to itemize them on the Schedule A. Instead, you take them on page 1 of your 1040 and they reduce your Adjusted Gross Income. Adjustments include contributions to a traditional IRA, student loan interest paid, alimony paid, and classroom related expenses. A full list of adjustments are found on Form 1040, page 1, lines 23 through 34. The best way to boost your adjustments is to contribute to a traditional IRA.
As you can see, two of the best ways to reduce your taxes is to save for retirement, either through a 401(k) at work or through a traditional IRA plan. Contributions to these retirement plans will lower your taxable income, and lower your taxes.
Increase Your Tax Deductions
Taxable income is another key element in your overall tax situation. Taxable income is what's left over after you have reduced your AGI by your deductions and exemptions. Almost everyone can take a standard deduction, and some people are able to itemize their deductions.
Itemized deductions include expenses for health care, state and local taxes, personal property taxes (such as car registration fees), mortgage interest, gifts to charity, job-related expenses, tax preparation fees, and investment-related expenses. One key tax planning strategy is to keep track of your itemized expenses throughout the year using a spreadsheet or personal finance program. You can then quickly compare your itemized expenses with your standard deduction. You should always take the higher of your standard deduction or your itemized deduction.
Your standard deduction and personal exemptions depends on your filing status and how many dependents you have. You can increase your standard deduction and personal exemptions by getting married or having more dependents.
The best strategies for reducing your taxable income is to itemize your deductions, and the three biggest deductions are mortgage interest, state taxes, and gifts to charity.
Take Advantage of Tax Credits
Once we've tweaked our taxable income, we are ready to focus our attention on various tax credits. Tax credits reduce your tax. There are tax credits for college expenses, for saving for retirement, and for adopting children.
The best tax credits are for adoption and college expenses. Not everyone is in a position to adopt a child, but everyone could take some college classes. There are two education-related tax credits. The Hope Credit is for students in their first two years of college. The Lifetime Learning Credit is for anyone taking college classes. The classes do not have to be related to your career.
You may also want to avoid additional taxes. If at all possible, avoid early withdrawals from an IRA or 401(k) retirement plan. The amount you withdraw will become part of your taxable income, and on top of that there will be additional taxes to pay on the early withdrawal.
One of the best, and most abused, tax credit is the Earned Income Credit (EIC). Unlike other tax credits, the EIC is credited to your account as a payment. And that means the EIC often results in a tax refund even if the total tax has been reduced to zero. You may be eligible to claim the earned income credit if you earn less than a certain amount.
Increase Your Withholding
You can avoid owing at the end of the year by increasing your withholding. More money will be taken out of your paycheck throughout the year, but you will get bigger refund when you file your taxes.
Offshore
You can contact me and discuss how you can convert your income or part of your income into an offshore company and pay little or no tax at all!
Merry Christmas America!
Best wishes
Jarl Moe
is to arrange your financial affairs so as to minimize your taxes. There are four basic ways to reduce your taxes, and each basic method might have several variations. You can reduce your income, increase your deductions, and take advantage of tax credits.
Reducing Income
Adjusted Gross Income (AGI) is a key element in determining your taxes. Lots of other things depend on your AGI (or modifications to your AGI)-- such as your tax rate and various tax credits. AGI even impacts your financial life outside of taxes: banks, mortgage lenders, and college financial aid programs all routinely ask for your adjusted gross income. This is a key measure of your finances.
Because your adjusted gross income is so important, you may want to begin your tax planning here.
What goes into your adjusted gross income? AGI is your income from all sources minus any adjustments to your income. The higher your total income, the higher your adjusted gross income. As you can guess, the more money you make, the more taxes you will pay. Conversely, the less money you make, the less taxes you will pay. The number one way to reduce taxes is to reduce your income. And the best way to reduce your income is to contribute money to a 401(k) or similar retirement plan at work. Your contribution reduces your wages, and lowers your tax bill.
You can also reduce your Adjusted Gross Income through various adjustments to income. Adjustments are deductions, but you don't have to itemize them on the Schedule A. Instead, you take them on page 1 of your 1040 and they reduce your Adjusted Gross Income. Adjustments include contributions to a traditional IRA, student loan interest paid, alimony paid, and classroom related expenses. A full list of adjustments are found on Form 1040, page 1, lines 23 through 34. The best way to boost your adjustments is to contribute to a traditional IRA.
As you can see, two of the best ways to reduce your taxes is to save for retirement, either through a 401(k) at work or through a traditional IRA plan. Contributions to these retirement plans will lower your taxable income, and lower your taxes.
Increase Your Tax Deductions
Taxable income is another key element in your overall tax situation. Taxable income is what's left over after you have reduced your AGI by your deductions and exemptions. Almost everyone can take a standard deduction, and some people are able to itemize their deductions.
Itemized deductions include expenses for health care, state and local taxes, personal property taxes (such as car registration fees), mortgage interest, gifts to charity, job-related expenses, tax preparation fees, and investment-related expenses. One key tax planning strategy is to keep track of your itemized expenses throughout the year using a spreadsheet or personal finance program. You can then quickly compare your itemized expenses with your standard deduction. You should always take the higher of your standard deduction or your itemized deduction.
Your standard deduction and personal exemptions depends on your filing status and how many dependents you have. You can increase your standard deduction and personal exemptions by getting married or having more dependents.
The best strategies for reducing your taxable income is to itemize your deductions, and the three biggest deductions are mortgage interest, state taxes, and gifts to charity.
Take Advantage of Tax Credits
Once we've tweaked our taxable income, we are ready to focus our attention on various tax credits. Tax credits reduce your tax. There are tax credits for college expenses, for saving for retirement, and for adopting children.
The best tax credits are for adoption and college expenses. Not everyone is in a position to adopt a child, but everyone could take some college classes. There are two education-related tax credits. The Hope Credit is for students in their first two years of college. The Lifetime Learning Credit is for anyone taking college classes. The classes do not have to be related to your career.
You may also want to avoid additional taxes. If at all possible, avoid early withdrawals from an IRA or 401(k) retirement plan. The amount you withdraw will become part of your taxable income, and on top of that there will be additional taxes to pay on the early withdrawal.
One of the best, and most abused, tax credit is the Earned Income Credit (EIC). Unlike other tax credits, the EIC is credited to your account as a payment. And that means the EIC often results in a tax refund even if the total tax has been reduced to zero. You may be eligible to claim the earned income credit if you earn less than a certain amount.
Increase Your Withholding
You can avoid owing at the end of the year by increasing your withholding. More money will be taken out of your paycheck throughout the year, but you will get bigger refund when you file your taxes.
Offshore
You can contact me and discuss how you can convert your income or part of your income into an offshore company and pay little or no tax at all!
Merry Christmas America!
Best wishes
Jarl Moe
Sunday, November 25, 2007
Offshore banks according to Forbes
According to a recent article in Forbes, The Organisation for Economic Co-operation and Development (OECD) is less than happy with a number of the most highly regarded offshore centres and the efforts that they have undertaken to improve transparency and remove the possibility of criminal taxation evasion activity happening within their borders.
The OECD update on offshore tax havens targeted specifically Austria, Luxembourg, Switzerland and Singapore claiming that these popular, well regulated, private and secure jurisdictions have been less than fully cooperative with recent amendments to international standards for information sharing.
Interestingly enough, Singapore is the jurisdiction that has been favoured by many seeking to remove assets from the European Union and the other nations that signed up to the EU Savings Tax Directive. Having not agreed to the terms of the directive, Singapore has benefited substantially from an inward flow of international assets and funds and has gained ground in terms of its popularity as an offshore tax haven of note.
Naturally enough the jurisdiction is more than keen to maintain its newly found status and is therefore seemingly attempting to tread the incredibly fine line between cooperation and maintaining a competitive edge – but Singapore must tread carefully, the influence and far reaching authority of the Organisation for Economic Co-operation and Development should never be underestimated.
The other offshore centres mentioned specifically by the OECD in its tax haven update - namely Austria, Switzerland and Luxembourg - have all signed up to the terms of the EU Savings Tax Directive and yet still they have been heavily criticised for not doing enough to counter tax evasion.
In a damning comment aimed right at Austria, Luxembourg and Switzerland the OECD update on offshore tax havens reads ‘a number of offshore financial centres that are committed to implement standards on transparency and the effective exchange of information standards developed by the OECD’s global forum on taxation have failed to do so.’
The chairman of the organisation’s fiscal affairs division did not go so far as to outwardly threaten the jurisdictions, but it is apparent that they have not done enough to implement the standards for transparency and exchange of information that were developed by the Global Forum back in 2000. It’s likely that the offshore centres named will have significant pressure exacted upon them in coming months and it will be very interesting to see how they work to tread the fine line between giving sufficient access to bank information for tax purposes and remaining attractive in order to win and retain offshore business.
Best regards
Jarl Moe
The OECD update on offshore tax havens targeted specifically Austria, Luxembourg, Switzerland and Singapore claiming that these popular, well regulated, private and secure jurisdictions have been less than fully cooperative with recent amendments to international standards for information sharing.
Interestingly enough, Singapore is the jurisdiction that has been favoured by many seeking to remove assets from the European Union and the other nations that signed up to the EU Savings Tax Directive. Having not agreed to the terms of the directive, Singapore has benefited substantially from an inward flow of international assets and funds and has gained ground in terms of its popularity as an offshore tax haven of note.
Naturally enough the jurisdiction is more than keen to maintain its newly found status and is therefore seemingly attempting to tread the incredibly fine line between cooperation and maintaining a competitive edge – but Singapore must tread carefully, the influence and far reaching authority of the Organisation for Economic Co-operation and Development should never be underestimated.
The other offshore centres mentioned specifically by the OECD in its tax haven update - namely Austria, Switzerland and Luxembourg - have all signed up to the terms of the EU Savings Tax Directive and yet still they have been heavily criticised for not doing enough to counter tax evasion.
In a damning comment aimed right at Austria, Luxembourg and Switzerland the OECD update on offshore tax havens reads ‘a number of offshore financial centres that are committed to implement standards on transparency and the effective exchange of information standards developed by the OECD’s global forum on taxation have failed to do so.’
The chairman of the organisation’s fiscal affairs division did not go so far as to outwardly threaten the jurisdictions, but it is apparent that they have not done enough to implement the standards for transparency and exchange of information that were developed by the Global Forum back in 2000. It’s likely that the offshore centres named will have significant pressure exacted upon them in coming months and it will be very interesting to see how they work to tread the fine line between giving sufficient access to bank information for tax purposes and remaining attractive in order to win and retain offshore business.
Best regards
Jarl Moe
Thursday, November 15, 2007
Tax in Ireland
15.11.07
This week I have been visiting Irland looking at the tax situation over here... and it has been quite interesting!
With an income tax of more than 45% and a Capital Gains Tax of 20% you can say that I'm fairly happy to find yet another place on this fantastic planet that really need some help from Mr. Jarl Moe ...
Property investing is very popular in this country both inside and outside the boarder and now, after my information the people of Dublin will save taxes the next years simply following and benefiting from the Cyprus tax treaty.
PS. For some travel info on my Dublin trip visit http://jarlmoe.wordpress.com/
Jarl Moe.
Sunday, October 28, 2007
WE HATE CAPITAL GAINS TAX
Capital Gains Tax changes - good for property investors, bad for business owners
(Mark Harrison)
Well, the dust has (almost) settled, and it’s time for a quick review of what Chancellor Darling’s pre-budget report actually means for us.
I should stress at the outset that if you hold business or property assets, and are thinking about selling them, then you should go out and get professional advice from a tax advisor about whether to try to do so before or after the 6th April next year. This is very much my personal understanding of the “headline issues” only… in no way am I trying to give tax advice.
The overall summary is that it’s a welcome piece of news for us property investors, but bad for us business owners (so once again, I’m in a “he giveth with one hand, he taketh with the other) situation.
OK, time to review the current arrangements for Capital Gains Tax (CGT):
1: Everyone gets a tax-free allowance each year for “capital gains” (businesses, property, shares, etc.). In the analysis that follows, I’m pretty much going to ignore this, because it makes the explanation easier, and doesn’t really change the “impact”
2: Some things (like the house you live in) is exempt from CGT.
3: The “basic rate” for capital gains has been 40%, but with a wrinkle, as follows:
3.1: For “business assets”, like shares in a private (unquoted) company, shares in companies quoted on AIM, shares where you own 5% or more of a given company, or where you’re a Director or Employee of the company, you get “business taper relief”, which has been good. Basically, provided you hold onto the asset for one year, you effectively pay tax at 20% instead of 40% (so-called 50% taper relief)… and if you hold onto the asset for two years or more, you effectively pay tax at 10% (so-called 75% taper relief.) For those of us who’ve built businesses, and then sold them, this has been, well good… since it means that we’ve paid 10% tax on our gains.
3.2: For “non-business assets”, like rental property, you get “non-business taper relief”. This cuts in MUCH more slowly, with not a penny reduction until you’d held the asset for 2 years (at which point you get a reduction from 40% tax down to 38% - woo)… and “full relief” only after you’ve held it for 10 years (at which point you get a reduction from 40% tax down to 24%.)
Some quick illustrations when explain why we property investors have been campaigning to be treated like business owners (given we’re regulated like them!)
Hold a business for 2 years, pay tax at 10% when you sell it. Hold a rental property for 2 years, pay tax at 38% when you sell it. Hold a business for 10 years, pay tax at 10% when you sell it. Hold a rental property for 10 years, pay tax 24% when you sell it. Here’s the proposed new rule…
Capital gains tax will be at 18%, irrespective of how long you’ve owned the thing, and irrespective of whether the thing is a “business” or a “non-business” asset. You can probably see, therefore, why someone who’s got a few buy to lets, and was thinking of cashing out, is probably going to hang on until next April to sell, all of a sudden… and pay tax at 18% rather than between 24-40%.
Likewise, however, pity the poor businessman who has worked the last 7 years, ploughing his life savings into the thing, working all hours, and looking forward to selling out when he hits 60 in 2010… suddenly, he’ll pay 18% tax rather than 10%… almost double what he would have paid.
Expect to see a few small businesses up for sale over the next few months, as people try to sell up under the current rules rather than the proposed new ones…
… but if that’s you looking to sell, go and see a real accountant first, eh?
(Mark Harrison)
Well, the dust has (almost) settled, and it’s time for a quick review of what Chancellor Darling’s pre-budget report actually means for us.
I should stress at the outset that if you hold business or property assets, and are thinking about selling them, then you should go out and get professional advice from a tax advisor about whether to try to do so before or after the 6th April next year. This is very much my personal understanding of the “headline issues” only… in no way am I trying to give tax advice.
The overall summary is that it’s a welcome piece of news for us property investors, but bad for us business owners (so once again, I’m in a “he giveth with one hand, he taketh with the other) situation.
OK, time to review the current arrangements for Capital Gains Tax (CGT):
1: Everyone gets a tax-free allowance each year for “capital gains” (businesses, property, shares, etc.). In the analysis that follows, I’m pretty much going to ignore this, because it makes the explanation easier, and doesn’t really change the “impact”
2: Some things (like the house you live in) is exempt from CGT.
3: The “basic rate” for capital gains has been 40%, but with a wrinkle, as follows:
3.1: For “business assets”, like shares in a private (unquoted) company, shares in companies quoted on AIM, shares where you own 5% or more of a given company, or where you’re a Director or Employee of the company, you get “business taper relief”, which has been good. Basically, provided you hold onto the asset for one year, you effectively pay tax at 20% instead of 40% (so-called 50% taper relief)… and if you hold onto the asset for two years or more, you effectively pay tax at 10% (so-called 75% taper relief.) For those of us who’ve built businesses, and then sold them, this has been, well good… since it means that we’ve paid 10% tax on our gains.
3.2: For “non-business assets”, like rental property, you get “non-business taper relief”. This cuts in MUCH more slowly, with not a penny reduction until you’d held the asset for 2 years (at which point you get a reduction from 40% tax down to 38% - woo)… and “full relief” only after you’ve held it for 10 years (at which point you get a reduction from 40% tax down to 24%.)
Some quick illustrations when explain why we property investors have been campaigning to be treated like business owners (given we’re regulated like them!)
Hold a business for 2 years, pay tax at 10% when you sell it. Hold a rental property for 2 years, pay tax at 38% when you sell it. Hold a business for 10 years, pay tax at 10% when you sell it. Hold a rental property for 10 years, pay tax 24% when you sell it. Here’s the proposed new rule…
Capital gains tax will be at 18%, irrespective of how long you’ve owned the thing, and irrespective of whether the thing is a “business” or a “non-business” asset. You can probably see, therefore, why someone who’s got a few buy to lets, and was thinking of cashing out, is probably going to hang on until next April to sell, all of a sudden… and pay tax at 18% rather than between 24-40%.
Likewise, however, pity the poor businessman who has worked the last 7 years, ploughing his life savings into the thing, working all hours, and looking forward to selling out when he hits 60 in 2010… suddenly, he’ll pay 18% tax rather than 10%… almost double what he would have paid.
Expect to see a few small businesses up for sale over the next few months, as people try to sell up under the current rules rather than the proposed new ones…
… but if that’s you looking to sell, go and see a real accountant first, eh?
Saturday, October 27, 2007
Jarl Moe In York
EARN MONEY FOR FREE
This weekend 26th and 27th of October I am speaking at the Property Man's event in York, UK.
This weekend 26th and 27th of October I am speaking at the Property Man's event in York, UK.
Rob Best, a dear friend of mine is teaching people how to bundle all the strategies within property investing into ONE!
How to earn money and build your property with NO money down!
Very exiting...
Even more exiting as I am teaching people how to pay ZERO Captial Gains tax on all their income from their property investing.
Very exiting...
Even more exiting as I am teaching people how to pay ZERO Captial Gains tax on all their income from their property investing.
Talk about bundle!
The event is held at:
Parsonage Country House Hotel
http://www.parsonagehotel.co.uk/
PS. Don't forget http://www.innerpowerweekend.com/ in 2 weeks time.... but if you have not got your tickets yet... sorry we are fully booked.
But, you can sign up for the next one soon...
http://www.parsonagehotel.co.uk/
PS. Don't forget http://www.innerpowerweekend.com/ in 2 weeks time.... but if you have not got your tickets yet... sorry we are fully booked.
But, you can sign up for the next one soon...
Sunday, September 30, 2007
Jarl Moe Speaking In Singapore
I, Jarl Moe, and my partner
Randy Charach
will be speaking at the Internet Summit in Singapore in October 2007.
Several of our great friends will share powerful information together with us...
Stay tuned on http://www.internetmillionaireincubator.com/special/
Before Singapore we will be checking out Shangai in China and have several meetings to PUSH success forward together with you.
Part of the seminar will be recorded in MP3 so stay tuned!
Best wishes
Jarl Moe.
PS. I just started a BRAND NEW Jarl Moe travel blog at http://jarlmoe.wordpress.com/
Randy Charach
will be speaking at the Internet Summit in Singapore in October 2007.
Several of our great friends will share powerful information together with us...
Stay tuned on http://www.internetmillionaireincubator.com/special/
Before Singapore we will be checking out Shangai in China and have several meetings to PUSH success forward together with you.
Part of the seminar will be recorded in MP3 so stay tuned!
Best wishes
Jarl Moe.
PS. I just started a BRAND NEW Jarl Moe travel blog at http://jarlmoe.wordpress.com/
Wednesday, September 26, 2007
Financial Terms In USA
JARL MOE ON USA TOUR
As I am touring USA right now speaking to the public about how to save more tax and use the international law to their benefit.....
Its time for you to learn some of the terms you must know but inside and outside USA in egards of finance and money.
Here we go:
3F’s
Family, friends and fools, the first source of money used by most entrepreneurs.
Acquisition
A purchase of a controlling interest (more than 50%) of a company’s ownership by another company or outside investor in exchange for cash or shares with the intent to acquire its assets and operations.
Adventure Capitalists
Individual or angel investors.
Anxious Money
Investors or gamblers that risk money they can’t afford to lose.
Bedbug Letter
A notification from the SEC instructing a company to withdraw its IPO because its registration statement is not in accordance with securities laws.
Blank Check Offering
Also known as SEC Rule 419, is an initial public offering of an early-stage company that has not finalized the exact type of business it will run (or acquire). In a blank check offering, investors are betting on the success of the (usually seasoned) management team, more so than on the company's proposed products or services. Because of their high risk, so-called "blank check companies" are required to put investors' funds into an escrow account.
Board
A Board of Directors or Operating Board of the company. Consists of individuals who oversee the company’s development on behalf of and for the benefit of the shareholders. The Board advises the senior management team and sets certain corporate policies.
Bridge Financing
A limited amount of equity capital or short term debt financing typically acquired within 6-18 months of an anticipated public offering or major round of equity investment.
Burn rate
The rate at which a company is spending its cash.
Broken IPO (sometimes called a "break issue")
A situation in which the stock price falls below the offering price after the underwriter has determined the initial price of the IPO.
Buyout
A purchase of a controlling interest (more than 50%) of a company’s ownership by an outside investor ("leveraged buyout" or "LBO") or management team ("management buyout" or "MBO") in exchange for cash and debt with the intent to acquire the company’s assets and operations.
Carry
The percentage of the return collected by VC’s on their limited partners investments.
Cash flow
The net amount of cash generated ("built") or expended ("burned") by a company.
Class A/B Stock
Issuing stock of different classes with different terms and rights. (e.g.: voting vs. non-voting)
Clawback
VC’s returning money to investors when the VC has earned more than the agreed carry.
Closing
A meeting or event when the investment capital is transferred to the company in exchange for equity or debt and, after the required legal documents are executed between the investor and the company.
Collar
A "collar," in terms of an IPO, is the lowest price that the issuer will accept for shares of a planned initial public offering.
Collateral
An asset (tangible or intangible) that could be pledged by a company to secure debt.
Company Stage
A state of an entrepreneurial company’s growth, from its initial formation to its liquidity event (e.g. public offering, acquisition, merger, etc.)
Comparable Public Company
A publicly traded company with characteristics (e.g. industry, revenues, company stage, etc.) similar to the company seeking capital.
Control
An ownership of more than 50% of the equity of a company or the ownership of the greatest amount of equity compared with the other shareholders (“plurality”.)
Convertible Security
A note, warrant, preferred share, or other specialized security that will be exchanged (i.e.: converted) into a predetermined number of common shares of the company at a predetermined, future time.
Cost of Goods Sold
The direct costs associated with the sales of the company. Would include such items as materials and labor directly used to manufacture the products.
Covenant
Legal condition imposed on a company which defines positive and negative trends of a financing or the operations.
Current ratio
The ratio of current assets to current liabilities, i.e.: current assets divided by current liabilities.
Debt Service
An amount of principal and interest payable on a regular basis to repay a loan.
Default
A failure of a company to comply with the covenants and/or terms and conditions of the financing.
DPO
Direct Public Offering ... the practice of selling shares of an IPO directly to the public without using an underwriter. The DPO strategy is often used by companies that have struggled to raise capital through conventional channels and/or companies conducting small offerings in which traditional underwriting fees would be prohibitive.
Due Diligence
The process of evaluating the merits, risks and potential of an investment opportunity.
EBIT
"Earnings Before Interest and Taxes". EBIT is equivalent to the Operating/Gross Profit.
Early Stage
A state of a company that typically has completed its seed stage financing and has a founding or core senior management team, proven its concept or completed its beta test, has minimal revenues, has no positive earnings or cash flow.
Earnings
Operating profit, less interest and taxes. Also know as the Net Profit.
Equity
The ownership of a company, represented in stock (common and/or preferred.)
ERP (Enterprise Resource Planning)
Very complicated, functionally integrated software that is designed to consider solving a problem for the entire Enterprise (e.g.: For a large company, their world-wide inventory problem.)
Executive Summary (ES)
A short summary of a complete business plan. Includes the pertinent information required for a potential capital provider to make a preliminary assessment of the investment opportunity.
Expansion Stage
A company that has completed its early stage and has a complete senior management team, significantly increasing revenues, positive earnings and cash flow.
Form 144
Must be filed by "insiders" prior to any "intention" to sell shares of their company's restricted stock - i.e. issued stock that is currently unregistered with the SEC. Form 144 is a notice of the insider's intention, (not obligation), to sell the shares. If the shares are not sold within three months time, then Form 144 must be amended.
Fully-Diluted Outstanding Shares
The number of shares representing the total company ownership, including the common shares and the current conversion or exercised value of the preferred shares, options, warrants, and other convertible securities.
Gross Profit
Gross Margin, less direct operating costs.
Gross Margin
Sales, less Cost of Sales.
Hockey Stick Sales
Most new ventures have sales projections that have a curve that looks like a hockey stick. The sharper the growth rate, the fewer people really believe your projections.
Hurdle Rate
A target ROI, determined by an investor to compensate for the risks related to the particular investment.
IPO (Initial Public Offering)
A company’s first offering of SEC-registered, common stock to the public.
Investment Criteria
Categories used by professional VC’s to initially evaluate venture capital seekers. Might include investment region, company stage, industry, required capital amount, and other factors.
Junior Debt
A debt financing with repayment rights that are to be paid after any senior security in a liquidation scenario.
Lead Investor
An investor that: makes an significant equity capital investment; and, is designated to monitor the investment on behalf of the other investors.
Leverage
Using debt to add to the available cash to grow the company. Or, to acquire cash without selling more equity.
Liquidity Event
The sale or exchange of a significant amount of company ownership for cash, debts, or the equity of another company.
Lock-Up Period
A pre-specified period of time - typically the first 180 days after an IPO - when a company's executives, officers and other insiders are restricted from selling their shares. Underwriters impose lock-ups because they are concerned that if
insiders sell shares soon after an IPO, the company's stock price will fall, undermining the initial public offering price and the post-IPO trading market.
Market Capitalization
The number of outstanding shares times the current price/per share. This is used to value publicly traded companies. Also known as the Market Valuation.
Merger
An integration of two independent companies, through a pooling of interests, a purchase, or a consolidation, where a new company is formed to acquire the net assets of the initial companies.
Mezzanine Stage
Short term financing (equity and/or debt ) for a company that is within 6-18 months of an anticipated public offering.
MLM
Multi-level Marketing. A sales strategy that recruits numbers and layers of outside people to actually sell the products.
Net Profit
Operating profit less interest and taxes, also know as Earnings.
Net Margin
The ratio of net profit to the revenues (sales.)
Offering Memorandum
A legal investment document that provides investors with the company’s business plan, investment information, and key investment risks. Often also known as the Private Placement
Memorandum, or PPM.
OPM
Other People’s Money.
Option
A right to purchase a specific amount of company equity at a defined price.
Overhang Affect
The overhang is a large block of stock (often shares of a recent IPO) that puts downward pressure on prices after it is released on the market. In the IPO market, the overhang effect often comes into play when the lock-up period expires on insider-owned shares of a company that has recently gone public.
Overhang
For VC's, this is the difference between the amount of money raised in a fund and the amount invested.
Outstanding Shares
The total number of common shares held and shown on the corporate balance sheets. The amount does not include convertible equity such as preferred shares, warrants and options.
Post-Money Valuation
The pre-money valuation of a company plus the total capital raised from the investment round. An arbitrary valuation of a company using various calculation methods.
P/E Ratio ("Price-Earnings Ratio")
The ratio of the price of a share of stock versus the earnings represented by that share. Or, the ratio of the market capitalization to the earnings of a company. The ratio is used to compare the company’s valuation with similar public and private companies.
PPM
Private Placement Memorandum. A legal investment document that provides potential investors with the company’s business plan, investment information and key investment risks. Also known as Offering Memorandum or Private Placement Offering. Usually filed with the state or federal government agencies.
Professional Venture Capital Providers
Accredited investors that raise investment funds targeted at taking ownership positions in selected private companies in exchange for capital.
Pro Forma
From the Latin, “for form.” Financial projections/budgets of a business or venture.
Public Offering
The registration and selling of common shares to the public under the rules and supervision of the Securities and Exchange Commission (SEC).
Quiet Period
After a company files its S-1 registration statement and does not come out of its quiet period until 25 days after its stock has started trading. The quiet period is designed to prevent companies from overtly publicizing their initial public offerings.
ROI
"Return on Investment”, the profit to be returned to investors relative to their initial investment.
Regulation FD
Also known as "Regulation Fair Disclosure" or "Reg. FD" is a newer (October 2000) SEC rule that requires companies to make all "material" information available to all investors at precisely the same time. This landmark ruling challenges public companies' long-standing practice of giving the news earlier to analysts, institutional investors and selected news wires such as Dow Jones, Reuters and Bloomberg.
Restricted Shares
Common shares acquired from the company in a private sale that are not pursuant to a registration statement.
Rule 144
An SEC rule that governs the sale of restricted shares once the public trading of the securities commences.
S-11
SEC Form S-11, covered under the Securities Act of 1933, is used to register securities of certain publicly traded real estate companies, including real estate investment trusts (REITs).
SEC
Securities and Exchange Commission, US Federal Government.
Secondary Offering
An additional sale of the common shares of a company to the public.
Secondary Purchase
The purchase of company ownership from a shareholder instead of the company.
Seed Stage
An initial state of a company’s growth that is characterized by a founding management team, business plan development, prototype development, beta testing.
Senior Debt
A debt financing with repayment rights that are senior (ahead of) all other debt financing in a liquidation scenario or are secured by certain assets.
SB-1
An SEC registration form that larger companies file when registering to go public. Form SB-1,
limits a small business's public offering to $10 million.
SB-2
An SEC form that’s a "plain language" filing that small business issuers can use when registering to go public. Unlike Form SB-1, it allows small business issuers to raise unlimited capital. Unlike the better-known Form SB-1 this requires only two years of audited financials, rather than three, and permits financials to be prepared under generally accepted accounting principles (GAAP) without rather the SEC's requirements for extensive narrative disclosure. (NOTE: The SEC defines a "small business issuer" as a US or Canadian company with less than $25 million in revenues in its last fiscal year, and whose outstanding publicly-held stock is worth no more than $25 million.)
SBIC
Small Business Investment Corporations. Aided financially by the US Government’s Small Business Administration. SBIC’s function as smaller, local venture capital companies.
Shelf Registration
Formally adopted by the SEC in 1983 (as Rule 415) when interest rates were in double digits and could change significantly in the six or so weeks it took a giant corporation like GE to register an underwritten bond deal. Rule 415 instead allows companies to register securities that can be sold at will within two years, as long as it keeps meeting quarterly financial reporting requirements.
SIC Code:
Standard Industrial Classification. Unique four digit codes assigned to industry by the US Department of Commerce. The codes classify different kinds of businesses.
Subordinated Debt
A debt financing with repayment rights that are subordinated (lower than) any senior security in a liquidation scenario.
Syndicate
Also known as an underwriting group. A team of underwriters from different investment banking firms who work together to purchase a new issue of securities for resale to the investment public. The firm that heads the syndicate is referred to as the lead manager.
Warrant
An option given to a party (typically an investor) that entitles them to purchase stock in the future in the company at a pre-determined price.
As I am touring USA right now speaking to the public about how to save more tax and use the international law to their benefit.....
Its time for you to learn some of the terms you must know but inside and outside USA in egards of finance and money.
Here we go:
3F’s
Family, friends and fools, the first source of money used by most entrepreneurs.
Acquisition
A purchase of a controlling interest (more than 50%) of a company’s ownership by another company or outside investor in exchange for cash or shares with the intent to acquire its assets and operations.
Adventure Capitalists
Individual or angel investors.
Anxious Money
Investors or gamblers that risk money they can’t afford to lose.
Bedbug Letter
A notification from the SEC instructing a company to withdraw its IPO because its registration statement is not in accordance with securities laws.
Blank Check Offering
Also known as SEC Rule 419, is an initial public offering of an early-stage company that has not finalized the exact type of business it will run (or acquire). In a blank check offering, investors are betting on the success of the (usually seasoned) management team, more so than on the company's proposed products or services. Because of their high risk, so-called "blank check companies" are required to put investors' funds into an escrow account.
Board
A Board of Directors or Operating Board of the company. Consists of individuals who oversee the company’s development on behalf of and for the benefit of the shareholders. The Board advises the senior management team and sets certain corporate policies.
Bridge Financing
A limited amount of equity capital or short term debt financing typically acquired within 6-18 months of an anticipated public offering or major round of equity investment.
Burn rate
The rate at which a company is spending its cash.
Broken IPO (sometimes called a "break issue")
A situation in which the stock price falls below the offering price after the underwriter has determined the initial price of the IPO.
Buyout
A purchase of a controlling interest (more than 50%) of a company’s ownership by an outside investor ("leveraged buyout" or "LBO") or management team ("management buyout" or "MBO") in exchange for cash and debt with the intent to acquire the company’s assets and operations.
Carry
The percentage of the return collected by VC’s on their limited partners investments.
Cash flow
The net amount of cash generated ("built") or expended ("burned") by a company.
Class A/B Stock
Issuing stock of different classes with different terms and rights. (e.g.: voting vs. non-voting)
Clawback
VC’s returning money to investors when the VC has earned more than the agreed carry.
Closing
A meeting or event when the investment capital is transferred to the company in exchange for equity or debt and, after the required legal documents are executed between the investor and the company.
Collar
A "collar," in terms of an IPO, is the lowest price that the issuer will accept for shares of a planned initial public offering.
Collateral
An asset (tangible or intangible) that could be pledged by a company to secure debt.
Company Stage
A state of an entrepreneurial company’s growth, from its initial formation to its liquidity event (e.g. public offering, acquisition, merger, etc.)
Comparable Public Company
A publicly traded company with characteristics (e.g. industry, revenues, company stage, etc.) similar to the company seeking capital.
Control
An ownership of more than 50% of the equity of a company or the ownership of the greatest amount of equity compared with the other shareholders (“plurality”.)
Convertible Security
A note, warrant, preferred share, or other specialized security that will be exchanged (i.e.: converted) into a predetermined number of common shares of the company at a predetermined, future time.
Cost of Goods Sold
The direct costs associated with the sales of the company. Would include such items as materials and labor directly used to manufacture the products.
Covenant
Legal condition imposed on a company which defines positive and negative trends of a financing or the operations.
Current ratio
The ratio of current assets to current liabilities, i.e.: current assets divided by current liabilities.
Debt Service
An amount of principal and interest payable on a regular basis to repay a loan.
Default
A failure of a company to comply with the covenants and/or terms and conditions of the financing.
DPO
Direct Public Offering ... the practice of selling shares of an IPO directly to the public without using an underwriter. The DPO strategy is often used by companies that have struggled to raise capital through conventional channels and/or companies conducting small offerings in which traditional underwriting fees would be prohibitive.
Due Diligence
The process of evaluating the merits, risks and potential of an investment opportunity.
EBIT
"Earnings Before Interest and Taxes". EBIT is equivalent to the Operating/Gross Profit.
Early Stage
A state of a company that typically has completed its seed stage financing and has a founding or core senior management team, proven its concept or completed its beta test, has minimal revenues, has no positive earnings or cash flow.
Earnings
Operating profit, less interest and taxes. Also know as the Net Profit.
Equity
The ownership of a company, represented in stock (common and/or preferred.)
ERP (Enterprise Resource Planning)
Very complicated, functionally integrated software that is designed to consider solving a problem for the entire Enterprise (e.g.: For a large company, their world-wide inventory problem.)
Executive Summary (ES)
A short summary of a complete business plan. Includes the pertinent information required for a potential capital provider to make a preliminary assessment of the investment opportunity.
Expansion Stage
A company that has completed its early stage and has a complete senior management team, significantly increasing revenues, positive earnings and cash flow.
Form 144
Must be filed by "insiders" prior to any "intention" to sell shares of their company's restricted stock - i.e. issued stock that is currently unregistered with the SEC. Form 144 is a notice of the insider's intention, (not obligation), to sell the shares. If the shares are not sold within three months time, then Form 144 must be amended.
Fully-Diluted Outstanding Shares
The number of shares representing the total company ownership, including the common shares and the current conversion or exercised value of the preferred shares, options, warrants, and other convertible securities.
Gross Profit
Gross Margin, less direct operating costs.
Gross Margin
Sales, less Cost of Sales.
Hockey Stick Sales
Most new ventures have sales projections that have a curve that looks like a hockey stick. The sharper the growth rate, the fewer people really believe your projections.
Hurdle Rate
A target ROI, determined by an investor to compensate for the risks related to the particular investment.
IPO (Initial Public Offering)
A company’s first offering of SEC-registered, common stock to the public.
Investment Criteria
Categories used by professional VC’s to initially evaluate venture capital seekers. Might include investment region, company stage, industry, required capital amount, and other factors.
Junior Debt
A debt financing with repayment rights that are to be paid after any senior security in a liquidation scenario.
Lead Investor
An investor that: makes an significant equity capital investment; and, is designated to monitor the investment on behalf of the other investors.
Leverage
Using debt to add to the available cash to grow the company. Or, to acquire cash without selling more equity.
Liquidity Event
The sale or exchange of a significant amount of company ownership for cash, debts, or the equity of another company.
Lock-Up Period
A pre-specified period of time - typically the first 180 days after an IPO - when a company's executives, officers and other insiders are restricted from selling their shares. Underwriters impose lock-ups because they are concerned that if
insiders sell shares soon after an IPO, the company's stock price will fall, undermining the initial public offering price and the post-IPO trading market.
Market Capitalization
The number of outstanding shares times the current price/per share. This is used to value publicly traded companies. Also known as the Market Valuation.
Merger
An integration of two independent companies, through a pooling of interests, a purchase, or a consolidation, where a new company is formed to acquire the net assets of the initial companies.
Mezzanine Stage
Short term financing (equity and/or debt ) for a company that is within 6-18 months of an anticipated public offering.
MLM
Multi-level Marketing. A sales strategy that recruits numbers and layers of outside people to actually sell the products.
Net Profit
Operating profit less interest and taxes, also know as Earnings.
Net Margin
The ratio of net profit to the revenues (sales.)
Offering Memorandum
A legal investment document that provides investors with the company’s business plan, investment information, and key investment risks. Often also known as the Private Placement
Memorandum, or PPM.
OPM
Other People’s Money.
Option
A right to purchase a specific amount of company equity at a defined price.
Overhang Affect
The overhang is a large block of stock (often shares of a recent IPO) that puts downward pressure on prices after it is released on the market. In the IPO market, the overhang effect often comes into play when the lock-up period expires on insider-owned shares of a company that has recently gone public.
Overhang
For VC's, this is the difference between the amount of money raised in a fund and the amount invested.
Outstanding Shares
The total number of common shares held and shown on the corporate balance sheets. The amount does not include convertible equity such as preferred shares, warrants and options.
Post-Money Valuation
The pre-money valuation of a company plus the total capital raised from the investment round. An arbitrary valuation of a company using various calculation methods.
P/E Ratio ("Price-Earnings Ratio")
The ratio of the price of a share of stock versus the earnings represented by that share. Or, the ratio of the market capitalization to the earnings of a company. The ratio is used to compare the company’s valuation with similar public and private companies.
PPM
Private Placement Memorandum. A legal investment document that provides potential investors with the company’s business plan, investment information and key investment risks. Also known as Offering Memorandum or Private Placement Offering. Usually filed with the state or federal government agencies.
Professional Venture Capital Providers
Accredited investors that raise investment funds targeted at taking ownership positions in selected private companies in exchange for capital.
Pro Forma
From the Latin, “for form.” Financial projections/budgets of a business or venture.
Public Offering
The registration and selling of common shares to the public under the rules and supervision of the Securities and Exchange Commission (SEC).
Quiet Period
After a company files its S-1 registration statement and does not come out of its quiet period until 25 days after its stock has started trading. The quiet period is designed to prevent companies from overtly publicizing their initial public offerings.
ROI
"Return on Investment”, the profit to be returned to investors relative to their initial investment.
Regulation FD
Also known as "Regulation Fair Disclosure" or "Reg. FD" is a newer (October 2000) SEC rule that requires companies to make all "material" information available to all investors at precisely the same time. This landmark ruling challenges public companies' long-standing practice of giving the news earlier to analysts, institutional investors and selected news wires such as Dow Jones, Reuters and Bloomberg.
Restricted Shares
Common shares acquired from the company in a private sale that are not pursuant to a registration statement.
Rule 144
An SEC rule that governs the sale of restricted shares once the public trading of the securities commences.
S-11
SEC Form S-11, covered under the Securities Act of 1933, is used to register securities of certain publicly traded real estate companies, including real estate investment trusts (REITs).
SEC
Securities and Exchange Commission, US Federal Government.
Secondary Offering
An additional sale of the common shares of a company to the public.
Secondary Purchase
The purchase of company ownership from a shareholder instead of the company.
Seed Stage
An initial state of a company’s growth that is characterized by a founding management team, business plan development, prototype development, beta testing.
Senior Debt
A debt financing with repayment rights that are senior (ahead of) all other debt financing in a liquidation scenario or are secured by certain assets.
SB-1
An SEC registration form that larger companies file when registering to go public. Form SB-1,
limits a small business's public offering to $10 million.
SB-2
An SEC form that’s a "plain language" filing that small business issuers can use when registering to go public. Unlike Form SB-1, it allows small business issuers to raise unlimited capital. Unlike the better-known Form SB-1 this requires only two years of audited financials, rather than three, and permits financials to be prepared under generally accepted accounting principles (GAAP) without rather the SEC's requirements for extensive narrative disclosure. (NOTE: The SEC defines a "small business issuer" as a US or Canadian company with less than $25 million in revenues in its last fiscal year, and whose outstanding publicly-held stock is worth no more than $25 million.)
SBIC
Small Business Investment Corporations. Aided financially by the US Government’s Small Business Administration. SBIC’s function as smaller, local venture capital companies.
Shelf Registration
Formally adopted by the SEC in 1983 (as Rule 415) when interest rates were in double digits and could change significantly in the six or so weeks it took a giant corporation like GE to register an underwritten bond deal. Rule 415 instead allows companies to register securities that can be sold at will within two years, as long as it keeps meeting quarterly financial reporting requirements.
SIC Code:
Standard Industrial Classification. Unique four digit codes assigned to industry by the US Department of Commerce. The codes classify different kinds of businesses.
Subordinated Debt
A debt financing with repayment rights that are subordinated (lower than) any senior security in a liquidation scenario.
Syndicate
Also known as an underwriting group. A team of underwriters from different investment banking firms who work together to purchase a new issue of securities for resale to the investment public. The firm that heads the syndicate is referred to as the lead manager.
Warrant
An option given to a party (typically an investor) that entitles them to purchase stock in the future in the company at a pre-determined price.
Tuesday, August 21, 2007
Searching for the ZERO
I spent my last weeks investigating the property market and the rules for my UK clients on stamp duty and capital gains tax. And for those of you that have met me you know how we feel about CGT... We hate it.
I "problem" for many friends is that they have already purshased property and now they wish to asset protect it and of course later sell it without paying CGT.
Soon my report will be ready...
Stay Tuned
Jarl Moe
http://www.thenotaxman.com/
I "problem" for many friends is that they have already purshased property and now they wish to asset protect it and of course later sell it without paying CGT.
Soon my report will be ready...
Stay Tuned
Jarl Moe
http://www.thenotaxman.com/
Wednesday, August 1, 2007
Offshore stamp duty
Several great questions appeared on my last seminar in London.One of them was...
Is it really true that an offshore identity will pay less stamp duty?
After studying this topic I can tell you the following.
For land in the UK, it is charged at:
0% if the price does not exceed £150,000 (£125,000 for residential properties)
1% if the price exceeds £150,000 but does not exceed £250,000
3% if the price exceeds £250,000 but does not exceed £500,000
4% if the price exceeds £500,000
So the question remains, how can we "bypass" the stamp duty in full?
The first key information is this....
If you where to buy your properties by using a UK Limited company you can sell the SHARES in the UK Limited company to the new buyer of your property, instead of selling the actually property you would sell the shares of the company that owns the property. Of course the purchaser then owns the shares and indirectly the property...
Do you get it?
If you use ONE UK Ltd per property you buy and only sell/transfer the shares to the new owner the stamp duty is 0,5%
Please note that the shares must be more than three years old... so you can not use this strategy in "flipping".
And how do we pay zero?
The rules in the UK clearly states that IF you where to sell the shares of a NON-UK company instead of a UK Ltd the stamp duty is 0%
Conclusion: It is really up to you to make your own calculations. Is it worth to have one Cyprus or one UK Ltd company per property to escape the Stamp Duty? Measure the yearly cost of maintaining the Ltd towards the Stamp Duty you must pay when selling and you have the answer.
If you have a property worth over 150K the stamp duty would be 4K
Your investment with establishing a Cyprus company is approximate 2K
(imagine having a property worth up to 500K and paying 3% = 15K!!!!)
In other words... If you wish to sell the property within one or two years you will SAVE money having the Cyprus company owning the property and selling the shares of a Cyprus company as the Stamp Duty and Capital Gains will be ZERO!
This strategy would apply for most countries within the EU and also USA and Asia.
P.S The above is for general information purposes only. It is not intended to be comprehensive or to provide any specific tax advice. For spesific advice on your case please contact me for full clarification http://www.moneyserve.biz/
Best wishes Jarl Moe "The NO Tax Man"
First Seminar In The UK
My first pure tax planning seminar about HOW to pay zero capital gains tax and much more was a great success. Im happy to see that it is actually possible to educate people on this hot topic in under three hours.
Thank you to all that attended.
My next seminar in London will be in the end of August.
Best wishes
Jarl Moe
Thank you to all that attended.
My next seminar in London will be in the end of August.
Best wishes
Jarl Moe
Wednesday, July 18, 2007
Tax Seminar In London
After great demand I have decided to host my own Tax Seminars Across Europe!
The first one will be in london the 23rd of July 2007
Please go to www.jarlmoe.com/register.htm and register for the seminar
See you there..........
Be ready to be amazed.
Best wishes
Jarl Moe
The first one will be in london the 23rd of July 2007
Please go to www.jarlmoe.com/register.htm and register for the seminar
See you there..........
Be ready to be amazed.
Best wishes
Jarl Moe
Wednesday, July 4, 2007
Jarl Moe Teaches You Dividends Tax Offshore
This week I would like to teach you some basics on dividends tax using UK as an example.
Depending in your country the dividends tax may differ, to make sure you have the right details please contact your local tax office and ask them....
OFFSHORE TAX DIVIDENDS
Lets make this very simple for you!
If you set up a business, including setting up a business in YOUR OWN COUNTRY you can of course choose if it will be YOU or ANOTHER IDENTITY that will own the shares in your new venture.
The people who don't know better (yes im talking to you) usually set up a limited company and set them selves up as shareholders, almost with pride that they own the shares...
Let me tell you in a few words why this is COMPLETELY WRONG!
In setting up any company you must concider tax planning and the benefits you can have by doing things outside the box.
Example:
1) You set up a UK Limited Company and they slap you with up to 31% tax!
2) You set up a foreign company and pay zero!
How is this possible?
The answer is.... because the law say so!
UK vs CYPRUS
The UK has dividends tax and Cyprus does not have dividends tax.
So... If you make a Cyprus company the shareholder in your UK company instead of you, you will not pay any dividends tax on any profits....
This is due to:
a) The tax agreement between UK and Cyprus
b) The Cyprus law
WHAT DO THE SMART PEOPLE DO?
The really smart people set up the Cyprus company to actually do their business with only a sales rep office in the country you operate in.....
In Cyprus the company pay 10% tax flat and NO DIVIDENDS TAX!
If you turn it around and make the UK company the shareholder in the Cyprus corp you can move the max dividents to the UK and pay your self divident tax in the UK and pay only 10%
Lets have a look at the details:
You pay tax at different rates on UK dividends (income from UK company shares, unit trusts and open ended investment companies) than you do on interest from savings, such as bank and building society interest.
Dividend tax rates 2007-2008
There are two different Income Tax rates on UK dividends. The rate you pay depends on whether your overall taxable income (after allowances) falls within or above the basic rate Income Tax limit.
The basic rate Income Tax limit is £34,600 for the 2007-2008 tax year.
It doesn't matter whether you get dividends from a company, unit trusts or open-ended investment companies, as all dividends are taxed the same way.
Understanding the dividend tax credit
Companies pay you dividends out of profits on which they have already paid (or are due to pay) tax. The tax credit takes account of this and is available to the shareholder to offset against any Income Tax that may be due on their 'dividend income'.
When adding up your overall taxable income you need to include the sum of the dividend(s) received and the tax credit(s). This income is called your 'dividend income'.
How tax credits are worked out
The dividend you are paid represents 90 per cent of your 'dividend income'. The remaining 10 per cent of the dividend income is made up of the tax credit. Put another way, the tax credit represents 10 per cent of the 'dividend income'.
If you pay tax at or below the basic rate
You have no tax to pay on your dividend income because the tax liability is 10 per cent - the same amount as the tax credit - as shown in the tables.
If you pay tax at the higher rate
You pay a total of 32.5% tax on dividend income that falls above the basic rate Income Tax limit (£34,600 for the 2007-2008 tax year). But because the first 10 per cent of the tax due on your dividend income is already covered by the tax credit, in practice you owe only 22.5 per cent.
Note that dividend income, like savings income, is taxed after your non-savings income (for example, wages and self-employment profit) at your highest tax rate.
If it falls both sides of the £34,600 higher rate tax bracket, it will be taxed partly at 10 per cent (and covered by the tax credit) and partly at 32.5 per cent (less the 10 per cent tax credit).
Can you claim the tax credit if you don't normally pay tax?
No. You can't claim the 10 per cent tax credit, even if your taxable income is less than your personal allowances and you don't pay tax. This is because Income Tax hasn't been deducted from the dividend paid to you - you have simply been given a 10 per cent 'credit' against any Income Tax due.
Declaring dividend income on your tax return
If you normally complete a tax return you fill in three boxes:
1. The 'dividend/distribution' - the actual amount you were paid
2. The 'tax credit' - as shown on the dividend voucher
3. The total of these two - the 'dividend income'
You pay any extra tax owing via either Self Assessment or PAYE (Pay As You Earn), depending on how you normally pay tax.
Hope this educational session has given you some inspiration on how YOU CAN SAVE MONEY!
If you need me... Im here.
Best wishes
Jarl Moe
Depending in your country the dividends tax may differ, to make sure you have the right details please contact your local tax office and ask them....
OFFSHORE TAX DIVIDENDS
Lets make this very simple for you!
If you set up a business, including setting up a business in YOUR OWN COUNTRY you can of course choose if it will be YOU or ANOTHER IDENTITY that will own the shares in your new venture.
The people who don't know better (yes im talking to you) usually set up a limited company and set them selves up as shareholders, almost with pride that they own the shares...
Let me tell you in a few words why this is COMPLETELY WRONG!
In setting up any company you must concider tax planning and the benefits you can have by doing things outside the box.
Example:
1) You set up a UK Limited Company and they slap you with up to 31% tax!
2) You set up a foreign company and pay zero!
How is this possible?
The answer is.... because the law say so!
UK vs CYPRUS
The UK has dividends tax and Cyprus does not have dividends tax.
So... If you make a Cyprus company the shareholder in your UK company instead of you, you will not pay any dividends tax on any profits....
This is due to:
a) The tax agreement between UK and Cyprus
b) The Cyprus law
WHAT DO THE SMART PEOPLE DO?
The really smart people set up the Cyprus company to actually do their business with only a sales rep office in the country you operate in.....
In Cyprus the company pay 10% tax flat and NO DIVIDENDS TAX!
If you turn it around and make the UK company the shareholder in the Cyprus corp you can move the max dividents to the UK and pay your self divident tax in the UK and pay only 10%
Lets have a look at the details:
You pay tax at different rates on UK dividends (income from UK company shares, unit trusts and open ended investment companies) than you do on interest from savings, such as bank and building society interest.
Dividend tax rates 2007-2008
There are two different Income Tax rates on UK dividends. The rate you pay depends on whether your overall taxable income (after allowances) falls within or above the basic rate Income Tax limit.
The basic rate Income Tax limit is £34,600 for the 2007-2008 tax year.
It doesn't matter whether you get dividends from a company, unit trusts or open-ended investment companies, as all dividends are taxed the same way.
Understanding the dividend tax credit
Companies pay you dividends out of profits on which they have already paid (or are due to pay) tax. The tax credit takes account of this and is available to the shareholder to offset against any Income Tax that may be due on their 'dividend income'.
When adding up your overall taxable income you need to include the sum of the dividend(s) received and the tax credit(s). This income is called your 'dividend income'.
How tax credits are worked out
The dividend you are paid represents 90 per cent of your 'dividend income'. The remaining 10 per cent of the dividend income is made up of the tax credit. Put another way, the tax credit represents 10 per cent of the 'dividend income'.
If you pay tax at or below the basic rate
You have no tax to pay on your dividend income because the tax liability is 10 per cent - the same amount as the tax credit - as shown in the tables.
If you pay tax at the higher rate
You pay a total of 32.5% tax on dividend income that falls above the basic rate Income Tax limit (£34,600 for the 2007-2008 tax year). But because the first 10 per cent of the tax due on your dividend income is already covered by the tax credit, in practice you owe only 22.5 per cent.
Note that dividend income, like savings income, is taxed after your non-savings income (for example, wages and self-employment profit) at your highest tax rate.
If it falls both sides of the £34,600 higher rate tax bracket, it will be taxed partly at 10 per cent (and covered by the tax credit) and partly at 32.5 per cent (less the 10 per cent tax credit).
Can you claim the tax credit if you don't normally pay tax?
No. You can't claim the 10 per cent tax credit, even if your taxable income is less than your personal allowances and you don't pay tax. This is because Income Tax hasn't been deducted from the dividend paid to you - you have simply been given a 10 per cent 'credit' against any Income Tax due.
Declaring dividend income on your tax return
If you normally complete a tax return you fill in three boxes:
1. The 'dividend/distribution' - the actual amount you were paid
2. The 'tax credit' - as shown on the dividend voucher
3. The total of these two - the 'dividend income'
You pay any extra tax owing via either Self Assessment or PAYE (Pay As You Earn), depending on how you normally pay tax.
Hope this educational session has given you some inspiration on how YOU CAN SAVE MONEY!
If you need me... Im here.
Best wishes
Jarl Moe
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