Hungary

QROPS update 12th December 2011 Pension drawdown & QROPS and QNUPS

Submitted by qrops on Mon, 12/Dec/2011

At Gerard Associates Ltd we continue our daily look at factors affecting markets and currencies allowing some insight into conditions affecting exchange rates.

Cash and income timing from a UK Pension income drawdown, flexible pensions or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension drawdown, QROPS and investment income taken.

Investment market volatility and currency exchange remains a challenge. The global economics are volatile and unprecedented in history. Currency exchange continues to concern expats with UK Pensions, income drawdown now including flexible pensions, a QROPS and QNUPS (Qualifying non UK Pension schemes).

 

IN THE UK

 

  • Britain was in the spot light on Friday as David Cameron didn’t agree to new fiscal terms at the EU summer saying he is safeguarding the UK’s banks and vowed to never join the euro. This has caused widespread disagreement within the coalition government. Nick Clegg believes the UK will be left behind and have less power with the Eurozone.
  • Sterling showed little reaction to data showing record exports helped narrow Britain's trade deficit at its fastest pace since in October records began. October’s figure came in at £-7.557bn, significantly better than the previous months £-10.175BN, and much better than the consensus view £-9.500 Analysts said they remained concerned that Eurozone turmoil and weak demand at home would threaten an economic recovery in the UK.
  • A choppy trading day on Friday saw GBPUSD with little change and closed of near $1.564. This morning we have seen it carry on down below the 23.6% Fibonacci retracement level of $1.5597 and currently trading at $1.5565 (December low) as investors look to at dollar as a safe haven.
  • A report by the FSA says RBS gambled with its purchase of Dutch bank ABN Amro and was dragged to the brink of collapse three years ago by poor management decisions and flawed regulation and supervision.

 

ELSEWHERE

 

  • Friday saw the euro swing euro back and forth after all EU nations except the UK and Hungary agreed to new fiscal ties at an emergency summit, the summit went a long way towards forging the closer economic ties needed to prevent future debt crises but markets are likely to judge it as too little and too late to solve the current one.
  • EU leaders agreed stricter budget rules for the Eurozone but failed to secure changes to the EU treaty among all 27 member states. Countries also failed to reach an agreement on giving a banking license to the Eurozone's permanent bailout fund, limiting its firepower. They announced the possibility of increasing the size of the ESM above €500bn, this is due to be discussed further next March.
  • The highlight for Germany was the announcement of no PSI in the ESM as a precondition, but adherence to the “well established IMF principles and practices”. Finally, discussion about an IMF provision of an additional €200b of resources is to be confirmed in the coming days.
  • EURUSD initially strengthened on the news rising to $1.3425, however concerns that the agreement doesn't represent a solution to the debt crisis drove the euro back down to $1.335. Monday morning has seen the USD gains continue, current trading is $1.3307.
  • Moody's downgraded its long term ratings on French banks with BNP Paribas, Credit Agricole and Societe General citing deteriorating macro fundamentals and funding issues.
  • Canada recorded a surprise Trade balance deficit (-$885m vs. +vs. +$1b) in October, following a big month surprise surplus. The drop came mostly on the back of a -3% fall in exports (biggest decline in eight-months) and a +1.9% advance in imports.
  • China revealed details to create Eurozone and US investment funds for a total of about $300bn. The aim is to help pump money into the Eurozone to boost returns on its foreign exchange reserves with aggressive high return investments.
  • Inflation in China eased to its lowest in 14 months in November, providing ample room for the central bank to ease policies to support economic growth amid turbulence in Europe, China's biggest trading partner. Inflation eased to 4.2 percent in November from 5.5 percent in October, the National Bureau of Statistics said Friday. The rate cooled for a fourth consecutive month, after peaking at 6.5 percent in July.
  • India’s industrial output shrank for the first time in 28 months, pushing stocks and the rupee lower on concern faltering growth will force the central bank to suspend its fight against the fastest inflation in BRIC nations.
  • Foreign-exchange strategists are slashing their forecasts for the euro at the fastest pace this year as European Central Bank President Mario Draghi’s interest- rate cuts remove one of the currency’s pillars of support.

 

DATA TO LOOK OUT FOR (all times GMT)

 

  • Markets will be waiting for further fallout from last week’s EU Summit in an otherwise fairly quiet day for data announcements.
  • At 7.00pm the US monthly Budget Statement is released, the figure is expected to fall sharply to -$150bn as expenditure across Federal Entities, Disbursing Officers and Federal Reserve Banks out ways payments in.
  • Japan’s Tertiary Industry Index for October is released overnight and is forecasted to show an marginal improvement.

 

Current Spot Rates (9.00am)

 

 

 

 

 

 

 

 

 

USD

EUR

AUD

CAD

CHF

DKK

NOK

HKD

SEK

ZAR

JPY

GBP

1.5588

1.1705

1.5356

1.5948

1.4443

8.7039

9.0243

12.1280

10.58

12.78

121.157

USD

 

0.7511

0.9851

1.0231

0.9265

5.5837

5.7893

7.78

6.79

8.20

77.725

EUR

1.3313

 

1.3119

1.3625

1.2339

7.4361

7.7098

10.36

9.04

10.92

103.509

 

Key Support and Resistance Levels

 

 

 

 

Support

 

Resistance

GBPUSD

1.5432

1.5506

1.5586

 

1.5740

1.5814

1.5894

GBPEUR

1.1609

1.1644

1.1677

 

1.1745

1.1781

1.1815

EURUSD

1.3142

1.3211

1.3297

 

1.3452

1.3452

1.3607

 

Gerard Associates Ltd advises UK residents, expats and people considering living abroad on the technical and currency options available for Pensions, pension income drawdown, flexible pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pension including QROPS and QNUPS and investments in a clear format allowing all customers to make an informed choice.

This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.

20th July 2010 Pension Foreign Exchange Report QROPS & QNUPS

Submitted by qrops on Tue, 20/Jul/2010

We continue our daily look at factors affecting currencies allowing some insight into market conditions affecting exchange rates. Cash and income timing for UK Pensions and QROPS should be considered to maximise the Pension, QROPS and investment income and benefits taken.  

Investment market volatility and currency exchange remains a challenge. Things are still very volatile and we are in unique global influencing territory.  In conjunction with investment returns, currency exchange continues to concern many expats with UK Pensions, QROPS and now QNUPS.    

The pound fell yesterday against the dollar and dropped to a seven week low against the euro. Investors decided to ignore ratings agency Moody’s decision to downgrade Ireland and Hungary’s financial  difficulties opting to cut their short euro positions against a basket of currencies most noticeably sterling.

A large euro buy order early in the session helped to suppress any negative feeling towards the euro as another Eurozone member state received a reduced credit rating to AA2 citing a “significant loss of financial strength”.

The euro has been performing well recently and optimism that the release of European bank stress-test results this week on the 23rd July will show strength in the region’s banking sector, easing concern that the debt crisis will worsen.

European regulators are examining the strength of 91 banks to determine whether they can survive potential losses on sovereign-debt holdings. Spanish officials including Finance Minister Elena Salgado last week said they are confident about the results of the stress tests on Spanish banks.

Without any significant data releases in the UK until tomorrow’s Bank of England’s minutes and Friday’s 2nd quarter GDP figures, all the attention was focussed on euro movements. Despite hawkish comments over the weekend from Bank of Englands policymaker Andrew Sentance and merger talks between France’s GDF Suez and Britain’s International Power, the pound lost 1% during Monday’s session falling as low as €1.1727 in the afternoon.

Against the dollar, the pound fell 0.4% to $1.5226, well below a high of $1.5351 reached early in the session.

The euro fell from the highs of $1.30 against the US dollar but remained within striking distance well in the late $1.29’s throughout the session. The 9.5% gain to $1.3008 from a four-year low on June 7 reduced speculation the region’s debt crisis would break up the single currency. At the same time, the head of Spain’s Exporters Club says the stronger euro will make it harder to counter a “paralyzed” domestic market.

 

Where has this recent euro rally come from?

Bets on a drop in the euro climbed to an all-time high earlier this year as so-called peripheral nations from Greece to Spain struggled to sell debt to trim their deficits. The reversal of this sentiment is where the rally stems from.

Bond yields in the peripheral nations began to retreat after the EU and the IMF announced an aid package worth almost $1 trillion on May 10, easing concern governments in the region would default.

Rising demand at bond auctions by Greece, Spain and Portugal in recent weeks and decreasing bets by hedge funds on a drop in the euro suggest that the region’s sovereign debt crisis won’t lead to a breakup of the shared currency.

Greece sold €1.6bn of 26-week Treasury bills July 13, the government will pay less than the 5% charged by the EU for its bailout funds. Spain sold €3bn of 15-year bonds on July 15, attracting bids for 2.57 times the amount offered, up from 1.79 times in April. A day earlier, Portugal sold more 2012 and 2019 securities than it had indicated on July 8.

The difference in the number of bets by hedge funds and other large speculators on a decline in the euro compared with wagers on a gain, known as net shorts, fell to 27,050 on July 13 from a record 113,890 on May 11, data from the Washington-based Commodity Futures Trading Commission showed.

The banking sector troubles in Europe caused the significant decline in euro strength over the past 2 months.

Seemingly with majority of the troubles now passed, the euro has made a significant step to recovering most if not all of the losses it sustained.

Tomorrow may see some alteration to the trend as the Bank of England minutes are released. Last month, one policy member Andrew Sentance voted to raise rates by 0.25%. Sentance is viewed as a hawk, and his decision to increase surprised few. If Sentance has rallied up more support this month, perhaps a more interesting split may be published. If voting moves to 2 or 3 in favour of a rise, the pound will suddenly become a more interesting option to many as yield will undoubtedly increase sooner than expected.

Friday sees the release of the preliminary 2nd quarter GDP figures, consensus is for a rise to 0.6%, taking the UK firmly away from the clutches of recession

Gerard Associates Ltd advises expats and people considering living abroad on the technical and currency options available for Pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pensions, investments, currency exchange and guidance on taxation in most popular ‘sunnier’ climates.   This with the re-assurance and security of UK authorised and regulated advice – essential tools for your security.

 

Tax Facts - Hong Kong

Gerard Associates Ltd. Financial Advisory Services does not provide individual tax advice, and nothing contained in this briefing should be construed as such. We make every effort to ensure the accuracy of the information but cannot be held responsible for any liability arising.

It is essential that all clients seek tax advice specific to their own personal circumstances with the relevant tax professional of the jurisdiction(s) in which you are liable to tax.

This has been prepared based on our understanding of current legislation and tax practice as at the date above. However, these are subject to change, and may result in income tax consequences different from those detailed below.

We cannot accept responsibility for its interpretation or any future changes to law.

 

Introduction

As the Special Administrative Region of China, taxation in Hong Kong is very different from the tax regime in China. Taxes are collected by the Inland Revenue Department (IRD). There are three categories of income taxes in Hong Kong, i.e. Salaries Tax (“HKST”), Property Tax and Profits Tax.

 

Tax Year

1st April to 31st March.

 

Assessment Basis

Taxation in Hong Kong is based on a territorial source principle, therefore only income sourced in Hong Kong is taxed.

 

Prior to 1 April 1990, married couples submitted joint/aggregated assessments, but since then separate taxation applies. Married couples who are disadvantaged by separate assessment may elect to carry on with aggregated assessments.

 

Income Tax

In Hong Kong, HKST is only levied on income "arising in or derived from any office or employment of profit, and pension". The definition of income includes wages, salaries, bonuses, commissions, pensions, gratuities and “deemed rental value” of property provided to an employee by an employer and other assessable benefits.

 

There are various allowable deductions including charitable donations, elderly residential care, self-education expenses and mortgage interest. There are also a series of allowances, the rates of which are dependent on family structure.

 

The tax levied is the lesser of:

 

• 15% (2010) of "assessable income" after allowable deductions, but before personal allowances, or

• A progressive rate levied on "assessable income" after deductions and personal allowances.

 

The rates range from 2% to 17% (2010).

 

Taxation of Investment Income

There are no investment income taxes in Hong Kong.

 

Tax on Property Rental Income

Property tax is also based on the territorial principle and is levied annually on the owner of rent producing real estate located in Hong Kong. The annual assessment to property tax is based on 100% of the annual rental income of the property less any rates paid, and a flat allowance of 20% of the annual rental income after deduction of rates in respect of repairs and other costs (irrespective of the amount actually spent) is available. The tax rate is 15% of the assessable income for 2009/10.

 

Wealth Taxes

There are no wealth taxes in Hong Kong.

 

Capital Gains Tax

There is no capital gains tax in Hong Kong.

 

Inheritance and Gift Tax

There are no inheritance or gift taxes in Hong Kong

 

Regional and Municipal Taxes

Rates are levied annually and are payable by the occupier of the premises (although the owner retains legal responsibility for payment). The value of a property is based on its rateable value (which usually approximates its market rental value). The annual rates tax is 5% of the annual rateable value of the premises.

 

Property Taxes

Property tax is applied to rental income, the details of which are shown under the taxation of rental income above.

 

Stamp Duty/Transfer Tax

Stamp Duty in Hong Kong is based on the territorial principle and is payable on Hong Kong-situs leases, assignments and conveyances of immovable property, the transfer of shares or marketable securities and the transfer of bearer instruments.

 

Stamp Duty/Transfer Tax

Stamp duty is either a fixed fee or is calculated as a proportion of the asset value depending on the nature of the transaction. Stamp Duty in respect of share transfers is 0.2%, whilst immovable property transfers are taxed at progressive rates to a maximum of 3.75%. A series of exemptions exist for stamp duty transactions.

 

Sales Tax

 There is no sales tax in Hong Kong.

 

Social Security Contributions

Social insurance in Hong Kong is arranged privately, but in 2000 the Government passed the Mandatory Provident Fund individuals.  From 1st December 2000 all employees and self employed individuals earning more than HK$5,000 per month are required to contribute a minimum of 5% of their monthly income up to a maximum level of HK$20,000 per month, which is tax deductible up to HK$12,000 per month.

 

Employers must also make contributions in respect of those employees earning over HK$5,000 per month.

 

Taxation of expatriates living in Hong Kong

As taxes in Hong Kong are based on the territorial principle, nationality, residency or domicile are not relevant in determining whether an individual is liable to tax. Liability to tax is assessed on an individual’s employment income to the extent that it arises in or is derived from Hong Kong, namely if it is earned from employment bearing a locality in Hong Kong or if it relates to services performed in Hong Kong.  Whether a person has a Hong Kong employment is determined by a number of factors, including whether that person has entered into a contract with a Hong Kong employer or resident company.

Hong Kong has comprehensive double taxation agreements in place with Austria, Belgium, Brunei, Hungary, Indonesia, Ireland, Kuwait, Liechtenstein, Luxembourg, the Netherlands, China, Thailand, the UK and Vietnam, and several others that are currently in the course of being ratified.

 

Taxation of ‘Non-residents’ living in Hong Kong

The liability to HKST on employment for an individual depends on whether the remuneration is received from an office in Hong Kong, from Hong Kong employment or from non-Hong Kong employment.

 

If remuneration is from Hong Kong employment an individual is fully taxable unless they render services entirely outside Hong Kong or spend not more than 60 days on visits to Hong Kong during any tax year, of which a full income exemption is available. Where an individual renders services partly in Hong Kong and partly in foreign territories, and the foreign services are subject to a tax which is similar to HKST in that particular country, only the amount of income relating to the Hong Kong services will be subject to Hong Kong tax.

 

If remuneration is from non-Hong Kong employment, an individual will only be liable to tax in Hong Kong if their visits to Hong Kong exceed 60 days during any tax year. Where an individual stationed in Hong Kong on regional duties is required to travel

frequently outside Hong Kong, they may apply to pay tax on a time apportionment basis by reference to the number of days spent in Hong Kong during the tax year. In this case the individual's income for foreign duties does not have to be subject to tax.

 

A person will generally be regarded as having a non-Hong Kong employment where:

 

·         Their employer is resident outside Hong Kong; and

·         The contract of employment has been negotiated and concluded and is enforceable outside Hong Kong; and

·         The remuneration is paid to the employee outside Hong Kong.

 

However, the IRD reserves the right to look beyond these three factors when appropriate.

 

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