Thought 2010 was tough?

Well if you thought 2010 was a tough year, 2011 will probably bring much the same for the currency markets, with volatility certain to be an ongoing theme.

Looking back at 2010, until the Eurozone debt crisis reignited at the start of October, Sterling had been rapidly losing ground to a dominant Euro. In September, when the Bank of England began to make noises about firing up the printing presses again with more quantitative easing, Sterling dropped back from just below €1.24 to levels as low as €1.12.

But a late showing of stronger data for the UK economy, (which quashed the threat of more quantitative easing for now), the Ireland bailout and the fear of Eurozone ‘contagion’ saw the pound recover to its current level, after briefly popping its head above the €1.19 parapet.

UK inflation remains high

To predict the direction of Sterling is a tricky call to make. Despite the UK economy struggling and unemployment levels starting to rise, inflation in the UK remains above the Bank of England target of 1-3% and is likely to increase even further in 2011. Whether inflation rises or falls is crucial for sterling, because if it remains around the 3% mark in the medium term, pressure will mount on the Bank to raise rates.

Call for interest rate hike

We have already seen one member of the Bank of England Monetary Policy Committee, Andrew Sentence, calling for an interest rate hike and the growing belief that when rates do rise in the UK they will go up very quickly which will have a positive effect on Sterling, possibly pushing it as high as 1.25-1.30 against the Euro. However any rate increase will probably not come until late 2011, so until then, the value of the pound will remain fairly range bound against currencies like the Euro.

Challenges for the Euro

The challenges facing the Euro in 2011 will be much the same as in 2010 – the need to service the debt of the southern European states. Italy, Spain and Portugal have to finance in excess of €800 billion of new and existing debt and should they find the market has no further appetite then the Euro could really start to fall apart.

China could come to the rescue of the Euro, as they certainly do not need their biggest trading partner imploding, and the Chinese are also keen to move away from having a huge dependency on the value of the US dollar.

So I am very intrigued as to the direction of the Euro over the next 12 months. The US dollar could be the surprise package in 2011 as growth rates for the US economy are upgraded, but once again this will probably not occur until late 2011.

Looking for certainty?

So if you’re looking for certainty, the only thing we can really be sure of is that volatility will once again be the key driver in 2011.

For more information click here.

TO ALL OF OUR READERS

A VERY MERRY CHRISTMAS

AND BEST WISHES FOR

A FANTASTIC 2011!

An article by Wincham Consultants Limited.

Company ownership for your property in Spain

Wincham believes that it is the market leader in the provision of Consultancy Services in respect of Corporate ownership of Spanish property. Not only has Wincham been operating in Spain for almost 20 years but it owns a portfolio of residential and commercial properties using the UK Company structure. As a company we would not recommend our clients use any methods that we had not proven ourselves. A UK Corporate property ownership can be extremely Tax efficient, especially in the areas of Inheritance Tax. The majority of our clients already own property in Spain and we can restructure their ownership of their Spanish property into a UK Limited Company. We are also approached by many clients who own Spanish property in either Offshore or Spanish SL Companies who would like our help.

Spanish SL Companies.

Generally a client who has structured the ownership of their property, using a Spanish SL, will have done so as they have been lead to believe that this method will protect them against Inheritance Tax in Spain. This is not so, as in Spain, it is the beneficiaries who have to pay the Taxes on death and not the deceased’s Estate. This means that whether the non Spanish domiciled beneficiaries are inheriting the shares and assets of the SL Company, or the property directly, then Inheritance Tax will still have to be paid in Spain.

Offshore Company Ownership.

Offshore Companies registered in places such as The Isle of Man, Gibraltar, Jersey, Guernsey etc, are not part of the European Union and, therefore, do not benefit from EU Treaties. Consequently owning a Spanish property in an Offshore Company can be highly expensive as Spain can Tax these Companies annually, it currently Taxes the assets of Offshore companies at 3% a year. This means they are paying 3000 Euro a year for every 100,000 Euro of assets owned in Spain.

A UK Company is not an Offshore Company but a Non Resident Company of Spain and so is not subject to 3% annual Tax .

How can Wincham help?

Whether you currently own a property in Spain, are about to purchase in Spain or own the property in an Offshore or SL Company, we have a solution and method to help to transfer your property into a UK Limited Company. By owning a property in Spain using a UK Limited Company structure the individual owners are not required to submit a Tax Declaration (Return) in Spain for the ownership, instead the UK Company submits a single Declaration once a year which is submitted and filed at zero as a UK Company does not pay this Tax in Spain.

It is important to remember that these methods are not loop holes but use EU Treaties which are unlikely to be changed or modified. Whilst Spain and the UK are members of the EU they cannot make local Laws that contravene their International Treaties.

It is always necessary to consider every case on an individual basis and our trained Consultants can advise on the best structure to adopt for your own Spanish property ownership. Please call to speak to one of our Consultants in the UK or Spain or visit our website www.winchamiht.com for further details and to obtain your ‘free of charge’ Spanish Inheritance Tax illustration demonstrating your potential Tax liability and the potential savings you could make by employing a different structure of ownership.

This information has been provided by Mark Roach, Company Director and Spanish Tax Consultant. Wincham Consultants Limited

For more information click here.