Money and banks

[FerdinandMagellan]

Not sure where this should go... but this looks like as good a place as any.

What do most long-term liveaboards do about managing their finances, banking, taxes etc?

We're planning to go cruising in the next two years on what at the moment looks like a permanent basis. We'll be starting in the Med (we're both European) and heading for southeast Asia over the course of several years.

We won't have any attachment to land, although I may still work occasionally via the internet, and therefore don't see why we should be paying taxes in any country in particular. We're considering opening an offshore bank account and managing our money that way - anyone had any experience of this, particularly if you don't have a home address? We're considering Citibank IPB in Singapore if anyone has any experience with them.

Do you run into problems with 'officialdom' - i.e. customs - if you lack a home address?

Thanks in advance

[waterworldly]

You live where your passport is issued. You pay taxes where your passport is issued. You keep your money in a country that has a safe banking system. You can access it anywhere on the planet via internet and ATM's. Your "home" address is the address where your boat is registered in the country where your passport is issued, where you pay your taxes where your bank records indicate you live. All of this needs to match, and everyone, from officialdom to the bank will insist upon it.

[FerdinandMagellan]

waterworldly: What a peculiar response. From what you're saying I'm surprised we haven't had more problems during our life on land. My passport is issued in one country, my wife's in another but neither of us have ever paid taxes in either (we were born but did not grow up there). We have, however, paid taxes in two other countries in which we have been resident (one where we are now and one we used to live) - you can do that in the EU.

The point of my post was not to discuss taxes, but rather to find out how other people manage land-side paperwork, money etc when they are at sea and have no address.

[hellosailor]

You may have no address but you will need to obtain and use one. When you clear port you will have problems if you say "I am a stateless person" and "My vessel is not flagged".

Every other alternative means your passport, your vessel documentation/registration/flag must correspond to a land address, even if that is only a mail forwarding agency or a relative.

Questions about your residency, domicile, and tax status will vary with your citizenship. Iif you have no address, you are probably a stateless person with no citizenship. If you have a citizenship, that country probably will be looking at your earnings and tax status--and those rules will change with every venue.

So most people use one address that matches for all obligations, or a combination of addresses and services that their home state is agreeable to.

You can try to go paperless and stateless and hide your income--but most countries have become fairly good about finding it, and fairly intolerant of finding it has been hidden.

[waterworldly]

Whatever. Travel by boat is quite different from air or land travel. Once you leave the EU, you will find it quite different indeed. Ducks in a row, ducks in a row.

[Ex-Calif]

You pay taxes where you earn the money. And if you are American you pay taxes no matter where you are. However, there is a foreign earned income exclusion of up to around USD82,000. You still have to file to gain the exclusion. Brits and Aussies are generally tax exempt from foreign earned income but investment properties at home have taxes to be paid.

For example - I live in Singapore and pay Singapore taxes. I am also a yank so I pay US taxes on any earnings over $82k. There is no deduction for Singapore taxes paid.

To obtain a bank account in Singapore you have to be an Employment Pass holder, PR or citizen. They are a bit tight about such things due to cross border money hiding etc...

We have a bank account in the US - We wire money to our bank in Singapore once a month. Our credit union ATM card has worked everywhere I go including a roadside ATM in Thailand surrounded by rice paddies. Back in the 80s this was unheard of.

If you have an Amex card I believe you can still walk into any Amex office in the world and write a personel check for US1,000 every 3-5 days. That's how we did it in the 80s. I still carry an Amex for this purpose although I haven't used it in years.

Also Citibank is pretty much worldwide now although due to differing countries banking rules it is not really the same bank. Just the same name. I had a Citibank account and card for a while but I just got sick of big business so I dumped them.

Surprisingly, our credit union is the best. They are small enough to know me and I know them. When I call I speak to people that actually know me so security is easier and they are actually helpful and respondent.

* - Final note about ATM cards and credit cards - The banks have figured out that foreign transactions are a real money maker. Any foreign transaction for most credit cards will now have a hefty fee, some as much as 1% of the bill. It's BS because it's all electric and their costs are almost zero. They also get you on the exchange rate. Fortunately our ATM/Debit card from the credit union charges $1.50 for atm use and no foreign transaction fee. ake sure you check this out with your cards.

[hellosailor]

Dan-
You're right about that, credit unions tend to respect their customers more than banks of any kind do.

"If you have an Amex card" Amex refers to about 50 "products" now. Most of them are credit cards aka "junior" cards, not the "full" American Express "charge card". The folks who still have the real card and pay annually for it, get more overseas privileges. You have to call Amex and play "Twenty Questions" to get any idea which is which.

[JamesFrance]

Your main difficulty will be leaving the tax system you are currently registered with. In the EU this normally involves one of the other states certifying that you are now with them.

If you are now having a pension or other income taxed at source, it will be very hard to persuade them to let you go.

If you can transfer all your assets and sail away, I guess you will not receive any tax demands, so who can catch up with you?

Unless you ever go back of course.

[RaptorDance]

I'm guessing you're a US citizen?

You need a fixed mailing address. For many of us St. Brendan's Isle fills the bill. It's run by a couple of ex-cruisers and they do a great job of providing services to roaming cruisers like us. If you like, you can also have them pay your bills (if you have any), ship parts and mail pretty much anywhere in the world.

They will also help you legally establish Florida residency (you don't actually have to go to Florida and they have no state income tax) so you can vote, maintain a drivers license, etc.

We've used them since we started cruising. They're great folks with great service and they're reasonably priced.

See their website for more info at Mail Forwarding Services at St Brendan's Isle

Our only relation to them is as happy customers.

As far as taxes are concerned - yes you need to pay them - but you can do that over the web. We use Turbo Tax and electronically file.

You can also safely bank over the web (we use UBS and Wells Fargo).

Off shore bank accounts don't cut it as they don't eliminate your tax liability. Citibank (where I used to work) especially goes to great pains to stay out of trouble with world governments and will report your financials to the governing authorities (meaning the US if you're a US passport holder).

You also typically then have to deal with much higher banking fees, possible lack of regulatory supervision (and FDIC insurance), let alone possible exchange rate risk (the dollar is down at the moment, if it moves the other way and you're money is in another currency, you lose!), and other concerns.

Hope you find this info useful.

Fair winds,
Bill Finkelstein
SV Raptor Dance

[FerdinandMagellan]

Thanks for the responses.

I'm an EU citizen, British, but have paid taxes in Spain all my life. When we go cruising, I won't be receiving any 'formal' income as such, and, as I understand it, in Spain and in all countries except America you are only obliged to pay taxes there if you live there for more than six months a year.

Therefore, I don't see any problem with moving our funds offshore (thereby avoiding tax on interest and capital gains), registering the boat in the UK (British passport holders can fly the red ensign), having a UK postal address, and just leaving. I won't be stateless as I'll still be a UK citizen, but I just won't have any tax liabilities there. Or am I missing something?

[David_Old_Jersey]

Originally Posted by FerdinandMagellan

Thanks for the responses.

I'm an EU citizen, British, but have paid taxes in Spain all my life. When we go cruising, I won't be receiving any 'formal' income as such, and, as I understand it, in Spain and in all countries except America you are only obliged to pay taxes there if you live there for more than six months a year.

Therefore, I don't see any problem with moving our funds offshore (thereby avoiding tax on interest and capital gains), registering the boat in the UK (British passport holders can fly the red ensign), having a UK postal address, and just leaving. I won't be stateless as I'll still be a UK citizen, but I just won't have any tax liabilities there. Or am I missing something?

As long as you are not physically "resident" in the UK, then you should not have any resulting tax problems from maintaining a UK postal / accomadation address and / or registering your boat in the UK.



You come for answers and all you seem to get is more questioms.

a) Are you sure it is that easy to leave Spain behind on the tax front?

b) Is it really in your long term interests to leave Spain for tax reasons?


On b) I am thinking mainly on the Healthcare front - on the presumption that you have paid in all your working life in Spain (and not the UK?) and that therefore you are well in their Tax and Healthcare system and that your entitlements are well in excess of, say, a UK Expat straight off Easyjet and conversly that (despite what the Daily Heil contends) non residents arriving in the UK do NOT suddenly become entitled to all the TLC available on the NHS that UK residents enjoy. (I use the words TLC and enjoy adviseadly, but IMO still way superior to b#gger all! or having to pay for 12 months of serious TLC - where the question could well be not "do I spend the money?" - it's "can I get the money?")....and this applies to those with a UK passport - on the principle of "if you haven't paid in".....and also those former UK residents who have moved totally offshore.....

Depending on your finances (No, I am not asking for details ) I would seriosuly consider staying Tax resident in Spain, paying whatever tax is payable on Interest and capital gains - unless you are selling the family stately home and making significant / unusual Capital Gains - and also maintaining an address their - even if only family / freinds or an Accomadation address - purely for maintaining healthcare cover.....the fact that you are not earning much does not mean you are not paying your "share".......of course this does all depend on the exact rules of the Spanish Healthcare system.

Declaring any income when under way would depend on the Spanish tax rules (cough cough ), and depending on how aggressive your tax planning.................aggressive is sometimes translated as "how likely you are to get caught"

In any event in this day and age many things in life are a lot simpler with a shoreside address that can be "proved" whether in Spain or UK. And BTW many banks do not like PO box numbers......

Bankwise, being a European I would go to Singapore (HSBC?)......IMO (apart from Switzerland - which is a tad expensive) anything closer is, in this day and age, simply not offshore enough or competent. - well, for some things closer is ok - but perhaps not quite like the good old days

[Mike Banks]

in the Land of Oz you can file a nil return if your income is below a tax threshold amount. If you have no taxable income one pays no tax.

The good thing about American and British citizenship is their response if you should happen to get into trouble. They will go to bat for you--a small insurance in the form of any necessary tax paid, although I do not think paying tax has much to do with citizenship.

Unless you have some consular biffo you had better be careful in alien waters--no flag means your goods and vessel are up for grabs in some places. All it needs is someone to file a complaint--and you are in the hands of people who can do as they please with you and yours.

If you earn enough, pay taxes and love doing it. One day you might need help--and taxpayers qualify for it. Mail forwarding and banking is a different thing altogether. State taxes are different, and if one state charges no tax, that seems to be the state one might wish to register one's vessel, but sometimes no tax revenue means no facilities.

[rebel heart]

Just to make Mike's post above stick, there's a world of difference in the US Navy's eyes when there's a vessel in distress, and when there is a US flagged vessel with US citizens onboard in trouble. The amount of pressure that the US State Department can put on another government is sizable when it comes to getting Americans out of a pickle.

Doesn't mean Americans don't get locked up in foreign jails for bogus crimes, but from my experiences on a warship, a US flagged vessel (and to a lesser extent, any of our official allies, such as Australians, Brits, New Zealanders, etc) gets priority treatment.

I hate knowing that $0.40 of every $1.00 I pay in taxes goes to paying for wars that I don't agree with, but as Mike pointed out, paying your taxes does have its fringe benefits.

[Therapy]

Originally Posted by rebel heart

The amount of pressure that the US State Department can put on another government is sizable when it comes to getting Americans out of a pickle.



I hate knowing that $0.40 of every $1.00 I pay in taxes goes to paying for wars that I don't agree with,

See any ralationship there?

But on topic. Sort of.
I wish someone that was stateless would post so we would know.

I am US so I guess I would use one of the three credit unions we have now.

[Connemara]

Originally Posted by FerdinandMagellan

I don't see any problem with moving our funds offshore (thereby avoiding tax on interest and capital gains), registering the boat in the UK (British passport holders can fly the red ensign), having a UK postal address, and just leaving. I won't be stateless as I'll still be a UK citizen, but I just won't have any tax liabilities there. Or am I missing something?

I dunno and it looks as if no one else really knows either...best bet is to find a good lawyer and check it out.

My guess is that the various governmental institutions have got the loopholes covered. You may get away with it for a while, but sooner or later they'll catch up. And they'll be pissed.

Connemara