There is a definite trend with those who have International Accounts which needs to be addressed. Naturally, whilst working on yachts, it is commonplace for crew to be paid in a variety of currencies. It therefore makes sense to take payment into one of the many available foreign currency accounts which allow you to hold a variety of currencies all under one umbrella. The question we have been asking ourselves is not why take the payment into a currency account, but why leave it there?
The simple answer has to be that people are wary of moving the money elsewhere, for fear of drawing attention to their hard-earned savings. It’s surely a natural instinct to want to keep your money hidden when you feel unsure of its legitimacy; a symptom of uncertainty with regard to your personal tax position. In most cases, these kinds of accounts will offer interest rates below not only the rate of inflation, but also the base interest rate issued by your countries central bank. In many cases the interest rate will be 0%. What this means is that whilst the number you see on the screen remains the same, your nest egg is literally shrinking in terms of real value every day you don’t take action.
If you are reading this piece and feel it applies to the situation you find yourself in, I’m sure that you are now asking yourself “What do I do?”. The answer is very simple. Following the introduction of the Automatic Exchange of Information which has now been enacted by 98 jurisdictions for the first time last year with many more to follow this year, you can no longer feel that your money is hidden. Voluntarily disclosing your earnings is now a necessary course of action in every case. Not only will this allow you to achieve a position of tax transparency, it will also mean you have the opportunity to move your earnings away from your foreign currency account to a more productive investment.
The common misconception that you cannot move your earnings from work in yachting must now be quashed. As long as you have fulfilled your obligation to disclose your income in any jurisdiction where you are considered tax resident, you are entitled to move your cash freely anywhere in the world.
To summarise, not only will voluntarily disclosing your income allow you to avoid potential penalties for failing to declare your earnings, it will also allow you to free yourself from the unprofitable foreign currency account and ensure that your money keeps making money.
Any advice in this publication is not intended or written by Marine Accounts to be used by a client or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party matters herein