[Trapper John]

Hi Everyone,

Moving to NZ from Sweden later this year and we'd like to use NZ's once-in-a-lifetime 4-year tax exemption by placing some capital in a tax-free place.

Question is, what tax-free place? And how do people do this? Do we just put the cash in a bag and take Ryanair to Luxemburg??

Any advice would be much appreciated. Trying to avoid paying for a UBS or Credit Suisse tax advisor...

Many thanks / Matt

[James 1077]

Jersey is always a good one as it has the normal UK banks and a very good regulatory system. Not sure if there are Swedish banks there as well but there will be some European ones. You should be able to open a Euro account at most banks there but not sure about Swedish Krona!

Other options are Guernsey (a far nicer island in my opinion but as you won't be visiting not really an issue), Switzerland and Lichtenstein. Can't say much about the last one but it has been in the news recently and you don't need the secrecy anyway.

If you are moving here permanently though then you don't need to worry about sticking cash in a bag and sneaking it over as everything is legit so a straight bank transfer is probably your best option.

Lastly check with you bank to see if you can keep it there and simply receive the income tax free as a non-resident. This could be the easiest way of doing it if it is possible in Sweden (it is in the UK).

[dharder]

Question is, what tax-free place? And how do people do this? Do we just put the cash in a bag and take Ryanair to Luxemburg??

I could have sworn I replied to this earlier. But maybe I'm just having a senior moment...

We transferred our money from the housesale to an international account in Jersey. One is a savings account, but we also have an international current account. That's tax free.

But a simple transfer is of course rather less exciting than the inconspicious plastic bag with the loot hidden in it...

Daniela

[Trapper John]

Many thanks James and Daniela,

One last things, any specific recommendations on banks that work well in this arena? We're half British so UK banks are an option.

Any advantage contacting a NZ bank in Jersey/Hong Kong etc, for example, if such exist?

/ Matt

[James 1077]

Not sure about NZ banks in Jersey but there will definitely be some in Hong Kong (I've just had a look and Westpac (http://www.westpac.com.au/internet/publish.nsf/Content/WIGLASPB+Hong+Kong)is there - and in Singapore (http://www.westpac.com.au/internet/publish.nsf/Content/WIGLASPB+Singapore) as well)

Jersey-wise you are looking at your normal UK banks who all have a presence there - eg Natwest (http://www.natwestinternational.com).

The problem with doing this though is that you end up having to convert money into different currencies (ie get capital in Krona, convert to pound/euro for savings, convert to NZ dollars at some point in the future when you don't know what the exchange rate will be).

The ideal situation is to simply keep the money in Krona or convert it into NZ dollars but still earn the interest tax free (if saving in NZ dollars then you should have a good interest rate as well!). For the former you need to find out from your bank whether or not there is a mechanism for non-residents of Sweden to earn interest tax-free from savings in Sweden. For the latter I guess you should get in touch with, for example, Westpac or one of the other NZ banks and find out about their offshore branches.

Updated to say that ANZ (http://www.anz.com/international/default.asp?from=anzhp)has branches in Hong Kong.

[James 1077]

OK, I've done some further research as my knowledge of Swedish taxation is extremely limited! ;)

From what I've been able to see there are some funny rules around residency in Sweden where, if you leave the country for a non-EU country then you can be deemed to still be a resident of Sweden for a period of 5 years.

However there is a Double Tax Treaty between Sweden and New Zealand which, from a quick glance of it, appears to override this rule so that you will be deemed to be resident in New Zealand when you move here (and set up house etc) provided you don't go back to Sweden too much over the course of a year and can show that your "centre of vital interests" has moved to NZ (ie you have a home in NZ and not in Sweden).

Therefore it is likely that when you move to NZ you will become tax resident in New Zealand and will be classed as non-resident for Swedish tax purposes.

Having looked elsewhere as a Swedish non-resident you can either elect to be treated as a resident (and taxed under IL) or remain a non-resident and be taxed under SINK. There are advantages and disadvantages to both but the main advantage of remaining a non-resident is that any interest that you earn from your cash investments in Sweden will not be liable to Swedish taxation.

If you aren't planning on working or holding other investments then I don't think that the disadvantages of being taxed under SINK will apply to you.

So from the looks of it you don't have to go through the effort of opening up a Jersey/Hong Kong account to earn any interest tax-free as you can keep it in Sweden and not pay tax on interest in either Sweden or NZ.

Obviously though this comes with a disclaimer of being 20 minutes work from someone who doesn't know anything about the Swedish tax system (and very little about NZ at the moment too!) but does have access to lots of exceptionally interesting tax guides (honest they are). If you have lots of money at stake then you should have a chat with a tax advisor or your bank just to get confirmation!

[Trapper John]

James, many thanks for your extremely valuable research into this!

We are meeting up with an investment advisor here in Sweden soon re investing in Sweden and especially the tax rules. My gut feeling is we will bring this into NZ$ and put it in HK. My understanding is that HK is emerging as a safe and reliable tax haven.

/ Matt