Article for Independent newspaper on global telecommuters

Escape to a sunny rural idyll used to be the preserve of a small group of people: those who had made big bucks quickly in the city or in advertising; pensioners or those who could make a living servicing holidaymakers at bars and small restaurants. But, recently a new group has appeared, the international telecommuter.

These are people who have not entirely dropped out of the rat race, but have discovered that they can continue their careers where the sun always shines. Generally self-employed knowledge workers, they can ply their trade anywhere with access to e-mail, cheap phone services and budget airlines. And that includes much of Europe.

Stephen and Jaki White moved to Ibiza from Manchester in the late 1980s with sufficient savings from his job as an accountant and hers as a business advisor to earn nothing for their first six months on the island. Stephen completed a course in teaching English as a foreign language which now provides him with a part-time income.

“What I didn’t expect,” he says, “Is that there would be a continuing demand for my skills from the UK. I get stuff sent over by e-mail and do some number crunching on it and send it back by e-mail. It’s easy.”

What makes Stephen unusual amongst the ranks of globetrotting consultants is that he has not set foot off Ibiza for four years, although he is planning a short break in Valencia. More normally people choose to base themselves close enough to an international airport to allow for face-to-face meetings.

Xavier Adam, with a UK degree in public relations and a Spanish degree in journalism, runs his agency from bases in the north and south of England, and in Spain. Asked which one he regards as home he pauses: “I’m not sure. I catch planes like buses and make sure everything I need for work is stored on the web so I can access it from anywhere I happen to be.”

And the appearance of foreign telecommuters is not always unpopular with locals. Structural engineer Andy Beeton won an innovation award from the Livradois National Park in central France for helping to stimulate business in the area. He provides technical design services mainly for UK engineering projects.

“Originally we dealt directly with clients and now we sub-contract and we don't have to deal directly with the public. We do calculations for more or less any building except bridges: commercial, domestic and light industrial. I e-mail the drawings and the calculations to customers who are often one-made bands and hard pressed to employ someone full time,” he says.

Of course at one time much was made of high earning individuals going into “tax exile”. Most notably, the Rolling Stones decamped to the south of France at the end of the 1960s to avoid paying what they saw as a punitive top rate of tax. It was not seen as very rock ‘n’ roll.

There may still be tax advantages to overseas residency even for people without a huge income. Expatriate telecommuters, however, are generally reluctant to talk about the subject. It is only discussed in private because many feel that what they are doing is somehow not quite right. Generally this is not because they are deliberately avoiding tax, but because the rules are so complex they are unsure whether they are bending, breaking or avoiding them.

Many Brits living on the Costas, for instance, choose to use British-owned banks in Gibraltar where the staff speak English. It is then easy and convenient to set up a company to handle payments from the UK. This also happens to be the most “tax efficient” way of handling financial affairs.

One expatriate who lives in the south of Spain within an hour’s drive of the Rock says: “It’s not that I’ve tried to fiddle my taxes, but obviously I don’t want to pay more than I have to and everything I’m doing I’m told is quite legal. My Spanish friends think I’m mad to worry about it, most of them seem to believe it’s their duty to avoid paying.”

For people who move between countries the challenge is to establish residency in one, or even two, countries. There are also “double taxation” agreements between virtually every country in the world. These are intended to prevent people being taxed twice on the same income. Although tax experts believe the system works well, there is at least one major catch which today would probably stop the Stones from going to France to make their “Exile on Main Street”.

The double taxation agreements prevent people having to pay tax twice on the same sum, but that does not mean the rate of taxation will be equalised. So somebody who earns money in a country such as France, which has a higher top band rate of tax than the UK, will not be able to reclaim the difference which is currently about two per cent.

Anybody contemplating making the move abroad should contact an expert in overseas taxation. The Inland Revenue’s website and IR20 booklet on taxation for residents and non-residents are useful but still seem designed to give work to accountants. The problem is that much legislation still seems to be geared to the idea that if people went to work abroad it was because they had been posted by an employer. Decisions about the self-employed are frequently at the discretion of the revenue.

An additional difficulty is self-assessment. Forms still have to be returned before the deadline. Fortunately this can be done online and there also commercial services such as Tax Checker (www.taxchecker.com) which will verify forms and submit them.

What used to be the other major concern of people working abroad, medical cover, is less of a problem than it used to be, at least within the EU. There are reciprocal arrangements with EU countries, and most of them have better rated public health services than the UK.

“Health cover for the States is extortionate,” warns Diane Thorpe, senior healthcare consultant with insurance brokers, JL Manson and Partners. “We were quoted £9,000 for a family moving to Florida where the parents were about 35.” In the end the family paid less than £3,000 which still seems expensive. Thorpe also suggests checking if your private health policy, if you have one, can be extended abroad as they often can. Another possibility for some is long-stay travel insurance.

Of course, despite all the television programmes to the contrary, a lifetime of warm weather is not for everybody. “I was sick of being a foreigner - we lived on the French side of the Pyrenees and the gloss wore off after a while - one does actually become sick of constant sunshine, or at least I do,” says internet developer Tom Craig.

“I have spent a large part of my life outside of Scotland and it was just time to rediscover what and where ‘home’ was. Now we have a young daughter and live in a fantastic village in a wonderful country - something I just didn't appreciate before. I must be getting old.”


Case Study (Sean should have pic or I can send it again)


For Anne Ritchie and her husband David swapping rural Yorkshire for rural Spain three and a half years ago was not too much of a wrench. “It has a lot of things in common, but with the added bonus of 300 days of sunshine and a very much more relaxed sort of lifestyle,” she says.

As a trend consultant she advises companies such as Wedgwood on the colours, textures and styles that are going to be popular up to two years ahead. Her clients are all based in the UK, although they are scattered from Shetland down to London. She was conveniently located in the middle although her work has always involved a fair amount of international travel.

“I am in Paris four or five times a year, Italy three or four times, in the States quite often and, of course, the UK. It’s really important, particularly living in the countryside, to be out seeing everything from sitting in a café watching the world go by, to doing market research and seeing what’s happening in the shops and trade shows,” she says.

“When we were looking for somewhere it was a very important consideration that it was less than an hour away from an international airport with regular and cheap connections to the UK. That’s partly why we chose here. It’s so easy to commute from Malaga to London. In fact the return fare is cheaper than it used to be for me to get the early morning train from Lanacaster. And, door to door, it only takes about an hour longer.”

She has to think hard before she finds a downside to the move. “I illustrate my trend books with ribbons, yarns, buttons and threads. It’s much more difficult to find that stuff in rural Spain than in Britain. But it just means I come back from my travels with my suitcases loaded.”

Her other concern was that the golden Andalucian sun in contrast with the cold grey light of England would influence her to start choosing “glorious yellows and oranges”. That did not happen although, by coincidence, her move south coincided with the millennial explosion in people’s taste for colour which followed a decade of beige, grey and black.

“I think being here has changed us. David’s health is definitely better. And sitting thinking about colours two years ahead is very much pleasanter in the sunshine,” she says.

Box

Phone home

Until fairly recently the main obstacles to working from abroad were the cost and reliability of phone calls. Thanks largely to the deregulation of telecoms throughout most of the world this is generally no longer a problem. The challenge now is to find a way through the plethora of services and pricing structures. There are some useful tips.

There are services in most countries that undercut the cost of phone calls using the dominant carrier. These either work on a subscription basis or using prepaid cards. It is worth checking out with other ex-pats just how reliable these services are. At peak times it may be impossible to get a line or call quality may be very poor, which is less than ideal if you are relying on the service for business.

Telecoms competition in the UK is more advanced than in most other countries and there are a number of handy ways to keep in contact with customers. Best-known are the so-called “follow me” numbers which can be diverted to wherever you are working.

A company such as Callsure (www.callsure07050.co.uk) offers 0871 numbers which divert straight through to a landline in the EU. The caller pays about 10p a minute for this service which is free to the recipient.

If you would rather not advertise that you are working from abroad you can get all your calls diverted, but beware of using BT for this. It will charge £58.75 to set up the service plus £24.72 a quarter plus between 26p and 36p a minute for calls. But with a little ingenuity you can get the same service for as little as 3p a minute plus £1.75 a month provided you retain a BT landline in the UK.

It works best using a “carrier pre select” service. These are being heavily promoted by companies such as Carphone Warehouse and mean that subscribers are charged for all their calls through a cheaper service while paying BT for landline. There is no need for an adapter or to dial a special code.

These services include calls diverted by BT and by shopping around it is possible to find rates as low as 3p a minute to mainland Europe. So the telecommuter pays 3p a minute to receive calls while the customer pays the UK standard rate and should not even need to know that the call is being diverted.

Of course once internet phone calls become more common the price should fall even further.