This is my most recent column for The Guardian. If you're wondering why nothing appeared in December, welcome to the world of newspapers. The size of a newspaper is determined almost entirely by the quantity of advertising. They're biggest in the run-up to the December festival of consumerism and smallest when everybody's recovering from that or in the summer when a large proportion of readers are roasting in the sun. So the Business Sense supplement which carries my column was dropped for lack of advertising and, let's face it, because nobody wants to read about the world of commerce between Christmas and New Year.
Those of us of a certain age remember the Rolling Stones heading off into tax exile on the Riviera. As a teenager I thought they had achieved the perfect combination of sun, debauchery and economy.
Now I find I've become an accidental tax exile myself, although it's unlikely my exotic-sounding status will actually save me any money. When I headed off to Ibiza early last year I assumed that I'd continue to pay tax in the same way as before. I was self-employed in the UK and my clients were all still there. All that changed was my computer was now connected to Telefonica broadband rather than Demon.
But on a trip back to Scotland I spoke to Ross Mackenzie, tax partner with international accountants Mazars. "Most countries have a 183-day rule, which defines where you are resident for tax purposes," he explained. You don't pay the tax where it's earned, but where you live or your "centre of economic interest" as the tax authorities call it.
It sounds simple. You pay your tax where you live for most of the year. Well, it might be straightforward if Pitt the Younger hadn't introduced income tax to Britain a couple of centuries ago using a variation on the medieval fiscal calendar. So, while most other countries measure liabilities ending on December 31, Britain's year runs to April 5. "Some people try to use that difference to their advantage," Mackenzie told me.
Theoretically it's possible to receive two sets of tax allowances, but it's not easy. The UK Inland Revenue requires a a lot of evidence that one of its tax payers really has departed its shores. The department does, however, provide detailed information in booklet form and from its website.
In an ideal world, a move to the sun would also be accompanied by a reduction in tax. Unfortunately for me, the UK has just about the lowest rates of income tax in Europe - at least on paper.
Anyway, it is not that simple to work out which country will deduct the smallest proportion of your income. The Stones' old stomping ground, France, for instance, seems to squeeze high earners hard. Tax there, however, is assessed by dividing the income by the number of people in the household. And France recently lowered its punitive top rate.
Although tax is subject to political vagaries, an accountant will be able to make a reasonable assessment of liabilities according to the laws of your intended country of domicile. But accountancy is an art, not a science, and legislation does not always reflect varying national attitudes to tax. Often the declaration of income is regarded effectively as "voluntary".
The common Mediterranean attitude is: "Which do you love more - the state or your family? So why should you give more than is necessary to the state?"
In many places - and for obvious reasons I'm not going to be too specific - avoidance is effectively built into the system. It is, for instance, still quite common in rural areas for property and other major purchases to involve a substantial amount of "black money". Perhaps a third of the actual price of a property may be handed over in cash and never declared to the authorities.
As a result, it was suggested the mini economic boom in the run-up to the introduction of the euro was caused by people rushing to spend their undeclared pesetas, lira and escudos before they became worthless. It also explains something that had baffled me. I couldn't understand why the hardware store near where I live has the largest selection of safes I have ever seen. Obviously some are for tourist hotels and apartments, but many look big and secure enough to store the cash and crown jewels of a small sovereign nation rather than a holidaymaker's papers and trinkets.
As for me, I'm still very British about declaring all my income, even if I'm not going to be rendering unto Gordon what is Gordon's any more. But if I had fulfilled my rock star ambitions, I'd probably now be resident in Dubai, which has a hard-to-beat zero rate of income tax.
· Nick Clayton is a freelance writer and web content consultant.
Monday, January 30, 2006
Friday, November 25, 2005
A Spanish lifestyle with British deadlines
This article appeared in The Guardian newspaper on 25 November 2005. Click here to read it as published.
When I left Britain I'm sure many of the people I worked for expected me to miss deadlines as I succumbed to the attractions of party island Ibiza. I hoped for a little more in the way of sun, sea and siestas, but without the missed deadlines.
To achieve my aim I thought all I needed to do was work a little more efficiently and reduce my reliance on the almost infinite number of displacement activities offered by an internet-connected computer. There'd always be another website to be checked. What if something really important was happening in the world? Ping. There's another email. It could be vital.
But in order to earn a living in Spain I still need my broadband, so none of those distractions have disappeared. Now I feel guilty, not just about putting off work, but putting off pleasure as well.
My personal productivity is challenged in other ways. There's a totally different rhythm of life here. The US-led "live to work" mentality hasn't got the grip it has in Britain. Work here remains a means to an end. It doesn't even define who you are in the same way as it does in the UK.
At the same time working life isn't organised solely for the benefit of the customer. Most shops, including garden centres and hardware stores, don't open on Sunday. Many are closed on Saturdays as well. And forget trying to do anything during the afternoon siesta. Even after you've been here a while this lack of customer focus can catch you by surprise.
This attitude is contagious which doesn't necessarily go down too well if, like me, you do most of your work for UK businesses. Everybody's supposed to be in favour of an improved work-life balance. In theory.
In practice, most of my British paymasters seem to think I'm on holiday all the time anyway. The fact that I always meet my deadlines does nothing to diminish this belief. And that is all the more frustrating because it's actually quite difficult to take a holiday. Every time I've left the island it's been for a hectic round of business meetings interspersed with the odd family visit and wedding. I wouldn't get much sympathy if I took a break away from them and Ibiza.
An added difficulty is the distinctly two-tone nature of the Ibizan year. From November to April there are no flights at all to anywhere outside Spain. Getting back to Scotland, where many of my clients are based, is an expensive, multi-hour nightmare. It's often quicker and cheaper getting from there to the States or Australia. The advantage is that this gives you half the year free of visitors to get on with your work undisturbed. You hope.
But the winter is also the time when you see your local friends. The chances are, along with 80% of the population, they'll be directly reliant on tourism for their income and a season which peaks for a few short weeks around August. Some make enough to head for Thailand, Goa or Brazil. The rest eke out the chilly winter nights with cheap red wine and home-grown herbs. There's no work, but it's still a sociable time.
Summer or winter, though, one unexpected bonus has saved my working life on numerous occasions. There's a one-hour time difference which means that if I stagger down the hall from my bedroom to my computer at 11am it's still the mildly more respectable 10am in the UK. An extra hour on a deadline or for sleep is just enough for that little bit of depravity on the side.
When I left Britain I'm sure many of the people I worked for expected me to miss deadlines as I succumbed to the attractions of party island Ibiza. I hoped for a little more in the way of sun, sea and siestas, but without the missed deadlines.
To achieve my aim I thought all I needed to do was work a little more efficiently and reduce my reliance on the almost infinite number of displacement activities offered by an internet-connected computer. There'd always be another website to be checked. What if something really important was happening in the world? Ping. There's another email. It could be vital.
But in order to earn a living in Spain I still need my broadband, so none of those distractions have disappeared. Now I feel guilty, not just about putting off work, but putting off pleasure as well.
My personal productivity is challenged in other ways. There's a totally different rhythm of life here. The US-led "live to work" mentality hasn't got the grip it has in Britain. Work here remains a means to an end. It doesn't even define who you are in the same way as it does in the UK.
At the same time working life isn't organised solely for the benefit of the customer. Most shops, including garden centres and hardware stores, don't open on Sunday. Many are closed on Saturdays as well. And forget trying to do anything during the afternoon siesta. Even after you've been here a while this lack of customer focus can catch you by surprise.
This attitude is contagious which doesn't necessarily go down too well if, like me, you do most of your work for UK businesses. Everybody's supposed to be in favour of an improved work-life balance. In theory.
In practice, most of my British paymasters seem to think I'm on holiday all the time anyway. The fact that I always meet my deadlines does nothing to diminish this belief. And that is all the more frustrating because it's actually quite difficult to take a holiday. Every time I've left the island it's been for a hectic round of business meetings interspersed with the odd family visit and wedding. I wouldn't get much sympathy if I took a break away from them and Ibiza.
An added difficulty is the distinctly two-tone nature of the Ibizan year. From November to April there are no flights at all to anywhere outside Spain. Getting back to Scotland, where many of my clients are based, is an expensive, multi-hour nightmare. It's often quicker and cheaper getting from there to the States or Australia. The advantage is that this gives you half the year free of visitors to get on with your work undisturbed. You hope.
But the winter is also the time when you see your local friends. The chances are, along with 80% of the population, they'll be directly reliant on tourism for their income and a season which peaks for a few short weeks around August. Some make enough to head for Thailand, Goa or Brazil. The rest eke out the chilly winter nights with cheap red wine and home-grown herbs. There's no work, but it's still a sociable time.
Summer or winter, though, one unexpected bonus has saved my working life on numerous occasions. There's a one-hour time difference which means that if I stagger down the hall from my bedroom to my computer at 11am it's still the mildly more respectable 10am in the UK. An extra hour on a deadline or for sleep is just enough for that little bit of depravity on the side.
Friday, October 28, 2005
A desk in the sun
This is the second of my Ibiza columns for The Guardian newspaper. Its title has changed from the misleading 'Homeworker' to 'A Desk in the Sun' which sums up the column much better. Unlike the first column which was cut from 700 words to 500 words, this one appears pretty much untouched.
You can read it on the Guardian website by clicking here.
How to be in two places at the same time
Last year I had a cunning communications plan which I hoped would make it look as if I was in Britain while I was really in Ibiza. It was simple. I'd leave a phone line in Edinburgh on permanent divert to my home in the sun. After all, few people actually saw me in the course of work. I was just a disembodied voice on the phone, or words in an email.
Despite my already virtual work existence I was concerned that moving a few thousand miles away would be a psychological barrier for the people who pay for my services. Setting up a diversion wouldn't be expensive, just line rental and, at most, 4p a minute for calls transferred to Spain. Using a cheap "carrier pre select" (CPS) service meant I wouldn't even have to pay BT's international rates.
Of course, nothing's simple. For a start, BT's diversions have to be set up from the home phone, but I didn't know what my Spanish number was going to be. And, by the time I had a line set up, my Edinburgh flat was being let out in order to pay the rent in Ibiza.
Then, once the diversion was apparently working properly, I couldn't understand why the phone would ring once and stop. It turned out business contacts were fooled by the Spanish ring tone's similarity to the British engaged tone. When I did manage to grab the phone before the caller hung up, there would be complaints about a disconcerting echo on the line. I quickly gave up pretending to be in the UK, but, much to my surprise, being by the Mediterranean often worked in my favour. I was living the dream of many of my business contacts and they seemed to enjoy having somebody to moan to about the weather. Suddenly I also went from being a techie hack to being somebody vaguely exotic.
My new location was even partly responsible for getting me one job, as web editor for the August Club, an online organisation for retired and soon-to-retire professionals. There I was, a practical demonstration of how you can earn a living in the sun as a consultant, without even the cushion of the pension enjoyed by most of the club's members.
But actually, even within the space of a few months, technology has advanced to the point where nobody needs to know where in the world I am when they phone me. That's the wonder of internet telephony.
I've been a Skype enthusiast almost since it launched, a whole two years ago. Computer to computer calls over broadband are generally of a much higher quality than ordinary phone calls. They're also free. That makes Skype great for keeping in touch and the August Club runs on its conference-call facility. But, even though you can now make and receive Skype calls to or from a landline, you still have to keep a computer switched on. And a headset remains the best way to use Skype.
Now, I don't mind that call centre look. But really what I want is a substitute phone service and Vonage is the best I've found so far. It comes with a box which hooks up to your broadband router, then you plug in an ordinary phone. That's it. Because I bought it in Britain it behaves as if that's where I am. I have an Edinburgh number and a subscription which allows me to make unlimited calls to UK landlines for less than £10 a month.
To all intents and purposes I have now created a situation where I live in Ibiza and work in Scotland. Yesterday I interviewed two venture capitalists, one apparently in Edinburgh, the other in Aberdeen. In fact they were both in London. It was only after the inevitable ice-breaking conversation about the weather that we all admitted that phone diversions meant we weren't where we seemed to be. The difference was they were in city offices with the prospect of either an impersonal hotel room or hours of trains, planes and automobiles. I was already where I wanted to be.
You can read it on the Guardian website by clicking here.
How to be in two places at the same time
Last year I had a cunning communications plan which I hoped would make it look as if I was in Britain while I was really in Ibiza. It was simple. I'd leave a phone line in Edinburgh on permanent divert to my home in the sun. After all, few people actually saw me in the course of work. I was just a disembodied voice on the phone, or words in an email.
Despite my already virtual work existence I was concerned that moving a few thousand miles away would be a psychological barrier for the people who pay for my services. Setting up a diversion wouldn't be expensive, just line rental and, at most, 4p a minute for calls transferred to Spain. Using a cheap "carrier pre select" (CPS) service meant I wouldn't even have to pay BT's international rates.
Of course, nothing's simple. For a start, BT's diversions have to be set up from the home phone, but I didn't know what my Spanish number was going to be. And, by the time I had a line set up, my Edinburgh flat was being let out in order to pay the rent in Ibiza.
Then, once the diversion was apparently working properly, I couldn't understand why the phone would ring once and stop. It turned out business contacts were fooled by the Spanish ring tone's similarity to the British engaged tone. When I did manage to grab the phone before the caller hung up, there would be complaints about a disconcerting echo on the line. I quickly gave up pretending to be in the UK, but, much to my surprise, being by the Mediterranean often worked in my favour. I was living the dream of many of my business contacts and they seemed to enjoy having somebody to moan to about the weather. Suddenly I also went from being a techie hack to being somebody vaguely exotic.
My new location was even partly responsible for getting me one job, as web editor for the August Club, an online organisation for retired and soon-to-retire professionals. There I was, a practical demonstration of how you can earn a living in the sun as a consultant, without even the cushion of the pension enjoyed by most of the club's members.
But actually, even within the space of a few months, technology has advanced to the point where nobody needs to know where in the world I am when they phone me. That's the wonder of internet telephony.
I've been a Skype enthusiast almost since it launched, a whole two years ago. Computer to computer calls over broadband are generally of a much higher quality than ordinary phone calls. They're also free. That makes Skype great for keeping in touch and the August Club runs on its conference-call facility. But, even though you can now make and receive Skype calls to or from a landline, you still have to keep a computer switched on. And a headset remains the best way to use Skype.
Now, I don't mind that call centre look. But really what I want is a substitute phone service and Vonage is the best I've found so far. It comes with a box which hooks up to your broadband router, then you plug in an ordinary phone. That's it. Because I bought it in Britain it behaves as if that's where I am. I have an Edinburgh number and a subscription which allows me to make unlimited calls to UK landlines for less than £10 a month.
To all intents and purposes I have now created a situation where I live in Ibiza and work in Scotland. Yesterday I interviewed two venture capitalists, one apparently in Edinburgh, the other in Aberdeen. In fact they were both in London. It was only after the inevitable ice-breaking conversation about the weather that we all admitted that phone diversions meant we weren't where we seemed to be. The difference was they were in city offices with the prospect of either an impersonal hotel room or hours of trains, planes and automobiles. I was already where I wanted to be.
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