Stop off for a check-up at the money-doctor whilst you are in Genoa
One of those subjects that everyone seems to shy away from today with Genoa Superyacht Hub – money! An appropriate subject for our city – perhaps you don’t know that the beautiful building down by the Porto Antico, now home to Genoa’s Port Authority, after having been Marco Polo’s prison, in 1407 hosted the Banchi di San Giorgio, thus creating the first modern bank in the world.
Working on a yacht is a great way to make decent money, but proper planning can help your money work for you, meaning that when you decide to settle down you’ll find yourself well on the way to being able to buy a home or more generally saving for your kids’ college fund or for retirement. There are a number of basic steps to take, and we examine these in this article.
The main point, however, is that you need to start saving and investing. The fact that you are probably earning in a different country or currency than many of your peers, as well as having nearly all of your living costs covered with the job, will mean that you actually have a lot more “disposable” income, which instead of spending you could start putting away for the future. As William Shatner once famously said “If saving money is wrong, I don’t want to be right.”
Once upon a time you could use a simple savings account and generally get a decent interest rate which would compound your savings over time – but not any more! Interest rates are really low and in some cases are even negative. If paying a bank to hold your savings for you doesn’t sound appealing, you need to look at the alternatives, and that’s where things get complicated.
So we want to share some basic tips with you to help you get started. The first steps are often the hardest, but with proper guidance your investments will help you to safeguard your future.
Whilst you are staying in Genoa, a great idea would be to have a word with Genoa Superyacht Hub’s Kiwi seafarer finance expert who is part of Spectrum IFA Group, a European financial advisory firm – you can contact him through Pesto Sea Group. He’s available to meet you here in Genoa either online or physically, give you a full finance check-up and “diagnose” what really needs to be addressed.
Here are some tips to get you started!
1. INITIAL CHECK-UP
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First of all a good look at where you are earning your money, in what currency and what transactions you need to make, your needs in terms of instruments – cashcards, credit cards, loans – any assets you already own and where you result or wish to result to be tax resident.
2. START WITH THE SIMPLE STUFF - BANKING
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Consider opening a seafarer account with Standard Bank.
You may not have a suitable account for receiving your salary, and you really shouldn’t let large balances accumulate in the common app-based financial services – there are some serious pitfalls in conducting large transfers with these app-based services.
Standard bank accounts are specific, multicurrency accounts, created for people like you and with exactly your sorts of necessities.
Discuss with our financial advisor what Standard Bank can offer – he works with a suitable certifier who can handle all the paperwork and simplify the process for you.
It’s certainly also worth talking about how you manage foreign currencies – there are ways to avoid expensive bank fees.
3. TAX PLANNING
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This is especially important for Superyacht crew as it may not be immediately clear where you are considered tax resident and what you need to do to be in compliance with the relevant laws.
If you don’t know where you are tax resident and haven’t filed any tax returns, that is a sign that you need to get your situation sorted out! It can get confusing, so contact us for professional advice.
Common Reporting Standards mean that financial institutions communicate client information to the countries where they are resident (or have a close association).
Don’t wait for the taxman to come knocking before making sure that you have done what is necessary. Tax residency is an important issue and is worth looking at thoroughly, because in certain countries you can end up paying a lot less in terms of income tax or in terms of eventual inheritance tax – in the UK it can be up to 40%, whilst in Italy, with proper planning, can be brought down to zero - so do have a good look at the various options.
The good news is that in some situations there are significant tax advantages for seafarers. Examples of this are the Seafarers Earnings Deduction which can offer substantial tax relief for UK residents working on yachts. Something you might not know is that:
- in the shipping sector, the territoriality of the income for tax purposes is generally linked to (i) localization & (ii) flag of the yacht
- ships flying foreign flags are regarded in Italy as flag-state territory, in principle unless they are continuously placed in the Italian territorial water
- by the law, income derived by Italian maritime employees working aboard ships flying foreign flags for more than 183 days in a 12-month period is excluded from the Italian tax base
- with a very recent ruling (No. 134/2020), the Revenue Agency has clarified that the notion of “Italian maritime employees”, for the purpose of the above-mentioned law provision is not limited to Italian national maritime workers, but extends to foreign nationals (both EU and non-EU) to the extent they are tax residents of Italy and gave further information on non-taxation of Italian resident seafarers employed on foreign flag vessels
Have you ever thought about Italy as Country of residency and considered the relevant quite interesting tax regime for seafarers employed on board of foreign flag vessels?
Here at Genoa Superyacht Hub we can refer you on for expert tax advice at any stage in your career and we have a network of tax experts who can talk you through the pros and cons of your particular situation.
4. START INVESTING
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It’s never too early to start investing. But how much should you be saving? Many of your friends back home in “normal” jobs will be getting “taxed” at a 40 to 50% rate once income tax and contributions are taken into account. So basically, if you are not, you should be thinking to “tax yourself” pretty much that sort of slice. Of course, you can choose to save less, but the important thing is to get started! The money that will work the hardest for you is the money you invest right at the start, because it gives you the maximum time to compound. Think about this: if you can generate a 7% net annual return on your investments, in 10 years’ time you’ll have roughly double the amount of money you started with. There are solutions available from €20,000 and your financial advisor will be there with you the whole way to make sure you choose the right investments. As your investments grow you can explore other solutions aimed at maximising your returns over the long-term. The financial advisor’s role is to help you set realistic savings expectations and then make sure you follow through on your best intentions. They can’t guarantee returns, but can make sure that you follow a process that gives you the best chance of making money. Investing for the long-term doesn’t necessarily mean “locking up” your money. Make sure you invest in financial products that make sure you always have access to funds in an emergency.
- ships flying foreign flags are regarded in Italy as flag-state territory, in principle unless they are continuously placed in the Italian territorial water
5. REGULAR REVIEWS
Everyone’s situation changes – life’s just like that. So make sure that you regularly review your financial plan to make sure it’s still fit for your purposes.
You may think of purchasing a house and need to free up a big lump sum or want to start thinking about making a move to a land-based job or starting your own business; you might need to start planning for school or university fees for your kids and want to start planning for your retirement. Whatever the event, try and plan ahead for the move – and our experts here at Genoa Superyacht Hub will be with you every step of the way!