Guaranteed Exchange rate - would you take it?

[ayrej2]

Ok,

So you have to make the choice:

a) Have your UK salary paid to you in Singapore Dollars at a gauranteed exchange rate of 2.8173.

Avoid any downside, but miss any up.
Like now, if the exchange rate slips you're quids in (2.7046)
If it goes the other way though, you're not seeing the benefit.

b) Have your UK salary paid to you into your UK bank account and exchange what you need yourself via the daily exchange rate.

Ride the market and pay any fees.

Obviously, to pick the correct answer you need a crystal ball.

http://finance.yahoo.com/currency/conve ... amt=1&t=5y

Looking at the past 2.8 doesn't seem that good, but where are we heading in the future?

Ed

[durain]

what's this week lottery number then?

[Saint]

Where do you want to be taxed?

[ayrej2]

dunno durain, obviously you'd need a crystal ball to answer that

Dosn't stop people every week from trying to guess though

[Saint]

dunno durain, obviously you'd need a crystal ball to answer that

Dosn't stop people every week from trying to guess though

i'll say again, where you want to pay tax?

[ayrej2]

Where do you want to be taxed?

In this case, it's not really a consideration. My company calculates everything on a Hypothetical tax basis. Tax neutral I think they call it.

Basically, they work out my UK Net pay, add any uplifts etc on that and pay me net where ever I elect. The Tax liability/benefit is theirs and as such I will not see any tax benefit from avoiding UK banks.

Hope that makes sense?

Edit: sorry Saint, I was replying to the first post when you posted. Wasn't ignoring you

[Saint]

Where do you want to be taxed?

In this case, it's not really a consideration. My company calculates everything on a Hypothetical tax basis. Tax neutral I think they call it.

Basically, they work out my UK Net pay, add any uplifts etc on that and pay me net where ever I elect. The Tax liability/benefit is theirs and as such I will not see any tax benefit from avoiding UK banks.

Hope that makes sense?

Have you looked into the current Singapore tax rates?

[ayrej2]

yep I know, sucks to be me

On the flip side, if they ever send me to Norway....

[Saint]

yep I know, sucks to be me

On the flip side, if they ever send me to Norway....

So what do you want the answer to then?!

[durain]

it's a gamble in your situation with the exchange thing. i just ride with the exchange. i exchange more if the rates are better and vice versa. you win some, you lose some.

i still dont get how your company work out your tax. either way, tax is singapore is low, UK is high and norway is super high!

[ayrej2]

i still dont get how your company work out your tax. either way, tax is singapore is low, UK is high and norway is super high!

well, they say it's to remove any incentive for staff to favour certain work locations as we work all across the world (as in everyone wanting to go to Sing & not getting anyone to go to Norway).

In reality, I'm sure its the most tax/cost efficient method for the company. As an example, say I earned 100k GBP, in the uk that's what they'd pay me and out of that, I pay 40k in tax.

Abroad they'd pay me 60k GBP (-40% UK tax) and pay my tax for Sing (15% = 15k GBP) and so I only cost them 75k, however I would still see the same take home pay. What's the incentive then? Well, they do pay me an uplift, accomodation allowance, transport allowance, my uk NI etc so my overall take home goes up. However, there isn't any tax benefit for me.

When I worked in Azerbaijan, my emplyoment company was registered in the US and my bank payroll was Jersey. Still the same deal though.

So what do you want the answer to then?!

well, if I pick the gauranteed rate, the exchange rate continues to fall., and If I don't, that it goes back to where it was 1 year ago

Seriously, I know there is no correct answer to this. However, some people I have spoken to have a general belief that the Sing dollar will continue to fall for a little while. I was wondering if this belief was widespread?

go on, what would you do? pick one!

[banana]

Pick the guaranteed rate. Life is too short to be spending that much attention on a few percentage points.

[Wind In My Hair]

I do have a crystal ball. It tells me you don't like losing. So pick the guarantee if you're happy to work for a salary at the 2.8 exchange rate offered. In the best case, you won't lose by getting a lower salary than you agreed to work for. In the worst case, you would have missed out on a bonus that was never promised you in the first place and that wasn't necessary for you to decide to work here. Complicated, but simple.

Personally I would let it float. Life has no guarantees and that's part of the fun. But I am not you. I'm happy that my income fluctuates every month. It keeps me on my toes, but not everyone likes it. So it really depends if you're the kind who prefers stability or surprises.

[ksl]

I was under the impression, that foreign Companies, that set up office in Singapore, actually reap many tax benefits on income earned outside of the Country. the 183 day rule applies in your case, for residential and tax purposes. Personally I don't see how they can pay 15% singapore tax, when you are resident in another Country, you will still be liable, and not the Company if in the UK longer than 183 days.

You need to be careful your company isn't trying to pull a fast one, because ignorance is not bliss, if you are living and working in other Countries.

I disc Jockey I knew worked in Greece, while the night club said they would pay all his income tax, after his season stint. They payed nothing and the DJ was on the red carpet in UK, when he returned, he had to pay UK tax on his income earned overseas, because he hadn't been out of the Country long enough. So it turned out the night club screwed him, taking so called tax, when they shouldn't have done. So much confusion.

There is also the benefit of when you do leave the UK, you qualify for a tax rebate, depending on your planned departure, unless that rule has already changed. I would get advice from an international accountant, who should know the ins and outs for employees, Just ask your Company which accountants they use, they probably have the best anyway, may even have their own!

[Saint]

This might sound a silly question and there's probably a very simple answer, but....

If you get paid in the UK, pay tax etc, you wont actually be earning a salary in Singapore. So how are you going to be able to legally work in Singapore? No salary, no EP?

I await young SMS or SE to come up with the obviously simple answer