Across Europe, the young working adult is facing the reality of growing unemployment. Those who are fortunate to remain employed are seeing their disposable income tighten up as tax levels increase and tax credits disappear.
The historical differences across this social demographic from northern to southern Europe are diminishing and similarities of social immobility are apparent.
What is actually happening today is an equalisation of economic challenges both here and everywhere else. Life has moved from a world of easy credit to financial crises through to daily austerity measures that make our financial lives heavily taxed for the foreseeable future.
At the other end of the age scale, whilst the baby boomers appear to have far more disposable income and today deemed the socially mobile generation, increased taxes and capital preservation is a necessity. Statistically, this is the most affluent of groups.
However, which group is faring better or worse? If you take into consideration financial difficulties, the fact that the baby boomers have been through a few recessions, including the 1973-74 oil crisis and a period of double digit inflation, then have they really been the fortunate ones?
While the future is gloomy, at least the younger population has the chance to return to work and accumulate wealth whereas opportunities for the elder generations are more limited.
At one time or another we will experience periods of financial hardship so no one person or group fares better or worse than another in the wider scheme of things.
In the short term living through harsh economic conditions is not easy, especially against the backdrop of tax legislation which can be volatile and stifling.
For those dependent on capital through savings, investments or pensions, a long term approach is the only way to deal with these issues. Whether through regular or single amounts your capital base can work without the constraints of immediate and inconsistent political and fiscal change, which only results in piling on further unneeded worries and pressure.
As the rest of its European brethren, Portugal is following the austerity trend at quite a pace and the tax legislation is thick and fast. Income and capital gains taxes are being increased on a frequent basis both on assets in Portugal and even more so on assets outside of the country.
To add further weight to tax reporting, Portugal has already issued an amnesty for assets held outside of the country that must be reported by June 30 of this year for incomes derived up until the end of 2010, otherwise highly punitive rates of tax will be applicable if they are discovered and continue to remain unreported.
So how do you succeed in these taxing times?
The best way to begin is to review precisely how Portugal will assess income and gains on assets both inside and outside of Portugal before you start to consider how you will structure or re-structure these assets.
Existing credits, both through national legislation and bilateral arrangements can help reduce your losses and even roll-up financial gains for the future. Through additional planning, you may be able to defer a tax liability to a later date when maybe tax is not so taxing.
The makings of any successful strategy incorporates careful thinking, planning and deliberation, backed up by knowledge and experience in all aspects of financial planning backed up by trusted and objective advice that understands your situation.
This article is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investments or course of action.
Raoul has a weekly radio feature (Raoul’s Rant) on the Owen Gee Solid Gold Sunday morning show on KissFM Algarve.
He can be contacted at the offices of euroFINESCOs.a. either by telephone on 289 561 333 or on email [email protected].