Gents,
Someone who know nothing about investing abroad, If I placed money in a Country abroad, say because it has a higher Interest rate over a 2 year period (maturity date)...
Yes.
Only as much as you need to pay extra tax on it. Many countries will pay non-residents interest without deducting tax, which means you need to declare it as income to HMRC and pay any tax that might be due on it. This might pull you into Self Assessment if the figure is large enough. I'm not completely clear on the situation where you must pay country X's local taxes of, say, 10% and your income tax rate is 20% - I think you'd pay the difference to HMRC. I don't know if there needs to be a tax treaty between the two countries to allow this (otherwise you'd have to pay the full tax in both places).
You pay tax on income received. So if the interest is paid into your account annually, the tax liability is annual. If it's paid in a single lump at the end of 3 years, that's when you'd need to pay the tax. Depending on your tax situation, one or other way may cost more.
Don't quote me on this, but AIUI it isn't domicile of the money that counts, it's domicile of you. In other words, if you're domiciled in the UK you pay UK tax on your worldwide income, irrespective of where that income was generated or how the funds were moved around. But IANA international tax accountant.
It really depends. You may want to look up 'inflation risk'... interest rates in, say, Turkey might be 20% but that's because the Turkish Lira devalues to keep pace (or worse), so you don't win. And the currency fluctuations in a day can easily wipe out a year's interest. OTOH if you need to keep TL because you sometimes visit, you'll get a much better rate there than you would holding them in the UK.
The admin hassle is more, particularly if you don't speak the local language, and many banks aren't quite set up to be operated entirely from abroad (if they let non-residents open accounts at all). You may encounter the local bureaucracy (eg need to be registered with the local tax authorities).
So really worth investigating the situation for the particular country you want, as it varies a lot (even within the EU).
Theo
MANY THANKS.
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