Regular features from July 2005 115th Issue

Goodbye Tax free Switzerland

With all the furor generated by political commentators around the French and Dutch voting NO to the European constitution, it has hardly been noticed that from

1 st .July 2005 Switzerland , which for generations has been a tax free destination for the wealthy, loses its tax-free status on bank interest. And not only Switzerland .

Starting 1 st .July all the current 25 countries of the European Union have to comply with the EU Savings Tax Directive. Their territories will provide automatic exchange of information on savings accounts held by European Union residents.

Under the same agreement Switzerland, Austria, Luxembourg, Andorra, Monaco San Marino (Jurisdictions where bank secrecy currently prevails) are expected to sign the agreement by the time this article is published

There is one big concession and difference over the 25 EU countries.

That is that these countries can maintain client confidentiality but adopt a withholding tax. (Bank secrecy will be retained)

Instead EU residents will be levied a “withholding tax” on interest gained from savings accounts. The tax will be shared between Switzerland and the clients EU country.

It is interesting to note that a Swiss bank client can have full freedom either to waive bank secrecy or accept withholding tax by default.

The EU tax directive will be levied on

1. Interest earned on deposits.

•  Interest bearing debt claims such as bonds issued after 1 st .March 2001

•  Accrued or capitalized interest (Zero coupon)

•  Investment funds with at least 40% of the underlying investments in interest bearing instruments.

•  Distributions from investment funds which relate to the interest income of the fund income from the sale repayment or redemption of investment fund units.

Tax Rates

•  15% (1 st .July 2005 to 30 th .June 2008)

•  20% (1 st .July 2008 to 30 th .June 2011)

•  35% (1 st .July 2011 onwards)

EU directive taxation example

Say you had accrued interest of $10,000 from your deposit in a Swiss bank account in the year 2006. As a EU resident you have the choice of either fully reporting to your countries tax authorities or not to disclose your financial information.

If you choose to remain shielded with bank secrecy as per new EU directive you are accepting withholding tax by default. Should that happen 15% (of $10,000) $1500 will be debited to your account. Out of $1500 75% will be anonymously directed to EU member country and the remaining 25% will be kept by the Swiss Tax authorities.

It should also be noted that in 2011 if you accrued the same interest $3,500 would be debited to your account and irrespective of the distribution of the deduction your profit for the year would fall from $10,000 to $6,500, a considerable difference if you happen to be living on bank interest. On the other hand Swiss Banks are not renowned for lucrative interest rates. Currently they only pay .25% on CHF accounts. That means you would need to have $4 million dollars on deposit to earn $10,000- every year. Nonetheless many people have that sort of money and much, much more in Swiss Bank accounts.

It is worth considering the other side and here is a brief quotation from the Swiss Bankers Association press release. It is in their best interest to put a gloss on what has really been a forced issue by the EU. If not for severe pressure do you really believe Switzerland would ever have imposed this tax?

Anyway they say-

“The tax will apply to interest payments and……is an alternative to an automatic exchange of information. This generous offer on the part of Switzerland will ensure that the country is not used as a loophole to circumvent the EU's taxation of savings income directive”

That's true but as Margaret Thatcher and Christine Keeler famously said “They would say that wouldn't they?”

There are many expats living in Thailand who maintain their residency in the EU mostly for health reasons. These people should contact their broker or me at the e-mail address below to find out how to invest in Switzerland while maintaining confidentiality and escaping the withholding tax. As the prophet also famously said, “There is always a way”

For further information on this article please contact Jerry at info@swissinvestcenter.net or visit his website www.swissinvestcenter.net

Engagement

Many foreigners come to Thailand to get married to a Thai woman. Some information on Thai culture and law related to marriage should be known. This article will provide you with the first step for marrying in Thailand .

Engagement / Betrothal:

According to Thai law, engagement, also called betrothal, means an act that a man gives or transfers property or gifts (called Khongman) to a woman as evidence that the marriage shall take place. The gift shall become the property of the woman after the betrothal has taken place.

Besides the gift given to the woman, something is normally required to give to her parents as well (called Sinsod), in return for the woman agreeing to marry. So many foreigners may not be accustomed to the said Sinsod, simply because of it not being practiced in western countries. It is a Thai culture, which is recognized by law.

A betrothal can be effective only when the man and woman have completed their seventeen years of age. The betrothal contrary to this provision is void.

If a minor will conclude a betrothal, the consent from her parents, her adopter, or her legal guardian is required, otherwise the betrothal is voidable.

What's going to happen if the man and woman haven't been married after engagement?

1. If either party commits a breach of the betrothal agreement, such a party shall be liable to make compensation such as:

a. For injury caused to the body or reputation of the man or woman

b. For appropriate expenses or debt incurred in good faith by the betrothed, his or her parents or a person acting in the capacity of his or her parents in preparation for the marriage.

c. For damage suffered by the man or woman through having taken appropriate measure affecting his or her property or other affairs relating to his or her occupation or earning in expectation of the marriage.

d. In the case where the woman is entitled to compensation, the Court may decide that the Khongman, which has become her property is the whole or part of compensation she will receive, or the Court may rule for payment of the compensation apart from Khongman that has become the property of the woman.

2. In the case where the woman commits a breach of the betrothal agreement, the Khongman shall be returned to the man.

3. In any cases, if the marriage is not yet taken place, Sinsod shall be returned to the man.

4. Khongman and Sinsod are not required to be returned to the man in case of death of either party.

5. In the case where there is an essential event happening to the betrothed

woman that makes the marriage unsuitable, the man is entitled to renounce the betrothal agreement and the woman shall return the Khongman to the man. On the other hand for the betrothed man with the same circumstance, the Khongman needn't be returned.

6. In the case where severe misconduct is made by one party, the other party is entitled to renounce the betrothal agreement and to claim compensation.

7. Any man who should know or have known the betrothal of the betrothed woman, having sexual intercourse with the betrothed woman, may be claimed by the betrothed man for compensation. This claim can be made after the betrothal agreement has been terminated.

8. Any man who should know or have known the betrothal of the betrothed woman, having raped or attempted to rape the betrothed woman, may be claimed by the betrothed man for compensation without terminating of the betrothal agreement.

9. The prescription for the claim for compensation mentioned above shall be six months from the date of breaching of the betrothal, or committing of misconduct.

Now you know your rights to claim back your property and compensation after a breach of engagement or misconduct by the Thai woman.

Jatuporn Cherbangkaew

Chief lawyer of Socrates Law Office.

IN THE CAN

Eric Clapton is one of the world's best-known guitarists, and has a string of hit albums, although only a relatively small number of hit singles. In the late 1960's it was a common site to see ‘Clapton Is God' graffiti on walls in New York and London because of the esteem he was held in by fans and critics alike. Clapton's meandering and groundbreaking musical career has been punctuated by extreme personal hardship and tragedy. Through the emotional truth of his music, he has sought refuge and release from the suffering of drug and alcohol addiction, personal relationships gone awry, and the deaths of several loved ones.

Ironically one of his best-known and loved songs was recorded under a pseudonym rather than his own name – ‘Layla' by Derek and the Dominoes. It was a top ten hit in both the US and the UK when it was re-released in 1972, having flopped originally when released as an edited 2 minutes 43 second version. The hit version was the full 7 minutes 10 seconds long song. Clapton went into a drug-filled depression when the single tanked in 1971. He couldn't understand why it wasn't a hit. The record company did very little to advertise the album, figuring any project with Clapton would get plenty of publicity. The re-released version got extra publicity after Duane Allman, who plays guitar alongside Clapton on the song, was killed in a motorcycle accident in October 1971.

Derek And The Dominoes formed after Eric Clapton, Bobby Whitlock, Carl Radle and Jim Gordon worked on George Harrison's first post-Beatles album, ‘ All Things Must Pass '. They got together at Clapton's house in England and started writing songs and playing small clubs. In an interview given later, Bobby Whitlock gave some idea what life was like touring with Derek and the Dominoes; “We toured all over England . We did a club tour, and no ticket was over a pound. It was all word of mouth. We played the Speakeasy in London and The Marquee Club, then we played some really funky places up in Nottingham and Plymouth and Bournemouth - we went all over Great Britain . Here we were, these so called "big rock stars," and we were playing these funky places that would hold like 200 people. Of course, people were jam-packed and spilling out on the streets and stuff. It was pretty wild, it was a great time. We did this one tour; we rode around in Eric's Mercedes. We were all crammed in one car. The second time we went out in Great Britain , we up scaled it. We played small concert venues - Royal Albert Hall and places like that. We went down to Miami , recorded the ‘Layla' album and went on tour in the United States . We preceded the record for the most part. ‘All Things Must Pass ' came out, it was a big record, and ‘My Sweet Lord' was number one. We were on the road in the United States , George was playing all over. We were all over the radio with our playing with George, and the album Layla - nobody could get it.”

Dwayne Allman came up with the famous guitar riff and played lead with Clapton. Allman was a big Clapton fan and arranged to drop by the session through Tom Dowd, who produced the Allman Brothers' album ‘Idlewild South'. Dowd was working with Clapton on the Derek And The Dominoes album and made sure Duane paid a visit. When he came by, Allman was thrilled to learn that Clapton not only knew who he was, but also thought he was a great guitarist. They got along very well and Clapton asked Allman to record with the band. Near the end of the song, Dwayne Allman produced the "crying bird" sound with his guitar while Clapton played acoustic. It was a tribute to Charlie Parker, a jazz legend known as "bird."

The piano at the end has become famous. It was used to great effect at the end of the movie ‘Goodfellas', and radio stations almost always play the version with the piano. At the time, not everyone liked it. Says Whitlock, "I hated it. The original 'Layla' didn't have a piano part. When we did the song, we didn't have a piano part in mind. Jim was playing it, and Eric said, 'What about that - that's good.' Jim's not a piano player. He plays so straight - everything is right on the money. They wanted me to give it some feel, so Jim recorded it, I recorded it, Tom Dowd mixed them together. It's 2 pianos."

The piano piece was edited on a few weeks later. Drummer Jim Gordon came up with it as a solo project and had to be convinced to use it on "Layla." Gordon was one of the most successful session drummers of the late 1960s and early 1970s, playing on many classic albums of the time. Sadly, in the mid 1970s, severe psychological problems began to manifest in Gordon's behavior. He complained of hearing voices, especially the voice of his mother. By the late '70s, Gordon's mental difficulties - later diagnosed as acute paranoid schizophrenia - had ruined his musical career. In 1983, Gordon brutally murdered his own mother using a claw hammer. The insanity defense having been narrowed in California , Gordon was convicted of second-degree murder in 1984 and sentenced to 16 years to life.

The band broke up when they tried to record a second album. Clapton and Gordon had a falling out in the studio, which ended the sessions and marked the end of the band. Says Whitlock, "Eric says it was drugs and paranoia. It was just a lot of everything. We were road weary. We did 50-something dates in as many days in the United States . I would wake up and not even know where I was. They didn't expect us to live very long anyway. We surprised them, at least a couple of us did - Eric and myself. That was it." Carl Radle died of heroin-related kidney failure in 1980.

The song ‘Layla' was a deeply personal one to Clapton when he wrote it, because at the time he was deeply in love with and was seeing George Harrison's wife Patti, who the song is about. A lot of people knew about the affair, since it wasn't easy for someone as famous as Clapton to keep a secret. Bobby Whitlock, who was good friends with both Harrison and Clapton, explains: "I was there when they were supposedly sneaking around. You don't sneak very well when you're a world figure. He was all hot on Patti and I was dating her sister. They had this thing going on that supposedly was behind George's back. Well, George didn't really care. He said, 'You can have her.' That kind of defuses it when Eric says, 'I'm taking your wife' and he says, 'Take her.' They got married and evidently, she wasn't what he wanted after all.” Clapton and Harrison remained good friends, with George playing at their wedding in 1979 along with Paul McCartney and Ringo Starr. Clapton left her for actress Lori Del Santo (with whom he had his son, Conor) in 1985. Clapton actually divorced from Patti in 1988.

The lyrics are based on the book by Persian poet Nizami, ‘Layla and Majnun', about a man in love with a woman who cannot have her because her parents object. When they cannot be together, he goes insane. Clapton's situation with Patti was different, but he liked the title and the theme of unattainable love. The song is a genuine classic, and the critics for once agreed; Rock journalist Dave Marsh wrote this in The Rolling Stone Illustrated History of Rock and Roll; "…there are few moments in the repertoire of recorded rock where a singer or writer has reached so deeply into himself that the effect of hearing them is akin to witnessing a murder, or a suicide... to me, 'Layla' is the greatest of them."

Clapton wrote a second song about Patti, who must have been a quite extraordinary woman to know, as the song in question was ‘Wonderful Tonight'. He wrote it in 1976 while he was waiting for her to get ready, as they prepared to attend a Buddy Holly tribute that Paul McCartney had put together. The day after Eric and Patti got married he was playing a concert in Tucson , Arizona , and he brought her on stage and sang this song to her. It is also said that the songs ‘Forever Man' and ‘Why Does Love Have To Be So Sad' are also about her.

In late 1990, the fates delivered Clapton a terrible blow when guitarist Stevie Ray Vaughan and Clapton road crew members Colin Smythe and Nigel Browne--all close friends of Clapton's--were killed in a helicopter crash. It could be said that on an emotional level Clapton surpassed even ‘Layla' when he once again turned to his songwriting and performance after he was dealt another cruel blow when a few months later Conor, his son by Italian model Lori Del Santo, fell forty-nine stories from Del Santo's Manhattan high-rise apartment to his death. Clapton channeled his shattering grief into writing the heart-wrenching 1992 Grammy-winning tribute to his son, ‘Tears in Heaven.' It is somewhat ironic that the man once hailed as a deity himself looked for God to explain such a heartbreaking experience. There is no doubt that Eric Clapton has ‘paid his dues' and earned the proper right to sing the blues, having experienced the lowest of lows alongside the highest of highs.

Lyrics for Layla

by Eric Clapton and Jim Gordon

What'll you do when you get lonely

And nobody's waiting by your side?

You've been running and hiding much too long.

You know it's just your foolish pride.

Layla, you've got me on my knees.

Layla, I'm begging, darling please.

Layla, darling won't you ease my worried mind.

I tried to give you consolation

When your old man had let you down.

Like a fool, I fell in love with you,

Turned my whole world upside down.

Chorus

Let's make the best of the situation

Before I finally go insane.

Please don't say we'll never find a way

And tell me all my love's in vain.

Chorus

Chorus

Useful Telephone Numbers for Hua Hin

Railway station
032-512 770, 032-511 073

Bus station of Hua Hin
032-511 654, 032-512 543

Bus station of Prachuabkirikhan
032-601 901

Bus station of Pranburi
032-621 443

Hua Hin Hospital
032-520 401

Dog Rescue Center
0-1981 4406

Wild life Rescue Center (Tayang)
032-458 135

Department of Land Cha-am office:
032- 430 846-7

Department of Land Hua Hin office:
032-536 164, 032-512 407

Department of Land Prachuabkirikhan:
032-611 211

Department of Land Pranburi
032-622 199

Local Government (Hua Hin)
032-521 340, 532 471

Local water supply
032-511 677

The Power Board of Hua Hin
032-512 215, 032 513 165

Observer office:
032-531 078

Red Cross.
032-512 567

San Paolo Hospital
032-532 576-85

Polyclinic International
032-516 424, 032-516 425

Shell Cooking Gas
032-511 144, 032- 515 620

The Communication Authority of Thailand
(Hua Hin)
032-511 351

Rotary Club of Hua Hin
0-1916 6637
Meeting every Thursday 8.pm
at Hua Hin Grand Hotel & Plaza

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