I’ve Become Tax Resident in Spain — What Happens to My Investments?

You haven’t sold your investments.

You haven’t moved your investment account.

You may not even have changed anything about the way your money is invested.

So why should becoming tax resident in Spain make any difference?

For many people moving to Spain, this is one of the questions that gets overlooked.

Your investments may still be held in the country you came from, but your tax position may have changed. For Spanish tax residents, Spain generally taxes worldwide income, subject to the specific rules that apply to the individual and any relevant tax treaty.

That means becoming resident in Spain can be a good time to step back and review your investments as a whole.

Does my investment have to move to Spain?

Not necessarily.

Becoming resident in Spain does not automatically mean that every investment you own needs to be transferred to a Spanish bank or investment provider.

You may have investments, savings or other financial assets held in another country and continue to hold them there.

The more important questions are:

• How will the investment be treated for Spanish tax purposes?
• Are there any reporting requirements?
• Can your existing provider continue to service you as a Spanish resident?
• Are the investments still appropriate for your circumstances?
• Are the charges competitive?
• Does the investment fit with your longer-term plans?

The location of an investment and your tax residence are two different things.

There can also be reporting obligations relating to certain assets held outside Spain. For example, Spain’s Modelo 720 is an information return covering certain foreign accounts, securities, rights, insurance and other assets, subject to the applicable rules and thresholds.

This is one reason why simply leaving everything exactly as it was before moving may not always be the best approach.

Should I sell my investments before becoming Spanish resident?

This is a question I hear regularly.

The temptation can be to think:

“Perhaps I should sell everything before I become resident in Spain and start again.”

But selling investments simply because you are moving country can create its own consequences.

You need to consider the investment itself, potential gains, timing, taxation, transaction costs and what you intend to do with the money afterwards.

There is no universal answer.

For some people, restructuring before or after a move may be worth considering. For others, selling investments could create unnecessary costs or tax consequences.

The important thing is to understand the position before making a major decision.

What about ISAs and other tax-efficient arrangements?

People arriving in Spain often have financial arrangements that were designed around the tax system of their previous country.

An ISA is a good example for someone coming from the UK, but the broader principle applies to people from many different countries.

A tax-efficient investment in one country does not automatically receive the same treatment in another.

That doesn’t necessarily mean it should be closed or sold.

It means its treatment should be understood before making a decision.

What should I review after becoming a Spanish resident?

Rather than looking at each investment separately, I think it is more useful to look at the bigger picture.

For example:

Investments
Are your investments still appropriate for your objectives, timeframe and attitude to risk?

Tax
How are your different sources of investment income and gains treated in Spain?

Currency
If you hold assets in several currencies, does that still make sense now that your life is based in Spain?

Charges
Are you paying for services or investment arrangements that are no longer suitable?

Reporting
Do you have any Spanish reporting requirements relating to assets held overseas?

Retirement
How do your investments fit alongside your pension and other retirement income?

Estate planning
Would your current arrangements still make sense if you died while resident in Spain?

Future plans
Do you intend to remain in Spain permanently, or might you eventually return to your previous country?

These questions can be much more important than simply asking where an investment is held.

Moving country doesn’t necessarily mean moving your investments

One of the biggest mistakes people can make after moving to Spain is assuming that everything needs to be changed immediately.

Sometimes it does.

Sometimes it doesn’t.

The better approach is to understand what you already have, how it is treated now that you are resident in Spain, and whether it still fits the life you are building here.

Your investments may not need to move.

But your financial plan probably deserves to move with you.

If you’ve recently become tax resident in Spain and haven’t reviewed your investments and wider financial arrangements since your move, it may be worth taking a fresh look.

At The Spectrum IFA Group, I work with expatriates and internationally mobile individuals living in Spain, helping them review pensions, investments and wider financial planning in the context of their circumstances in Spain.

If you’re unsure whether your existing investments are still appropriate now that you live in Spain, get in touch and we can discuss your circumstances and whether a review would be worthwhile.