By Chris Burke
This article is published on: 8th May 2025
Happy (Almost) Summer, everyone!
So far this year, the weather has been very unusual, to say the least. Hopefully, things will start to feel a bit more normal soon – which brings me nicely to the financial world, which has been anything but normal! Sometimes it feels like many of us are just pawns in the game that very powerful people play.
In my world, however, many of these ‘games’ are understandable from a financial perspective, and we don’t panic. Instead, we factor in all scenarios and focus on the medium- to long-term goals for our clients.
This month, I’ve put myself in my readers’ shoes and asked:
Whether you’re new to Spain (generally considered to be less than three years) or well-established, it’s important to stay financially organised and understand what actions you need to take.
Living abroad as an expatriate requires thoughtful financial planning to navigate both Spanish and international financial systems. Here are the key areas to consider:
1. Understand Tax Residency and Obligations
In Spain, spending over 183 days within a calendar year establishes you as a tax resident, meaning your worldwide income and assets may be subject to Spanish taxation. It’s crucial to understand the rules around tax residency to avoid unexpected liabilities.
2. Strategise Property Sales and Investments
If you own property in your home country, consider carefully when to sell. Selling property in the same tax year you become a Spanish resident can lead to significant capital gains taxes. Planning the sale before relocating may help mitigate this issue.
3. Establish a Comprehensive Estate Plan
Creating a Will that covers both your home country and Spain is essential to ensure your assets are distributed according to your wishes. It’s wise to consult with advisers experienced in cross-border estate planning to navigate the complexities.
4. Optimise Currency Management
Managing currency exchange efficiently can help minimise losses due to fluctuating exchange rates. Consider using multi-currency accounts or international banking services to provide greater flexibility and cost savings.
5. Savings, Investments & Pension Planning
Ensure these are structured to reduce future tax liabilities—whether that’s for withdrawals, passing assets to your spouse or children, or aligning with your investment expectations (e.g., risk/reward balance). Most importantly, work with someone you trust to help manage these assets.
6. Consult with Experts
Whatever your budget, make sure you work with a recommended lawyer, tax adviser, accountant, and financial adviser. In Spain, you are considered guilty until proven innocent, and it can take years to resolve legal issues—during which your bank accounts or assets may be frozen. Many expats are unaware of this, especially if they come from countries where the opposite presumption applies.
7. Use Your Life Experience
When choosing the right advisers, trust your gut—or your “spider senses,” as I like to call them. You’ve built up intuition through life experience, and more often than not, it’s spot on.
Engaging with financial advisers who specialise in expatriate services can provide tailored guidance on investment strategy, tax planning, and navigating financial matters in both Spain and your home country.
By proactively addressing these areas, you can establish a solid financial foundation for your life in Spain – ensuring both compliance with local regulations and alignment with your long-term goals.
I’m here to help you get organised and take those financial worries away. If you’d like to discuss any of the topics above in more detail, or would like an initial consultation to explore your personal situation, you can do so here.
Click here to read independent reviews on Chris and his advice.
By Chris Burke
This article is published on: 13th February 2025
Let’s get right into it, the start of the year is a chance to get yourself organised and write down that list of life admin tasks you keep putting off and finally complete, one by one – I am no different to anyone else – and how good does it feel when you tick each one off!
I must admit, I keep a list of ‘tasks’ on my phone, but each day I write these down in front of me which seems much more effective – maybe because I am constantly looking at them? Then I ‘tick’ them off as I go – it’s so satisfying!
Anyway, from a finance perspective this month I remind you of those important admin tasks that you really need to make sure you are on top of and which, if you don’t address, could end up costing you and/or your loved one’s money:
Wills
Make sure, particularly if you have children, that you have a Will and that it is up to date/correct. Many people are astounded to find out that even today there are still archaic rules in place in Spain regarding your children and how inheritance rules apply – make sure you understand this and are comfortable with what could happen.
Mortgages
2025 has a strong forecast for interest rates to continue falling, predicting to around 2% by the end of the year. It could be a good time to review that mortgage and make sure you are not over-paying or to secure a better rate moving forward which, over the lifetime of the mortgage, could save you tens of thousands of euros.
Savings/Investments
With interest rates predicted to continue to fall, although possibly not enough to change inflation, it’s important any savings you have are working hard for you – obtaining a 7% return over 10 years doubles your money. With careful planning and investment advice you can preserve/grow your wealth as per your needs.
Inheritance/Gift planning
Depending on where you live in Spain, it can be very important (and valuable) to know and understand how inheritance tax works versus receiving a gift from someone – in many cases it can be beneficial to do the latter, potentially avoiding much larger, future taxes.
I am here to help you get organised and take those financial worries away. If you would like to discuss any of the above topics in more detail, or you would like to have an initial consultation to explore your personal situation, you can do so here.
Click here to read independent reviews on Chris and his advice.
By Chris Burke
This article is published on: 16th October 2024
I am guessing most of us are back in the old routine after summer (sorry to tell you that the summer is now over, even if you don’t want to hear it!) – How quickly do the hours/days/weeks/months/years/life go by….it only seems like yesterday I was starting out in my career, now I am the wrong side of ………something!
I myself don’t have that long to go until I retire. It never is too late to start your financial planning but the sooner you do it the easier and more fruitful your finances should be. Do I ‘practice what I preach’ and take the advice I pass on to others? Absolutely! That’s another reason why I am best placed to give the advice……..
This month we are focusing on the following investment planning tips to inspire you to get organised financially and feel good about it:
Making sure you have a ‘Plan’ for your savings and investments
Managing your personal finances should be just as, if not more, important than managing your work or business role – You should make sure you are achieving your set objectives, regularly reviewing along the way to make sure you are hitting your targets, goals and aspirations for life. Apart from your health and family, what could be more important than that?
Imagine if you received one EXTRA annual bonus each year, for the whole of your working life, how much difference would that make to you? Then, investing that prudently over your working life to provide for your family and retirement? With some knowledge, know-how and someone to guide you along the way and making sure you regularly review, in the good and bad times, that this can be achieved.
Use the ability to offset, defer and mitigate tax for your investments/savings
Alongside making your monies work and grow for you, being smart with your tax situation will make sure that those ‘hard earned gains’ you have achieved over the years, when you need them most in retirement, are subject to the least amount of tax, legally.
For decades those ‘in the know’ have used tax experts and legal teams to makes sure they pay the minimum amount of tax possible, which can make an incredible difference to your wealth – This is a major area we focus on with our clients’ investments/portfolios. Investments set without professional advice, for example via on-line platforms or banks, are normally nowhere near as tax efficient as those established with the help of an experienced financial planner.
Using your investments to pay for children’s future expenses without paying any taxes yourself
“At what age are children financially independent?” I hear some parents say. In my experience it can be never…….however, many of my clients plan to support them financially for their education and university fees, if possible. Parents are then very surprised to hear that rather than pay the tax themselves on their investment gains for these future expenses, they can arrange (with proper financial planning) that their children can, if they wish, receive income from these investments directly. This means any tax due would come under the children’s tax bracket, instead of the parents’ – which can make a significant difference to the tax payable in total, but particularly for the parents.
Investment quiz – what’s most important to you?
Many people get in touch with me when they feel they need help with investment planning and advice, however that is not always the case. Sometimes, after reaching out for a different reason and talking their situation/aspirations through, they then decide they want to set up an investment strategy.
But how do you decide whether investing is right for you? I have compiled below the following questions in two columns – If you agree more with those in column A than B, then you should strongly consider getting in touch to discuss investment plans and strategies:
| A | B |
| You want your money to grow and give you greater wealth in the future | Keep your money accessible in case it’s needed, knowing it will not grow and keep up with inflation, but you have instant access |
| You would like to have a financial plan/strategy keeping some money accessible, but also make sure your other monies are ‘working’ for you, increasing your wealth and finances over the years | Employ all of your spare money into paying off your mortgage early, then look at your retirement investment strategy (click here to read whether it is best to do this or not). |
| Retire early using FIRE (Financial Independence, Retire Early) - early being well before the typical retirement age of 66. | Not retire early, enjoy life fully now and see what happens when you get to retirement |
If you would like to discuss any of the topics above in more detail or you would like to have an initial consultation with Chris to explore your personal situation, you can do so here.
Click here to read independent reviews on Chris and his advice.
If you would like any more information regarding any of the above, or to talk through your situation initially and receive expert, factual based advice, don’t hesitate to get in touch with me.
By Chris Burke
This article is published on: 11th September 2024
As always, I am here to help ensure that the last phrase above stays with you for life, by helping you manage your assets using highly tax efficient, well-invested methods, and offering you sound advice as the years go by.
This month I thought I would really get you thinking and organised by providing, from my experience and professional opinion, in the order of importance, a list to get you financially efficient and enable you to change your wealth and financial outcome in life. Pick out those areas that apply to you and get working on that personal financial health-check now, so that over the years you maximise your assets and wealth:
1 – Taxes
Review your tax situation, making sure all your assets are as tax efficient as possible and that any monies you have are not subject to unnecessary tax, both now and later in life. For me, this is the FIRST task to tackle with your finances, and working with a good tax adviser here in Spain is rule number one. Having a ‘leaky bucket’ where any gains you make are ‘dripping’ away to hacienda is not managing your money effectively.
2 – Debt – Review and Reduce
Pay off high-interest debt as quickly as possible, starting with credit cards and other loans with high rates. Consider refinancing options if rates drop or consolidating debts for lower rates.
3 – Prioritise Building an Emergency Fund
Aim to have at least 3 to 6 months of living expenses in a high-yield (good luck with that in euros!) savings account. With economic uncertainty, having a buffer can provide peace of mind and protect against unexpected expenses.
4 – Have short, medium and long-Term financial plans
Set clear, realistic financial goals (short, medium and long-term) to develop a comprehensive plan and achieve them. Regularly review and adjust your plan to adapt to life changes and financial circumstances.
5 – Consider Inflation
With inflation remaining a concern, explore investment options that can hedge/work against inflation, such as inflation-linked government bonds, commodities, real estate or well-designed investment portfolios.
6 – Invest your savings/spare cash consistently
To grow and increase wealth, one must invest. Nothing is guaranteed in life, however over the long term a good investment plan will work to grow your monies as opposed to a guaranteed reduction in real value with low/non-interest-bearing bank accounts.
Continue investing regularly, regardless of market fluctuations, through strategies like pound/euro cost averaging. Diversify your portfolio across different asset classes (stocks, bonds, real estate, etc.) to minimise risk.
7 – Automate your savings and investments
Set up automatic transfers to savings and investment accounts. This helps ensure you save regularly and take advantage of compounding growth without needing to remember each month.
8 – Re-evaluate insurance coverage
Review your insurance policies, including health, home, auto, and life insurance, to ensure you have adequate cover without overpaying. Consider policies like umbrella insurance if your assets have grown significantly.
9 – Maximise retirement contributions
Contribute as much as possible to a retirement plan, especially if your employer offers a matching contribution. With inflation and increasing life expectancy, building a larger nest egg is crucial.
10 – Stay informed about tax changes
Keep up with any new tax laws or changes that could affect your personal finances. Look into opportunities for tax deductions or credits, like contributing to tax relief investments or making charitable donations.
11 – Rebalance your investment/asset portfolio regularly
Review your investment portfolio at least annually to ensure it aligns with your risk tolerance, financial goals, and market conditions. Rebalancing can help maintain the desired asset allocation and also changes in your life as the years go by.
12 – Plan for major expenses in advance
If you anticipate major expenses (like buying a home, car, or funding education), start planning and saving early. This can help you avoid high-interest debt or dipping into long-term savings.
13 – leverage technology and financial tools
Use budgeting apps and financial management software to help track expenses, plan investments, and manage your portfolio efficiently.
14 – Invest in yourself
Allocate time and resources to enhance your skills and knowledge in personal finances, as this can lead to higher income potential or career advancement.
Nothing changes if nothing changes……
If you would like to discuss any of the above topics in more detail, or you would like to have an initial consultation with Chris to explore your personal situation, you can do so here.
Click here to read independent reviews on Chris and his advice.
If you would like any more information regarding any of the above, or to talk through your situation initially and receive expert, factual based advice, don’t hesitate to get in touch with Chris.
By Chris Burke
This article is published on: 11th July 2024
Summer is well and truly here so it’s time to enjoy everything that brings, especially before it gets too hot! It’s hard to beat Spain when we have so many sunny days – a walk along the seafront or a stroll through the forest to keep cool and listen to the nature.
From a financial perspective, I am always here to update you on anything new or tips/hints to keep your finances healthy – this month we are focusing on the following:
Biometric card for entry & exit to Spain
The EES (Entry/Exit System) will be introduced by the EU in Autumn 2024 – this is an automated system for registering travellers from the UK and other non-EU countries each time they cross an EU external border. It will require third country nationals, including UK nationals, visiting the EU to create a digital record and provide their biometric data (fingerprints and facial image) at the border when they enter the EU’s Schengen Zone. It is expected that Spanish Green Certificate holders may face significant delays and difficulties at borders if they do not have a TIE.
The system will register the person’s name, type of travel document, biometric data (ie fingerprints and captured facial images) and the date and place of entry or exit each time they go through a ‘checkpoint’, which will in real terms replace stamping of passports (so those regular travellers to the EU won’t have to worry about running out of passport pages with stamping!).
Whilst hopefully making travelling easier and quicker, it’s also clear to note that there will be a ‘hard electronic’ record of which borders you cross and how many days you are spending in each country, which from a tax perspective could be interesting. Let´s see how long it takes for this to also become common practice at ‘road borders’.
Inheritance tax (IHT) & Gift tax in Spain
One of the great unknowns amongst those who are non-Spanish and tax resident in Spain is how inheritance tax works and what amounts are payable. Particularly if you come from the UK, it’s important to note that Spain does not, (generally), take into consideration the rules of other countries regarding IHT. Inheritance tax in Spain has no ‘double tax treaty’ with the UK, meaning Spain will not take into account any tax paid on this OR rules applicable in that country (for example, if there is no tax to pay in the UK there could be significant tax to pay in Spain).
They purely look at the amount you are inheriting and if you are a Spanish tax resident apply the following to work out how much tax you need to pay them (if any):
Inheritance tax starts from zero (allowances) and can reach up to 82% for a distant relative. Therefore, it’s imperative to understand what this number is should the situation arise, enabling you to plan effectively and maximise the remaining monies. It´s only my personal opinion but why would you not want, with proper planning, to maximise those ‘hard earned monies’ your relatives accumulated and left you over their lifetime?
On a side note, if there are relatives in other countries, (perhaps you have siblings), the Will can be set up to make sure you receive the same amount from the estate net of inheritance tax -the executor of the Will can deduct the tax from the ‘pot’ and then distribute accordingly – therefore the tax can be paid from all members receiving the inheritance not just yourself and enabling you to receive the same amount in real terms. This is something I have come across on a few occasions.
Another way is to receive any monies is as a ‘Gift’ whilst the donor is still alive, the tax on these is between 5-9% (again, the closer the relation the less tax you pay, so for a parent making a gift the tax would normally be 5%). Furthermore the location of the assets, (such as property in the UK), will make a difference to the amount paid.
As you can probably appreciate, by understanding these rules you can start to plan how and when best to receive any assets from relatives/parents. This is an area in which we work closely alongside tax advisers/planners almost every day, making sure our clients take sound financial/tax planning advice and a strategy is implemented to make sure the money is:
80+ state pension for UK persons those living abroad
If you do not receive the UK basic State Pension or you get less than £101.55 a week, you could get the difference paid up to this amount, as long as you were 80 years old before the 6th April 2016.
Other qualifying criteria are:
If you would like to discuss any of the topics above in more detail or you would like to have an initial consultation with Chris to explore your personal situation, you can do so here.
Click here to read independent reviews on Chris and his advice.
If you would like any more information regarding any of the above, or to talk through your situation initially and receive expert, factual based advice, don’t hesitate to get in touch with me.
By Chris Burke
This article is published on: 28th March 2024
Spring is well underway and it won’t be long before the wonderful feeling of summer is upon us – I personally can’t wait!
Part of my role is to make sure you are financially/economically smart and keep you up to date with ways to reduce taxes, increase wealth and anything else I feel an expatriate living in Spain should know. This month we focus on the following topics:
British Passports – additional months rule reminder!
If you are planning to travel to an EU country (except Ireland), or Switzerland, Norway, Iceland, Liechtenstein, Andorra, Monaco, San Marino or Vatican City, you must follow the Schengen area passport requirements.
Your passport must be:
Check your passport meets these requirements before you travel. If your passport was issued before 1 October 2018, ´´extra months´´ may have been added to its expiry date.
Surely this is obvious Chris you say? Well, since Brexit I am afraid not. Many people have passports which unknowingly have more than the 10 years validity on them and thus they travel to Spain thinking ‘great, my passport expires in October this year, more than 3 months after I arrive back in the UK from my trip to Spain’. However, the problem is Spain ‘doesn’t accept’ the extra 6 months that were added to the length of this passport.
I mention this because someone on my flight only recently was stopped from leaving the UK due to this. There are no alerts or checks from airlines even with online check-in until you get to the departure gate, a VERY painful way to find out. This applies to Spanish residents also!
Check your passport……. if it has the additional months, make sure you renew it before it’s not valid in Europe. New UK adult passports are now only valid for 10 years.
Inheritance & Wills – important tax tips
One of the FIRST things I tell anyone I meet professionally (whether they ask or not) is that the MOST important person to get on your side in Spain is a good tax adviser/accountant, particularly in respect of inheritance planning, and here is the reason why.
Depending on the relationship to the deceased, the value of the inheritor’s current assets, and the amount they receive, there could be a significant amount of tax to pay in Spain. Just by being organised in many circumstances this can be avoided.
Two case scenarios:
In these scenarios and depending on where they live in Spain, tax could be payable at a rate of up to 72%……………however, this could be avoided by various methods including using gift tax at 5-9% prior to death or changing some administration before the person passes on from this world.
PLEASE make sure you are organised from an inheritance tax perspective if you think this could have an effect on you. Knowing what the potential tax could be will enable you to make important decisions or plan to avoid this.
What were the best investments of 2023?
Hindsight is a wonderful thing.
However its always important to review and understand what has happened, why, and then decide if you need to change your approach towards most strategies in life, including investing.
Amongst many options, thematic investing has become more and more popular over recent years. To explain this approach simply, you are focusing on a trend/area that you believe will give you higher potential growth on your monies than in a more general investment. For example if you believe that Cyber Security is going to be an area that more people will spend money on in the near future and therefore a good area to invest in, you could target investments that focus solely or predominantly on this specific topic. Because you are being more focused and targeted, this attracts higher risk because your money is invested solely in that area. However, if you are correct then the returns/rewards are generally greater because you have channeled your money into that specific area rather than taking a general approach.
In 2023 it is clear that when you review which investment funds worked well, two key areas stand out more than most (I do not take cryptocurrency into consideration because many investment companies will not consider this, due to still being viewed as an unknown entity, and it being largely unregulated).
Strong performers in 2023 were:
However, it’s important to note that the year before this these were both two of the worst performing…….so how do you know what investment funds to pick, how long to hold them and when to make any changes?
Well, by education……by constantly being informed on a range of factors related to these areas, which could include the following:
Alongside this, considering your investment timelines, your goals and your appetite for risk/reward, then you can start to put together a strategy that with regular reviews and ongoing advice, with someone you trust, will give the best chance of success to achieve your savings and investment goals moving forward.
Click here to read independent reviews on Chris and his advice.
If you would like any more information regarding any of the above, or to talk through your situation initially and receive expert, factual based advice, don’t hesitate to get in touch with me.
By Chris Burke
This article is published on: 14th January 2024
When living in Spain it shouldn’t take too long to discover that personal finances work very differently from many other European countries, particularly the UK. Independent advice is hard to find – most people talk to their bank and are told that their main option is to invest in the bank’s own standard products and solutions, which for many people are not suitable or appropriate.
Many people from the UK are used to a more sophisticated way of investing, maximising tax efficiency and mitigation through solutions such as ISAs and pensions. These can greatly reduce the tax you pay making a big difference to the amount of money you end up with, in some cases incredibly so.
Is there a Spanish equivalent of a UK ISA?
In short, there is something very similar. It can greatly reduce the tax you pay as your investment grows and can even be set up for your children to benefit independently.
Are there Spanish equivalents of a private pension in Spain?
Yes, there are, however these are vastly different to in the UK. In the UK you can contribute up to £60,000 per year to a private pension. In Spain you can only contribute €1,500 per year. A self-employed person can contribute an additional €4,250 per year. Very few employers in Spain have their own pension schemes and those that do have a limit of €10,000 per year that can be jointly contributed to.
How does the equivalent of the UK ISA in Spain work?
As your money grows any gain you make is not taxable until you receive this money (achieving compound growth). When you access this money, any gain is offset proportionally against the original investment amount, and as such removing this proportion of the gain. For example, if your investment grows by 50%, any partial withdrawals you make have this portion deducted against the gain you have made. Over the years this can make an incredible difference to the tax you pay, particularly as this investment income falls under Capital Gains tax (savings tax) and not income tax, which can become VERY important when paying tax on your monies (pension income falls under income tax).
As a reminder, the tax rates are:
Capital gains tax ranges from 19-26%, income tax from 24-47%.
Many people use this option for their mid-term and retirement planning because they have some flexibility, are portable should you move elsewhere and are also highly tax efficient and compliant in Spain.
Important note on UK ISA’s
Whilst UK ISAs are tax efficient in the UK (all gains are tax exempt), as a Spanish tax resident this is not the case – any gains that arise in your UK ISA must be declared annually and tax paid on these even if you do not access the money. This makes UK ISAs as a Spanish tax resident very inefficient and why many people look for alternatives.
UK ISA Tip when moving to Spain
Before you become a Spanish tax resident, if you encash your UK ISA you realise any gains that would be taxable when you become a Spanish tax resident. This not only includes any annual gain, but more importantly the gain from inception, which as a Spanish tax resident you would be liable for when you encash.
If you would like any more information regarding any of the above, or to talk through your situation initially and receive expert, fact based advice, don’t hesitate to get in touch with Chris.
Click here to read independent reviews on Chris and his advice.
By Chris Burke
This article is published on: 10th October 2023
The clocks go back in a few weeks, so enjoy the last of the summer evenings before its time to get the winter wardrobe out and get cosy!
This month’s Top Tips are as follows:
Wills – why almost everyone should have one
If you die whilst living in Spain or owning property/assets here, the expression is known as dying ‘intestate’. To quote why you should not want this to happen (apart from the obvious!) the Law societies words are as follows:
“Dying intestate not only means your final wishes will probably go unheeded, but the financial and emotional mess is left for your loved ones to sort out. This need not be your final legacy.”
So, if are not bothered about the administration you leave behind, the only circumstances under which I would suggest you might not want a Will (I still think you should, but it’s your choice) are if you are single or married with no children.
If you have children under the age of adulthood, in my professional opinion there are no excuses for not having a Will for the following reason: God forbid something should happen to both parents, how would the law know who you would want them to be raised by and how? Those left behind (grandparents for example) may not agree with your wishes but they should respect them. Imagine if you didn’t stipulate and the state decided against your families wishes………………….
Building a pension in Spain, quick example
“Chris, I want to save for retirement but I note the annual amount you can save into a private pension in Spain is €1,500, what options do I have?”
Well, some people tell me they could overpay into the state pension to obtain more, I say good luck with that. One of the ways they now calculate this is the average of the last 25 years of your salary/income, so the days of a great Spanish state pension for most are over.
I could go into great depth here but for ease’s sake, the following saving / investing example could give you an income of approximately €25,000 per year, so along with a full UK state pension that would give you a total income of approximately €38,000 per year and hardly any tax to pay:
I did say it was quick! This is of course is in tomorrows money (inflation roughly doubles every 24 years). With my clients we go into much more depth and analysis, but it gives you an idea.
Why have your investment in a tax ‘Wrapper’ rather than a platform?
Because of Tax, Tax, Tax!!!!!
Need I say anymore, THE most important aspect to consider as a Spanish tax resident.
When you withdraw money from an investment platform you are taxed on the ‘profit’ you take out. So, for example you start/invest €100,000, it grows to €120,000, you withdraw €10,000, tax is payable on the €10,000 as that is profit.
However, with a ‘tax wrapper’ you pay a different tax, Spanish Proportional tax, which is calculated by the following formula:
Initial investment amount, divided by current investment value, multiplied by the amount you are withdrawing.
So, to copy the above example, you start/invest €100,000, it grows to €120,000, you withdraw €10,000, tax is payable on the gain proportionally which is calculated the following way:
€100,000 divided by 120,000 multiplied by €10,000 = €8,333.
This €8,333 is the amount tax exempt, so you are ONLY taxable for €1,666 as opposed to €10,000 for an investment platform gain.
You can also add Children over the age of 14 to Tax Wrappers who benefit from this in the future, as well as partners/spouses. So, the additional cost of the Tax Wrapper can more than outweigh the tax savings over time.
Some of today’s Tips can be quite complex, if you are not sure don’t hesitate to get in touch.
1980’s advert
For those of you who don’t know me that well, I am a bit of an 1980’s fan. I was brought up on prawn cocktail, roast beef with all the trimmings and trifle for pudding. I still even now listen to 1980’s music channels………anyway, I am going to share each month some of my favourite TV commercials from back then until you tell me to stop OR I get inspired with something else!
Looks like we’ve overdone it on the…………
Click here to read independent reviews on Chris and his advice.
If you would like any more information regarding any of the above, or to talk through your situation initially and receive expert, factual based advice, don’t hesitate to get in touch with Chris.
By Chris Burke
This article is published on: 18th September 2023
Well, thank goodness that heatwave is over and I can venture out during daylight hours again! September and October for me are the absolute best times of the year here in Spain, great comfortable temperatures, less people (tourists) around and the sea has been warmed up over the summer.
This month’s Top Tips are as follows:
One of the most common questions people ask me is ‘As I am not on the Beckham Law, how can I reduce my taxes?’ One of the first questions I ask them is ‘how much time do you travel for work outside of Spain?’ If you travel for 2 weeks or more every month, in simple terms you might not to have to pay tax for those days you are away – a significant saving and you may have a tax exemption of up to €60,100 per year.
The key qualification factors are as follows:
If you adhere to all these points then this tax exemption could be applicable for you – please ensure you take professional advice.
Property is, in my opinion, a great asset to hold and one that every investment portfolio should have. Just like ‘non-property’ investments, the value can go up and down. It can be more ‘hassle’ to manage taking into account tenants, taxes, issues with the property etc. but long term it has usually been a good investment. Governments are starting to make being a landlord a more expensive venture in the UK now – let’s see if Spain follows suit.
Since covid we have seen that property prices have generally boomed. However, the last 12 months or so things have started to change. New Zealand is in the midst of a property crash, down approximately 18% in a year. Canada is also in a property ‘recession’, down by approximately 15% year on year (most of you probably won’t have heard about these – the news outlets tell you what they want you to hear). Property, just like investment portfolios, does not only go one way, as in up. This year, for the first time in a long time (probably 15 years), I have been advising some clients to sell their UK property investments if they don’t think they will go back there, and it makes sense from a tax perspective. If you are living outside of the UK, at some point you are going to have a decent sized taxable gain/event on that property, (more so in Spain) and even if it is inherited by someone else, it’s unlikely that even then the tax will be avoided/mitigated.
In the UK, properties valued at up to around £600,000 are ‘still moving’, estate agents tell me. Many people over the next year or two will be coming off fixed rate mortgages they took out during covid (when interest rates were low) and their new mortgage repayments will at least double under current rates. They will have the choice to either swallow this extra monthly cost or sell (some will have no choice). Taking all of this into account, forecasters are predicting the UK property market will decline – it is already stumbling at best, with a slow down in sales and asking prices not being achieved generally.
In Spain things are slightly different, and one of the driving factors is that you can fix your mortgage rate for life, meaning you have much more stability of payments moving forward – they can only reduce (if you re-mortgage when rates come down…if and when they do). Research says that the property market is booming in Spain. However, with approximately 15% of the property bought in Spain last year acquired by foreign buyers, taking into account what’s happening elsewhere an economist might say this impact will inevitably have a ripple effect at some point.
Some professions will always be able to be performed from home, however many companies are also starting to ask employees to return to the office. This could put an end to ‘we can work from anywhere, let’s go and live on an island/in the countryside’.
In summary I would say the Spanish property market is at best coming to a slow down, at worst a decline of some proportion. Of course, if you are holding this property for the long term then this will be of less importance. But considering the prices are the highest now they have ever been, and mortgage rates are much higher than they were, taking on a property now might mean you ‘have’ to hold it for a long time to realise its value.
A good adviser will make you more knowledgeable, financially organised, take the strain away from your finances, make your money work hard for you and always be there for you with sound advice whenever you need it (even if they don’t know all the answers, they will do their best to get them for you), always putting your needs first.
Do you remember this timeless, funny classic:
Now you can Identify as a Tree……who would have known back then!
If you would like any more information, or to talk through your situation initially and receive expert, factual advice, don’t hesitate to get in touch with Chris.
By Chris Burke
This article is published on: 16th August 2023
Savings accounts or investing in Spain – what is right for you?
This is one of the most common questions I am asked, and with interest rates creeping up I thought it prudent to run through how you should decide what’s right for you.
To help with this, firstly we need an explanation of the important differences between the two:
Why would you put money into a savings account?
Saving is putting money aside in a deposit account for the next few years. When interest rates are low, the return you’ll get on your money will be very modest. The risk is that it won’t beat inflation, which is the rate at which the prices of goods and services increase. So, whilst your money is safe (covered up to £85,000 in the UK and €100,000 in Europe), its purchasing power will be eroded over time, meaning you will be able to buy less with your money in the future. When interest rates are high you will get more return on your money, but generally in this type of economic climate it will still be less than inflation. Because of this, money you keep in cash savings accounts should be for short term savings of less than about 5 years.
Why would you invest your money?
Investing is another way of setting aside money for the future, where you invest your money into something with the aim of making a profit in the long run. When you invest, you’re generally exposed to the risk of stock market volatility (although some investments don’t invest entirely or solely in these markets). Your expected returns can fluctuate and you may not get back what you put in, especially in the short term.
You should aim for a minimum of 5 years when investing and start planning ahead with your investment strategy to manage this risk a few years before you want to access your money.
“Save for what’s around the corner and invest for the future”.
Why take any risk with your money?
Firstly, as explained above, inflation will eat into the power of your money over time. This is a problem while you are working, but is particularly important to manage when you are retired and you cannot replace lost buying power with income from your job. Secondly, not all investment risk is equal. The benefit of taking a calculated amount of risk over the long term is that it gives you the potential to make much more money than you would from a savings account, helping to pay for future large expenses and a more comfortable retirement.
What is the trend when interest rates are high compared to investing in the stock markets?
Over a short timeframe, holding cash in a savings account is usually a safe and appropriate option. It is less risky in the short term as it is readily accessible and interest rates are currently attractive relative to the past few years.
However, time is the critical factor to consider here, as over the longer term cash won’t beat inflation but investing should, as can be seen in the chart below:
Over long periods of time there is a big difference in the returns achieved from saving and investing. In the short-term, investing is riskier than an interest-bearing cash account, however when compared to inflation investing has offered far more certainty and success in the long run.
Prudential 90’s advert
Do you remember this timeless, funny classic: We want to be together!
The principles remain the same even today……
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If you would like any more information, or to talk through your situation initially and receive expert, factual advice, don’t hesitate to get in touch with Chris.
