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By Gareth Horsfall
This article is published on: 16th September 2026
Over the summer I have been seeing alot written about AI, most of which I take with a pinch of salt, but one headline that appeared in my inbox was the following:
Bot and AI overtake human-generated web traffic for the first time; we are in the age of the “Dead Internet”
According to data from Cloudflare, automated bot and AI agent traffic has surpassed human-generated web traffic for the first time in history, with 57.4% per cent of requests to websites it hosts being automated bot requests, while only 42.6% originate from human users. Matthew Prince, co-founder and CEO of Cloudflare, expressed surprise at the speed of the transition from human-generated to computer-program-generated content. He expected this would happen towards the end of 2027.
This, for me at least, is alarming. Not because automated AI generated content will surpass human generated content, I think that was almost inevitable but because AI models are all fishing in the same pond. I don’t know enough about how well AI can generate new creative ‘original’ ideas, but I am almost certain that it will never surpass the human capability to create and innovate, therefore it does leave you wondering to what extent the information we are getting from Chatgpt or Claude, or any other open source AI model, is just recycled from the same information which AI put there in the first place. I am sure the more technologically advanced amongst you may be able to educate me on this point, but unlikey to convince me that the loss of original human generated content is not just a loss for us all, but also very dangerous when looking to make important decisions based on information which for all intents and purposes can be wrong. The level of error in AI generated search results, for example, is something that worries investors in its longer term application.
(Please remember that my Ezine’s are human generated and researched (using minimal AI input)!
Having said all this above, we have no choice but to adapt. Here is a good point to tell you a personal story about my own family name history. I have written about this before but it is good to remind you of it, given the context.
My name is Horsfall!
For those of you who are familiar with industrial revolution history in the UK, you may be award of the Luddites. In Huddersfield, where I am from, they were a group of people who worked in the textile industry and who were involved in the finishing of cloth by hand. The introduction of machinery, which both streamlined the operation and made it much quicker, put their jobs and livelihoods at risk and as a result they organised themselves into groups who went around the mills destroying machinery. In 1812, a man named William Horsfall (a direct line ancestor), a mill owner himself, and a vocal opponent of the Luddites, was also an advocate of installing machinery in his factories, to modernise, streamline and introduce efficiencies and greater productivity. On his horse, coming back from the market one Tuesday morning, he was shot and killed by the Luddites. This culminated in the death of the Luddites movement because the police immediately swooped in to avoid similar occurrences happening. However, the term ‘a Luddite’ became synonymous with people who are opposed to technology, automation and modern working methods. (If you want to see the full family story you can click HERE)
Personally, I don’t like AI in it’s present form (although I recognise it’s application in business to make things easier), but I know it’s here to stay and as Jensen Huang CEO of Nvidia recently said:
“You are not going to lose your job to AI, but you are going to lose your job to someone using AI”
Here are a couple of interesting slides about AI, courtesy of our friends at Evelyn Partners Investment Management
This slide particularly interests me because it goes to show the power of human ingenuity. As we can see, apart from the great depression, unemployment levels have largely hovered around the 5% mark since the 1700’s, over which time we have seen the introduction of so many new technologies – in no particular order: the train, car, aeroplane, the telephone, machines in factories, the radio, TV, the washing machine, going into space, the cell phone, computers, the internet, and now AI.
I think one of the best examples of this human adaption is the job of the influencer. 10 years ago, internet influencers never existed. Yet now, people are making millions from online ad revenue, quite often it is completely useless content, but which creates the clickbait required to generate income. It is also becoming a life saver for certain sectors, such as farmers, to sell direct to the public instead of through distributors or to supermarkets. The internet and now AI has, in a way, democratised the world of work in professions which, previously, had been reserved for a select few. Now, more opportunites are available to the masses.
I have noticed this myself because in my efforts to understand the world of the land a little bit more, I have done a lot of research online and come across many people who have created Youtube or TickTok channels, producing short videos on the things they do on their land and the methods they use. One development I have noticed is that when these influencers seem to reach a critical mass of followers, subscribers and likes, then they suddenly start appearing with tools sponsored by certain companies and they start writing books for sale. It is well known that generating revenue through subscribers, followers etc is not going to a create a big and reliable long term income stream, but ancilliary product and services, sponsors and driving traffic through your website, seems to be the way to go.
However, the influencer space may also be a ‘job’ under threat, with the rise in automated traffic, as explained above, this presents challenges to their economic model. Bots do not click on ads, which raises questions about how content creators can generate revenue in an increasingly bot-dominated landscape. As a potential solution they could charge bots for access to digital users’ content. Like every other employment, it will have to adapt to a rapidly changing future.
I will finish my section on AI with this, because it really puts into context why AI, robotics and automation are going to play an increasingly large part in our lives.
At the beginning of August new jobless claims were announced in the USA. New filings for unemployment benefits dropped to 187,000 for the week ending July 18 — a nearly 57-year low, and a much bigger drop than economists expected. This is probably not a cyclical blip. It’s demographics finally showing up in the data. Birth rates across the developed world — the U.S., Europe, Japan, China, South Korea — have been falling for decades, and it’s finally catching up. Fewer young workers are entering the work force every year than are retiring from it. This is basically a structural worker shortage, and jobless claims sitting near six-decade lows is exactly what you’d expect that shortage to look like on paper: a “low-hire, low-fire” economy where employers are desperate to hold onto the workers they already have. (I think about our friends in N.Italy who run a number of bars and they can never find trained staff and spend most of their time interviewing, hiring and firing. It has become their biggest headache). However, a labor shortage this bad can’t be solved through immigration, fast-enough, to mitgate your way out of a birth-rate collapse, and you definitely can’t train workers who don’t exist.
The only option left is productivity — which means robotics, automation, and AI aren’t optional anymore. They’re the only way to keep the economy growing when the number of available humans is shrinking. That’s why capital is pouring into automation and AI — this is not an passing fad, this is the innovation cycle!
Many of you have quoted me headlines that there is an AI bubble just waiting to burst and that a market crash will be lead by over speculated AI stocks. There is probably some truth in the fact that there are companies out there who have overly inflated valuations due to the hype around AI. However, the question is whether a revaluation of these stocks alone would be enough to generate a full market crash, or maybe a correction.
Major innovation cycles have never been cheap, and they’ve never been non-inflationary. Every prior boom — the 1970s energy and productivity shock and others — was accompanied by a commodity repricing. Building new infrastructure and new machines at scale means real demand for real materials.
Put it all together: a demographic worker shortage forcing an automation super-cycle, requiring a huge amount of hard assets (commodities) to build it all out. The smart money has already moved away from the speculative AI firms who may see a revaluation sometime soon, into the resource based companies who are going to be building the infrastructure to take us into this innovation era.
By Barry Davys
This article is published on: 16th January 2024
If you have assets outside of Spain you may need to report these to the Spanish tax man on the Modelo 720. In effect it is a “census” as it does not trigger any payment of tax. However, it does help the Hacienda cross check information.
If you have bought or sold an overseas asset in the last calendar year, you may need to submit a M720, even if you have previously submitted a form. Also, if the value of your overseas assets have increased by more than 20,000€ since you last submitted a form you may also need to re-submit. If the answer is “Yes” you must submit your form before the 31st March.
Here is a link to the obligation to report on the Agencia Tributaria (Hacienda) website which lays out if you need to report your bank accounts, investments and properties that are outside of Spain. Google Translate does a good job of translating this, if needed.
You may have seen in the press that the European Court ruled on the M720 rules. I am pleased to report that the fines for non-reporting or mis-reporting have been struck out by the court and new, much lower, fines will be put in place.
Please note that we are seeing articles saying the M720 is no more. This is not the case. In fact the court, whilst removing the very high fines, also said in it’s ruling that they could see the need for the M720.
By Chris Webb
This article is published on: 5th March 2022
We are fast approaching the 2022 deadline to file the Modelo 720.
Here we are in March 2022, nine years on from when the Spanish authorities launched their new “anti-fraud” plan to prevent tax evasion. We were initially advised it was aimed at Spanish nationals trying to hide their assets overseas, but quickly realised that most people affected were the International community with assets back home……
This law was introduced back in 2013, at the time the authorities didn’t really highlight this requirement very well and most of the country were not aware it had been passed. Fast forward to 2022 and I am still meeting people on a regular basis who have never heard of it.
So here it is, a brief outline of the Modelo 720 and what you need to do.
WHO HAS TO REPORT?
Any person, permanent establishment or company who is tax resident in Spain and is the owner, titleholder, representative, authorised person, beneficiary, or has disposal powers of assets located outside of Spain worth more than €50 000 (see assets below), must report the value of these assets.
WHEN DO YOU REPORT?
Between 1 January and 31 March of each tax year.
WHICH ASSETS MUST BE REPORTED?
There are three main asset classes that need to be reported if the total value of each class is over the €50 000 limit:
Bank/Building Society accounts located outside of Spain – It is important to note that if you hold several bank accounts and the TOTAL amount held exceeds the €50 000 limit, then ALL the accounts need to be reported, even those with a nil balance.
Investments / Life or disability insurance policies – If you are the owner or policyholder of an investment or insurance policy then these will need to be declared if they exceed €50 000. Again, there is a requirement if you have multiple investments or policies, that if the total value exceeds the limit then they will all need reporting. Interestingly if you are holding what we describe as Spanish compliant Life Insurance Bonds, then the onus of reporting on the Modelo falls to the institution themselves.
Property – Owners or part owners of an overseas property where the value exceeds the limit must report these properties.
NOTE – You need to report the Modelo 720 again if any of your asset classes have increased by over €20.000 since they were last reported
WHAT IF YOU DON’T REPORT IN TIME / CORRECTLY / OR AT ALL?
This is where things have changed in 2022. Previously The Spanish Tax Authority had implemented a series of heavy penalties for those who do not comply with the regulation.
These penalties can be imposed for late filing, incomplete/inaccurate filing and even for presenting the information to them in a way not deemed acceptable. Pre 2022 these fines could equate to 150% of the asset value. In a recent European court ruling these fines were deemed excessive and have been ruled out by the authorities. It is important to note though that the courts did agree a need for the Modelo 720 itself.
Whilst the excessive fines have been struck out please don’t think that there are no repercussions for not filing. The Spanish authorities will release a new penalty / fine structure that will be more acceptable to the European courts.
For further information you can visit the Agencia Tributaria website here Modelo 720 to see the latest information, in Spanish.
If you need any guidance or have any queries regarding your Modelo 720 please let me know.
By John Hayward
This article is published on: 28th January 2022
Although the ECJ has not stated that the Modelo 720 (the declaration by Spanish tax residents of assets outside Spain) is illegal, the European Court of Justice agrees with the European Commission that Spain has failed in its obligations under the free movement of capital because Spain has been charging disproportionate fines for non or late disclosure. The ECJ notes that Spain does not treat the disclosure of Spanish assets in the same way.
Spain has seemed to ignore pressure before on this subject but the ECJ has stated that, if Spain does not address this issue, Spain will face large fines. Perhaps this time Spain will act.
In 2013, the Spanish government launched an “anti-fraud” plan to prevent tax evasion. It appears that this was originally aimed at Spanish nationals who were “hiding” their money outside Spain, but it soon became applicable to non-Spanish nationals living in Spain.
The Modelo 720 has to be completed by 31st March of each year and is based on assets held as at 31st December of the previous year. In general, you will be deemed tax resident if you are in living in Spain for more than 183 days of a calendar year (which is the same period as the tax year).
By Cedric Privat
This article is published on: 15th February 2021
Que vous viviez en Espagne depuis de nombreuses années ou que vous soyez un nouvel arrivant, vous êtes soumis à certaines déclarations obligatoires et devriez donc être concernés par une ou plusieurs échéances listées ci-dessous.
Ces dates sont inchangées depuis plusieurs années et devraient le rester.
Déclaration informative mais obligatoire sur les biens et avoirs à l’étranger. Vous devez présenter ce Modelo 720 si la somme de vos actifs est supérieure à 50 000€ dans une ou plusieurs des trois catégories:
Les années suivantes, il n’est demandé de représenter le Modelo 720 qu’en cas d’augmentation de plus de 20 000€ par rapport au capital initialement déclaré.
Des sanctions sont possibles en cas de non respect de cette déclaration.
À déposer avant le 31 mars.
La déclaration d’impôt se fait entre les mois d’avril et juin. Vous pouvez soit l’effectuer directement sur internet, soit prendre rendez-vous avec un
conseiller du Trésor Public (Hacienda), soit léguer cette tâche à un “gestor” (conseiller fiscal).
L’année fiscale en Espagne va de janvier à décembre, vous déclarez donc vos revenus de l’année précédente.
En Espagne les impôts étant prélevés à la source, Agencia Tributaria n’effectuera qu’une vérification. Dans la plupart des cas, vous ne paierez pas de supplément.
À déposer avant le 30 juin.
Impôt sur le patrimoine: cette déclaration est obligatoire si votre patrimoine brut (sans déduction
des dettes) est supérieur à 2 000 000€ ou votre patrimoine net supérieur à 500 000€.
La résidence principale est exonérée jusqu’à 300 000€.
À déposer également avant le 30 juin.
Afin de vous aider à mieux comprendre la fiscalité en Espagne, Spectrum a créé le “Guide des impôts en Espagne 2021” (document en anglais).
Ce guide vous aidera à comprendre les règles de résidence fiscale locale et les impôts sur le revenu, les successions, les investissements, la propriété et les retraites.
Vous pouvez librement télécharger ce document sur notre site et dans le même temps, si vous le désirez, vous abonner à ma newsletter “actualités financières et fiscales en Espagne”.
spectrum-ifa.com/cedric-privat/spanish-tax-guide-cedric-privat
Je reste à votre disposition pour vous apporter des informations complémentaires.
By Chris Burke
This article is published on: 15th January 2021
Whether you have lived in Spain for a while, or are new and trying to understand when you need to submit to the various deadlines, including taxes and overseas assets, I have listed below in an easy to read format what you have to declare and when, to help make your life more simple. These have been the same for the last few years and so should remain moving forward. If you would like help in understanding, declaring and any other questions don’t hesitate to get in touch.
End of January 2021
FORM D6
Stocks, bonds and investment funds that are outside of Spain and are not Spanish compliant. (this is to compliment and not replace Modelo 720). Failure to comply with the obligation to submit this Form D6, can lead to a fine of up to 25% of the undeclared amount, with a minimum of €3000. Late declaration entails penalties ranging from €300 in the first 6 months to €600 after that deadline.
End of March 2021
MODELO 720
This is a declaration of assets outside of Spain value of €50,000 or more. Once declared you only need to do this again if the value of any asset (e.g. a bank account) has risen by more than €20,000). The authorities can fine you anywhere between 100 and 10,000 euro for failure to meet the requirements (as of 2019, the European Union considers Spain to be breaking EU law with these sanctions for people who file the Modelo 720 late).
End of June 2021
Declaración De La Renta
Your annual tax return, showing all assets and worldwide incomes, must be declared for assessment by this date. Not all assets will be taxable, depending on how they are structured. In Spain the financial year runs from January through to December, and in June you are declaring for the previous calendar year’s finances.
Wealth Tax declaration – Catalonia
Wealth tax is applied if your worldwide assets are more than 500,000€ with an additional allowance of up to 300,000€ for your main residence. The tax is based upon your net wealth: assets minus liabilities. In Catalonia the rates of tax start at 0.21% and rises to 2.75% depending on your wealth each year and is taken from the 31st December the previous year. There are ways of mitigating this tax by having your assets structured correctly.
What role do Chris and The Spectrum IFA Group perform?
I am a financial planner/Wealth Manager and we specialise in optimising clients’ assets, including strategies to minimise taxes both now and in the future. We manage clients’ savings, investments and pensions whilst understanding what these are and the role they will play in their lives. I do my best to continually keep clients informed of anything they need to know in respect of these topics.
By Chris Burke
This article is published on: 26th February 2020
Just a reminder that time is running out for submitting your Modelo 720 declaration for 2020. The deadline this year is the 31st March and is fast approaching.
All those tax resident in Spain (those living in Spain for more than 183 days a year or where Spain is the main base for your business) should be aware that as a result of legislation passed on 29th October 2012, residents in Spain who have any assets outside of Spain with a value of €50.000 (or alternative currency equivalent) or more, are required to submit this declaration form to the Spanish authorities.
This declaration can be made online, through the Tax Office`s web page www.agenciatributaria.es where the Modelo 720 formcan be located (type in Modelo 720 into the search block on the top right hand side of the page). It must be filed between January 1st and March 31st of the first year of residence to avoid being investigated or fined by the Spanish authorities. I would personally recommend speaking with your accountant / Gestoria to avoid mistakes.
To warrant a declaration the total value of assets should exceed €50.000 in each or any one of the categories; e.g. if you have 3 bank accounts and totalling up all the balances it exceeds the €50.000 limit you are subject to making the Modelo 720 declaration. However, if you have a bank account at €30.000 and, say, investments valued at €30.000 then there would be no reporting requirement as they are in separate categories and each individual total value does not exceed the €50.000.
A declaration must be submitted individually, regardless of the percentage of ownership (in joint accounts). For example, if you have a joint bank account with a value exceeding €50.000, although your particular (say €25.000) share is below the threshold, each owner would still be required to submit an individual declaration based on the total value of the account.
Although this declaration of assets abroad is solely informative and no tax is charged, failure to file, late filing or false information could result in fines.
For this reason, we recommend that everybody arranges to declare their assets. Once you have made your first declaration it is not necessary to present any further declarations in subsequent years, unless any of your assets in any category increases by more than €20.000 above the initial value declared.
By Charles Hutchinson
This article is published on: 16th January 2020
We now have a new government here in Spain, albeit quite far to the left which could cause some more interesting changes in taxation. Watch this space.
WEALTH TAX
So far, the reinstatement of the 100% allowance for Wealth Tax (which was approved in 2011) has been delayed again for one more year as part of the 2018 budget extension, due to the recent era of no federal government being in place. Nor has the Junta de Andalucia made any moves to reinstate the allowance in the 2020 budget either.
MODEL 720 DECLARATION OF FOREIGN ASSETS
On the 23rd October 2019, the EU Commission filed a complaint in the European Court of Justice to the effect that Spain has not complied with the Commission’s findings in November 2015 namely that Modelo 720 deters businesses and private individuals from investing or moving across borders in the Single Market. Also these provisions are in conflict with the fundamental freedoms in the EU; this conflict affects free movements of persons, free movement of workers, freedom of establishment, freedom to provide services and the free movement of capital.
Furthermore, the Commission has claimed that by introducing late filing penalties and the labeling of these foreign assets as unjustified capital gains (which are not subject to the statute of limitations), it has breached EU law. Additionally, whatever the amounts involved, they are all subject to tax at the top marginal rate (45% in 2012) plus a fixed penalty of 150% in addition to the tax and further fixed penalties for failure to file, which are higher than the general rules on similar infringements. Spain, therefore, is liable to comply with EU law and to pay costs.
Although precedence does not exist in Roman law, a precedent was set in 2011 when the EU successfully prosecuted Spain over discriminatory Inheritance and Gift Tax rules. This ended with a Court resolution in 2014 that led to an amendment in Spanish Law and opened the door for reclaims of taxes paid over the previous 4 years.
The issue of the Declaration continues to be of great concern to many people in Spain, particularly the expatriate community. Some of the most vulnerable assets are foreign bank accounts. These can be easily switched into other foreign assets where reporting under Modelo 720 is not required and the taxation of income from them (if taken) is greatly reduced.
If you have concerns in this area, please contact me where I can assist you with the problem.
Source: JC&A Abagados, Marbella
By Cedric Privat
This article is published on: 25th January 2019
Qu’est-ce que le Modèle 720 ?
En 2013, le gouvernement espagnol décide de s’attaquer à la fraude fiscale. Il met alors en place un certain nombre de mesures.
Visant en priorité les nationaux espagnols, cette réforme affecte également les étrangers vivant et/ou travaillant en Espagne disposant d’un patrimoine en dehors de la péninsule Ibérique.
Le Modèle 720 est une déclaration informative mais obligatoire sur les biens et avoirs à l’étranger.
L’objectif de cette démarche est de disposer d’informations sur:
– les comptes bancaires situés à l’étranger
– les titres, droits, assurances-vie et placements gérés ou acquis à l’étranger
– les biens immobiliers et les droits sur les biens immobiliers à l’étranger
Ce formulaire dûment rempli doit être présenté entre le 1er janvier et le 31 mars, uniquement par internet (via le site “Agencia Tributaria – Modelo 720 Declaración Informativa. Declaratión sobre bienes y derechos situados en el extranjero”).
Qui doit présenter le Modèle 720 ?
Toute personne physique ou morale résidant sur le territoire espagnol (plus de 183 jours par an), et uniquement si la somme de ses actifs est supérieure à la somme totale de 50 000€ dans une ou plusieurs des trois catégories.
Les années suivantes, il n’est demandé de représenter le Modelo 720 qu’en cas d’augmentation de plus de 20 000€ par rapport au capital initialement déclaré.
Quels sont les risques en cas de non-présentation?
Même si cette déclaration n’a pour but que d’informer, le gouvernement espagnol menace d’appliquer de lourdes sanctions en cas de non respect de cette mesure.
– 5 000€ pour toute information incomplète, erronée ou fausse, avec un minimum de 10 000€ d’amende par déclaration.
– 100€ par information, avec un minimum de 1500€, si la déclaration a été déposée au delà de la date limite.
– Si l’Hacienda se rend compte de l’absence de déclaration, les sanctions annoncées sont extrêmes (par exemple, 150 % de la valeur du bien, plus-values sur tout patrimoine non justifié)
De nombreuses plaintes ont été déposées afin de contester ces sanctions excessives et injustes, la commission européenne serait également en contact avec les autorités espagnoles sur ce sujet.
Néanmoins, il vous est fortement conseillé d’effectuer cette déclaration afin d’éviter tout problème avec Hacienda.
Plusieurs conseillers fiscaux francophones à Barcelone, dont je me propose de vous fournir les coordonnées, peuvent vous apporter leur aide pour remplir ce formulaire.
Je reste à votre entière disposition pour vous fournir tous renseignements complémentaires.
By The Spectrum IFA Group Spain
This article is published on: 11th July 2018
If you are considering a move to Spain, or have recently arrived, there are a few basic steps to follow which will help with managing and improving your finances. The list below is intended for general guidance only, but refers to some of the key points consider as part of your early financial planning.
Whilst departure terms between the UK and EU are yet to be finalised, the status of British expatriates living in Europe has largely been agreed, in principle at least. From state pension escalation, to health care cover and rights on residency and employment, first phase negotiations concluded (eventually) with consensus on protection of citizens’ rights.
Of course, agreement still needs to be formalised and as the EU/UK progress agreement highlights, ‘nothing is agreed until everything is agreed’. But for now, at least, it is looking like existing expatriates’ rights are likely to be recognised beyond April 2019.
From the initial and legally binding ‘pago de arras’, the legal process of buying a property is markedly different from UK conveyancing.
It is important to engage a knowledgeable lawyer, ideally English speaking if you do not speak Spanish. Your lawyer will liaise with and arrange your meeting with a notary, which is legal a requirement in Spain for the property buying process. Resident and Non-resident tax obligations vary and require reviewing on an individual basis.
Seek guidance on the wide range of borrowing options available, from the national banks to smaller regional lenders. An independent mortgage specialist will identify the most competitive and flexible mortgages available and ensure suitability for your specific borrowing requirements, as well as introducing you to trustworthy and reliable legal and professional services, a must in Spain when purchasing or selling property. It is important to note that banks do not make mortgage offers without the property being secured. (See below for our independent mortgage brokers, Spectrum International Mortgages Spain)
Familiarise yourself with the various current and savings accounts available, from the cuenta corriente (current account) to tax efficient ‘Cuentas de Ahorro’, or savings accounts. It is important also to note that bank managers tend to move branches frequently, so finding a bank you like is more important in the longer term than a friendly bank manager or ‘Director’.
Please note you cannot choose where to be tax resident. The law dictates when this will happen and you do not necessarily have to complete any forms to be treated as tax resident. If you meet one of these following conditions you will be a tax resident:
● If you are in Spain for more than 183 days in any calendar year
● If your “centre of interests” are considered to be in Spain eg. If your main income is in Spain, your main home is in Spain or if your spouse and children live in Spain.
● Residency commences from the first day that you declare Spain to be your permanent home.
When you move to Spain, the Spanish tax authority becomes your controlling tax authority, even if you pay tax elsewhere. The tax year is the calendar year. Worldwide income needs to be declared annually (between April and end of June) and the relevant form is called “La Renta”. (Income taxes and capital gains tax are called IRPF). UK source income from dividends and property rental, whilst taxable in the UK, should also be included in your Spanish tax return. The double tax treaty between Spain and the UK should ensure an accurate tax assessment, but it is important to check that liabilities have been calculated correctly.
Note too that tax-free investments in the UK, such as ISAs and premium bonds, do not hold the same favourable status in Spain. For permanent and long-term Spanish residents, there are tax efficient alternatives available (see Investment section below). Without exception, make full disclosure of income and assets, recognising that there is automatic exchange of tax and financial information between the two countries, under global Common Reporting Standards adopted by the EU in 2017.
The Modelo 720 or M720 is a requirement for all Spanish residents, including foreigners, to complete. It is an informative overseas asset declaration for assets of over 50,000 euros including property, banks accounts, offshore investments, shares and other assets. This declaration needs to be completed by March 31st following the first full fiscal year of residency. As this declaration can only be completed electronically we highly recommend the involvement of a qualified ‘gestor’ or tax accountant, as hefty penalties could be imposed for providing erroneous information.
Wealth tax obligations change on a regular basis and vary between autonomous regions, so obtaining the latest local rates applicable is important.
For employed individuals earning over 60,000 euros pa and having not been resident in Spain for the past 10 years before becoming tax resident, the possibility exists of being paid as a non-resident for tax purposes and up to five full tax years. The rate of income tax is 24% plus you avoid the need to declare M720. It is available to company owners as long as they (and their immediate family) do not own more than 25% of the shares. The ability to join this scheme needs to be assessed on a case by case basis.
This is a subject that causes some confusion on moving to Spain. In Spain, it is the beneficiaries that are assessed for Inheritance tax. In the UK it is the estate of the person who has died that is assessed for Inheritance tax. This means that different planning is required in Spain although it is possible to plan for both the UK and for Spain in some circumstances.
Like wealth tax, inheritance tax varies from autonomous community to autonomous community. Advice in the community where you are living is therefore very important.
Spain’s comprehensive and efficient healthcare system is considered to be at least on a par with the UK and better in many areas. It is generally accessible to expatriates but the extent of cover available to you, and how to secure access to it, depends on individual circumstances. Eligibility for a Tarjeta de Salud or holding suitable private health insurance, or a combination of the two, are essential to avoid unexpected and expensive bills for medical treatment. This especially applies to dental treatment which is typically very costly in Spain.
Relying on your bank for foreign exchange transfers is generally an expensive option. Numerous currency transfer specialists provide not only competitive terms and secure, swift transactions, but a range of other benefits including on-line facilities for regular payments, forward contracts and rate tracking alerts.
Pensions are a technically complex subject where reliable advice is essential. From understanding UK state pension entitlement, to reviewing all existing personal and/or occupational schemes, there is scope to increase the value, flexibility and security of your retirement finances. British expatriates living in Europe currently enjoy pension freedoms and transfer opportunities that are unavailable elsewhere. However, in relation to both Brexit and ongoing UK pension reform, it is unlikely this flexibility will remain beyond the short term.
Even if Brexit transitional arrangements encourage a smoother economic separation, further changes to pension regulations are already on the UK domestic agenda. Consult an authorised, qualified and experienced specialist to arrange a comprehensive review of your existing pension arrangements. Be wary of any recommendation to transfer a UK pension without receiving a detailed report which explains clearly why a transfer is in your best interests.
Spanish forced heir-ship rules restricts the extent to which you can freely transfer wealth during your lifetime. It also, unless you have planned properly, governs how your estate is distributed upon death – most notably, prescribed heir-ship laws override individual choice when it comes to nominating beneficiaries. However, if you are a British expatriate living in Spain, EU legislation allows you to specify that your estate be administered according to the laws of your country of nationality, rather than your country of residence. Doing so provides valuable flexibility and control over the eventual distribution of your estate. Note this relates to probate law and is unconnected to inheritance tax law.
It is important to establish and maintain a valid will or testamento which fully reflects your intentions. A notary will prepare your will in the appropriate format.
Recognising that UK assets are taxable in Spain, and that tax free in the UK doesn’t translate to the same in Spain, consider switching to Spanish approved tax efficient investments. Care is needed with possible tax consequences on the disposal of UK assets, so always seek professional advice before restructuring. Seguro de vida are widely regarded as the most tax efficient solution available in GBP and EUR (and other currencies), in English language and with investment flexibility to match individual objectives and risk profiles. Technically a life insurance policy, but in practice an investment vehicle and this is the most tax efficient means of investment in Spain –
Low cost, straightforward, beneficiary nomination, IHT exemptions/reliefs, capital access, income option, portability (UK return),
Even for the financially experienced it is worth seeking professional advice, if only to ensure that all available investment and tax planning opportunities are being fully utilised. Only deal with an independent, appropriately authorised firm and ideally someone living and working locally who has been recommended by other expatriates in the area.
The regulatory status of an independent broker can be checked on-line at; http://www.dgsfp.mineco.es/regpublicos/pui/pui.aspx, and at any initial discussion with an individual you should be informed about the advisory process, from fact finding and presenting suitable recommendations to responsibility for investment management and ongoing client servicing.
