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 John Hayward
This article is published on: 11th February 2021
If you bank with Sabadell, you may well have noticed that they are charging you for transfers in and out of your account. Although you may have an account that didn´t attract changes before Brexit, it could do now. When approached by a client of mine, who has a Premium account with Sabadell, their response was, and I paraphrase “because we can”, using the Bank of Spain rule book to justify the charges. It is because the UK is no longer in the EU. It appears that these charges are being applied to ad hoc transfers as opposed to regular payments such as pensions.
I have heard of other instances where transfers have been made from the UK using a currency exchange company. Currencies Direct, for example, have stated that they will cover the charges made by banks as they feel that it is incorrect and goes against the SEPA (Single Euro Payments Area) agreement, challenging the actions of the banks.
Solutions
I understand that other banks are also making charges when they did not before Brexit, so check with your bank. You do not have to just accept what they are doing.
By John Hayward
This article is published on: 10th February 2021
What are investors doing with their cash?
Last year, Quilter, a British multinational wealth management company, conducted research* with 2,000 UK investors. The Covid-19 pandemic has provided many investors the opportunity to save more than they were before. However, many are either choosing to lock this money in a bank account or are waiting for what they believe is the ‘right’ time to invest in markets. But when is the right time to invest?
The research also found that most of those surveyed don’t understand the potential risks that having too much of their savings tied up in cash can have on their financial plans over the long term.
More recently, Quilter reached out to a sample of their international customers and found that the very same sentiment was shared by them. Many investors are sitting on cash that is not necessarily working for them and they could be missing out by being too cautious with their money.
Prudential have reported that, according to the Bank of England 28% of households have seen savings increase in 2020. That could mean they have a cash pile sitting unproductively earning minimal interest.
We understand that people are concerned about the future, even more so now with Covid-19 in play, but we also know that interest rates are likely to stay low for the foreseeable future whereas as inflation remains in the background. Many were waiting (years) for Brexit to go through and then Covid-19 came along and now they are waiting for this to go away before taking action with their money. In the meantime, the value of their cash has gradually reduced whilst those invested have seen the benefit of being so.
Here is a link to Prudential’s Investing for Beginners for those who are would like to know more about some investment basics and we can provide additional guidance.
Investing for Beginners | How to Start Investing | Prudential
There are many articles which call themselves ‘Investing for beginners’ but maybe a better place to start is to simply understand the ‘point’ of investing. Why could it be a good idea? Why should you consider it?
To find out how we can help you decide how best to plan for your current needs and those of the future, contact me today.
By John Hayward
This article is published on: 9th February 2021
Dying without a will can have serious consequences for the people you care about, making it hard (or even impossible) for them to claim what is due to them. Even with a will there may not be enough detail as to what assets the deceased had, which is why it is vital to have to have a separate list of all your property including bank accounts and investments, as well as details for key contacts (lawyer, accountant, financial adviser).
Now we are talking about two different countries with two different sets of probate law and two different languages. Although you may hear of “international” wills, the fact is that there could be conflict with one will trying to deal with, effectively, two different estates.
What tends to put people off making a will is:
a) Writing a will makes the certainty of death even more so
b) Cost
If the cost is a problem (around €200 for Spanish will and £200 for an English will), it is important to think of the subsequent costs, inconvenience, trauma, and potential loss of assets, by not making a will. It is generally considered wise to have a Spanish will to cover Spanish property and a British will to look after everything else.
We can help you deal with both types of will and save those who you wish to benefit a whole lot of problems.
*Note that England and Wales, Northern Ireland, and Scotland have different processes
By John Lansley
This article is published on: 8th February 2021
This article is aimed at those living in Andalucia, but also applies to the rest of Spain and further afield.
UK domicile has always been a rather difficult topic, but, as it determines whether UK Inheritance Tax (IHT) will apply to your estate or not, it has always been important to understand how it works, especially since Brexit.
Inheritance Tax in Andalucia provides much more generous exemptions. So, is it a matter of choice? Are you able to choose which Inheritance Tax regime applies to you?
Domicile
Firstly, some ground rules. As far as the UK HMRC are concerned, if you were born in the UK, the probability is that you will have a UK domicile of origin. Unless this changes, at your death your estate will be exposed to UK IHT, and this applies to your assets anywhere in the world.
If you are not domiciled in the UK, only UK assets will be subject to IHT. So, straightaway, it’s clear there can be a huge advantage in not being UK domiciled.
Example
For example, imagine someone who lives in Andalucia and is tax resident there, owns a house in the UK worth £300,000 and has £300,000 worth of assets outside the UK. If UK domiciled at death, his estate would face a bill of £110,000*. If domiciled outside the UK, the UK IHT tax bill would be zero.
So, on the face of it, losing his UK domicile would make sense as it would save his heirs £110,000 (don’t forget Spanish Inheritance Tax! See below). But is it as simple as that?
Can I change my domicile?
Changing domicile is very difficult in practice. In the old-fashioned sense of emigrating to another country, where all UK links were severed and new ones established with your new home country, you might easily acquire a domicile of choice elsewhere. However, these days, when moving to Spain or France, or another country close to ‘home’, it is not so easy – for example, retaining a property in the UK, having UK investments and income sources, and even writing your Will under English Law, can all demonstrate that you have not sufficiently severed your links and acquired a new domicile.
Intentions
Beyond simple facts such as these, domicile also hinges on intentions. So, someone who moves to Spain and vows never to return stands a better chance of losing UK domicile than someone who is pretty sure that, when poor health and family pressure become significant, a return to the UK is almost certainly going to happen.
Inheritance Tax in Spain
Spain’s Inheritance regime is different to the UK, in that it applies to those who die in Spain and also to assets situated in Spain. It is the recipient of an inheritance who pays the tax, and the amount depends upon the relationship between beneficiary and deceased.
As mentioned above, Andalucia’s Inheritance Tax rules are very generous, and an estate of the same size (ie, £600,000 or equivalent) located in Andalucia could attract no tax at all, if all the assets are left to the deceased’s children, for example, but a more distant beneficiary, or an unconnected person, would likely see tax having to be paid. Other Spanish regions are not so generous and bigger bills would ensue, as would be the case in many other countries, so it pays to check carefully.
Brexit
So, has Brexit had any effect on this? Not in terms of UK and other Inheritance Tax laws themselves, nor Wills, but perhaps in the sense that your thoughts about moving back to the UK in later years might have been changed, especially if you have a non-UK spouse (due to the tough new income requirements in such cases). Or you might have UK assets that fall foul of various rule changes, and you need to consider making changes which could have an impact on your domicile, for better or for worse.
Loss of freedom of movement
If you have spent a lot of time in Spain in recent years, perhaps had a ‘foot in both camps’, and enjoyed the freedom of being able to come and go as you please, the recent realisation that you need to be rather more specific about which country you are based in might have meant looking closely at such things as where you pay tax, healthcare access, Wills, driving licences, bank accounts and other investments, and many more. Domicile and Inheritance Tax exposure in both the UK and Spain should have been part of the review because a wrong decision could prove costly.
Equally, if you left the UK after 31 December 2020, or considering doing so, you might find that the requirements for residence in Spain are too much of a hurdle and your intentions of remaining in Spain indefinitely (and saying goodbye to UK tax concerns) have had to be shelved and replaced with the alternative of spending much less time in Spain each year, with the resultant impact on domicile and UK IHT liabilities.
Wills
Don’t forget that your Will is an integral part of domicile and Inheritance Taxes planning in both Spain and the UK. Now is a very good time to consider whether yours needs to be updated.
So, as always, it’s vital to obtain proper professional advice, and this is a subject that, while perhaps not affecting you personally, could have a tremendous impact on the long term wealth of your family. Brexit has generated a number of less than obvious changes – domicile isn’t an obvious one, but it is certainly something that should be given careful thought.
*NB other exemptions and reliefs are available that might reduce the liability.
By Spectrum IFA
This article is published on: 4th February 2021
Benjamin Franklin disait: “En ce monde rien n’est certain, à part la mort et les impôts.” Cette réflexion peut paraître pessimiste mais elle est néanmoins réaliste.
En ce début d’année 2021, nul besoin d’alimenter la morosité ambiante; et pourtant, n’oublions pas la réalité.
Personne ne souhaite laisser ses proches dans l’embarras lorsqu’il ou elle viendra à partir (le plus tard possible!). Alors quelque soit votre âge, pourquoi ne pas anticiper et faire en sorte de ne pas ajouter au deuil des vôtres des complications administratives qui pourraient être facilement évitées?
Afin de vous y aider, Spectrum a créé un document récapitulatif (pdf à remplir) regroupant l’ensemble des informations relatives à votre situation actuelle. Il résume vos données personnelles, fiscales, financières, vos contacts, vos mots de passe, vos assurances, vos factures à résilier, etc.
Il vous suffira ensuite d’envoyer ce document à une ou plusieurs personnes de confiance (conjoint, enfant, avocat, notaire, “gestor”, conseiller financier, à qui bon vous semble) qui se chargeront de le conserver en lieu sûr.
Vous pouvez librement télécharger ce document sur notre site et dans le même temps, si vous le désirez, vous abonner à notre newsletter “actualités financières et fiscales en Espagne”.
By Spectrum IFA
This article is published on: 2nd February 2021
Relying on a bank to transfer currency is an expensive option. Currency transfer specialists provide competitive terms, secure, swift transactions and a range of other benefits including regular payments, forward contracts and rate tracking alerts.
At The Spectrum IFA Group we work with Smart Currency Exchange to deliver the best possible rates, service and support for our clients.
Whilst nobody can predict exchange rate direction, the relative strength (or weakness) of the euro is relevant for most of us. I attached a weblink to Smart’s 2021 quarterly currencies forecast.
A historic Presidential election, Brexit deal and global pandemic sent currencies in directions that no one could have predicted in 2020.
Does that mean matters will settle down in 2021? We wouldn’t suggest you bet your transfers, your property budget and your future plans on that!
Fresh uncertainties for the year ahead bring new challenges for economies – and currencies – too. So, predicting the pound’s movements accurately can be a near-impossible task – even for the major banks.
I invite you to read this quarter’s currency forecasts, but with a strong suggestion that you do not base any decisions on them. Predictions for GBP/EUR range between 1.06 and 1.28 over the next 12 months!
Post-Brexit special – what happens now?
Looking to buy a property overseas this year? What do you need to consider in a post-Brexit world? Our resources section can help.
New and improved tables and charts
How are economies coping in the midst of the pandemic? Our new charts and tables offer a deeper insight.
Expert analysis sections
Smart’s Senior Risk Management Analyst offers his insight and opinion – do you agree with him?
Your next move?
In this climate of uncertainty, how should you plan for the future?
For any further information on currency exchange, please contact your local adviser or please send an email to: info@spectrum-ifa.com
By Chris Burke
This article is published on: 2nd February 2021
Many people seek financial advice, or financial planning, but if you asked them what they would like to get out of it, most people would probably say clarity on their finances, planning how to make their monies work and to have what they need in retirement, or partial retirement. Only 45% of people in Spain save into private pensions, and now with the government reducing the amount you can save that way tax efficiently, retirement planning is even more important.
Most financial advisers will look at your assets, see what you are doing, talk through why, then recommend a product to improve what you are doing. There is nothing wrong with that, in fact that is part of what we do, however this isn’t really giving people what they hoped to get out of the meetings/talks.
A key part of helping people with their finances, as well as making their monies work, is real life planning of what they have now, what their goals are and showing them how to get there. People take in and understand much more visually, as most of us know; in fact 65% of us are visual learners. That’s why it’s important that when planning your finances you consider using a visual modelling system that shows your monies, what they are doing, future monies potentially coming in, and if you save ‘X’ amount into a pension/property/investment this will be the outcome. For example, which of the below would you prefer to see as your advice?
‘We recommend you place your €50,000 with ‘X’ company, and over the years achieving ‘X’ % return. Also, save ‘X’ a month in a savings program and both of these at retirement will give you ‘X’
OR TRY THIS…
What it really comes down to is the expertise of the planning, the knowledge of the financial adviser with whom you are working, and how much is actually put into planning your finances, rather than just making what monies you have work.
This is just one example why I/we at Spectrum stand out as excellent professional financial advisers and planners, if you would like to seriously start planning your retirement and investments or review what you are doing now, don’t hesitate to get in touch, or sign up to my Newsletter below to keep well informed.
By Chris Burke
This article is published on: 1st February 2021
Now more than ever, with the UK leaving the EU, if you have a UK pension/pensions you will need to make sure that they are being properly looked after and managed. This needs to be by someone who can legally practice in the country where you are tax resident. Many UK pension companies are no longer able to give advice to those living outside of the UK, meaning you could have difficulties accessing, managing and securing your pension moving forward. A local adviser also has the advantage of knowing the local regulations, so is able to make sure you are adhering to the rules in addition to being as tax efficient as possible.
When people approach me to speak about their UK private or company pensions, they usually are not clear on:
When I ask most people what their pensions are invested in, what the annual returns are and when they last reviewed this, they usually don’t know or can’t remember. One of the reasons for this is that being outside of the UK makes all this all the more difficult to manage, and even more so now after Brexit.
Or, if they do know the answer to my questions, they have now found they cannot receive any advice from UK pension companies or UK based financial advisers moving forward.
Consider consolidating several pension pots
If you have several different pension pots, there are potential advantages if you consolidate them into one. These include:
In many cases, the first step would be to locate your pensions and then evaluate what you have, how they work, what your options are and then have these managed effectively.
I help clients consolidate their UK pensions, managing them efficiently and effectively, planning for when they want to access them integrating with their tax situation and lifestyle. We can help you achieve all this, giving ongoing advice and moving forward making sure you access you pension tax efficiently, adapting to your life as it changes along the way.
For example, if you are over 55 years of age and currently on the Beckham Law, did you know you can cash your UK pensions in, potentially paying no tax in the UK, and potentially none in Spain? This is because on the Beckham Law, all ‘non-Spanish’ income is tax exempt (this depends on your personal circumstances) and being a NON-UK resident, you have no tax liabilities there either.
If you would like to discuss your various UK pensions and what your options are, feel free to get in touch.
By Barry Davys
This article is published on: 18th January 2021
Love it or hate it seems to be the approach to Bitcoin. It will be the best investment ever or it is just a bubble controlled by the few people who can pull the strings, rumoured to be the Chinese.
Let’s start with “What is Bitcoin?”. Bitcoin is a piece of computer software with the ability to share pieces of the software with other people. Of course, the other people have to pay for their share of the software and the price varies according to supply and demand. In principle, there is nothing wrong with this. It worked for Bill Gates.
To get a better of understanding of Bitcoin it is worthwhile making that comparison with Microsoft. With Microsoft we know who owns the product, the products have set prices and perform a function that makes something happen, e.g. run our computer, allow us to write letters, make presentations and do our numbers on spreadsheets. Bitcoin has none of these attributes.
The way Bitcoin pricing works is much more like a commodity. If you go to Starbucks today and buy a coffee, let’s say you pay 4€. Next week you want a coffee. The same coffee now costs 5€. The coffee has not changed, only the price. The difference may be due to shortages, logistical difficulties during a pandemic, many more people wanting a Starbucks coffee, exchange rate movements etc. Bitcoin works in the same way. The price of Bitcoin is primarily set by demand as the supply is fixed. There are only so many Bitcoins in the World. At least you can do something nice with a coffee bean. Bitcoin’s primary purpose is just as something you can sell to someone else. It has no other purpose at the moment.
You would now have a valid point if you were to pull me up on this analysis. “You can use it to buy goods and services” is a fair comment to make, however, there is a ‘but’ that should follow that statement. Whilst the number of places you can use Bitcoin to make a purchase is increasing it is not widespread.
Bitcoin is super volatile, which is great on the way up and terrible when it falls after you have just bought it. Here are some important figures which tell you about Bitcoin’s volatility.
2009 – 2017 little price movement
Autumn 2017 the price rises
October 2017 $5,000
November 2017 $10,000
17th December 2017 $19,783
April 2018 $7,000
November 2018 $3,500
14th March 2020 $5,165
It has bounced again in recent weeks and is now at $40,714 as I write this article (9th Jan 2021). Institutional investors (fund managers, hedge funds etc) are now buying Bitcoin. Increased demand of a fixed supply commodity pushes up the price. Will this last? I do not know. Is it a bubble? Again, I do not know. However, what I do know is that institutional investors invest to a plan. They systematically take profits i.e. sell some of their holdings. They are disciplined. They manage risk by keeping a balance of different investments. Should these institutional investors take profits, other fund managers will follow and sell so as not to get caught out by a large price fall. Their careers depend on getting it right. The ability to feed their family depends on it. They analyse, have large teams doing research, watch and wait before buying and sound out other professional colleagues to ensure they sell in a timely manner. The field of behavioural finance has shown that as individual investors we use the part of our brain driven by emotion when making investment decisions, especially when there is a big price movement in an asset. This emotion based decision making often leads to poor decision making.
There is a body of opinion from Bitcoin exchanges and advocates that is putting forward the theory that Bitcoin is going to become a national currency in some countries and therefore the price is going to go ballistic (their phrase). It is unlikely that a non regulated, very volatile commodity will be used as a national currency.
Here is an example from me of the practical problems. A solicitor practice in Barcelona started to accept Bitcoin for settlement of their fees. It looked like a superb idea to show they were a forward-looking firm.
The problem comes with the volatility. Between issuing the invoice and payment by the client there is a delay. Having charged 1.03874 Bitcoins, for example, they had no idea how much they would get in the currency that would pay all the bills of the firm, such as their staff (Can we pay you in Bitcoins Mrs staff member? Ah, no!), electricity company etc. So having chosen 1.03874 Bitcoins as the fee because that would generate 4,000 in Euros, at the date of payment it could have been just €2,000 value. For this reason it is very unlikely that Bitcoin will become a national currency!
If you wish to invest in Bitcoins, it is worthwhile separating them from your primary investments. Bitcoins will then not influence your investment decisions on your main portfolio in the way that they might be if they are on the same investment platform. How much should you invest in Bitcoin? Set aside a percentage of your savings and only invest that much. Whether it is 1% or 10% will depend on your overall circumstances. However, with Bitcoin it is very worthwhile applying the rule that only invest what you can afford to lose. That way, if you lose it all it has not damaged your financial wellbeing. If it goes up 400% next week, you will be able to take some profit and perhaps spend your winnings on something frivolous.
Bitcoin profits will be taxed. Remember to put money aside from your winnings to pay tax. The amount of tax will depend on your country of residence. The annual declaration can be very difficult so keep track of all your transactions. A figure of 23% of the profit is a good guideline as the amount to put aside if you live in Spain.
Practical Tip. A more mainstream alternative to investing in Bitcoin is the technology that Bitcoin is based on called blockchain. Blockchain has lots of uses and is good news. Uses include electronic voting in national elections, supply change management, payment systems, and anti-counterfeiting software. It can also allow companies to work together and share only what they need to for a specific project.
As an example of what is possible, there are also many Blockchain propositions for supply chain management for Covid 19 vaccines and contact tracing. For more information on blockchain, you could read “Blockchain Revolution” by Don and Alex Tapscott. You can already find many investments to include in your main portfolio such as ETFs and funds. For more information on these funds email barry.davys@spectrum-ifa.com
A final point on Bitcoin. When someone sells a Bitcoin what does the buyer pay with? It is one of the major currencies. Sellers still want good old fashioned US dollars, Euros or Sterling when they part with their coin. That tells us something!
