Viewing posts categorised under: Spain

Longer Term Perspective

By Chris Webb
This article is published on: 22nd April 2020

22.04.20

One of my favourite songs is, ‘The Show Must Go On’ by Queen, arguably one of the best bands ever. How apt the opening lines sound now. It’s day 41 of our lockdown as we bunkered down on the 11th of March, a little earlier than the national lockdown came into force and I wont lie and pretend its been plain sailing. Having two children home schooling and trying to run our businesses from home at the same time has been quite a challenge, but the overriding feeling has been and still is that the show must go on…

Emotionally this might just be the toughest period that we all have to go through. Every day is a new challenge. But as we all know, we can’t just sit and stare at the walls and feel sorry for ourselves.

All of us will have had different emotional barriers to face. They might be the feeling of confinement and reduced work capabilities; they might be a feeling of panic and anxiety trying to deal with the unknown situation we are in; they could be dealing directly with this virus, either having caught it themselves or having a loved one infected.

It doesn’t matter what the factor is, it’s guaranteed that we have all been dealing with emotions far more during the last 5/6 weeks than we have ever had.

On top of dealing with our own family’s emotions, I am having daily conversations with my clients about their investments during this period and the emotional impact it is having. All it takes is to watch the news channel to clearly see how volatile the markets have been. This is an additional emotional crisis for some, particularly if they aren’t experienced investors.

All my clients will know that I talk a lot about the different hats you need to wear when investing in the markets. There is the investment hat and the emotional hat. The investment hat is the exciting one that drives your investment decisions; the emotional hat is the one that pulls you back a little and makes you consider your choices. In my opinion the emotional hat is the most important one. It only lets you make decisions that you are happy with and have thought through.

Here are my top tips for dealing with the emotional side of investing; hopefully it will help steer you through the coming weeks.

The Rational, Irrational and Emotional Struggle
It is a challenge to look beyond the short-term variances and focus on the long-term averages.

The greatest challenge may be in deciding to stay invested during a volatile market and a time of low consumer confidence. History has shown us that it is important to stay invested in good and bad market environments.

During periods of high consumer confidence stock prices peak and during periods of low consumer confidence stock prices can come under pressure. Historically, returns trended in the opposite direction of past consumer confidence data. When confidence is low it has been the time to buy or hold.

Of course, no one can predict the bottom or guarantee future returns. But as history has shown, the best decision may be to stay invested even during volatile markets.

Declines May Present Opportunities
An emotional roller coaster ride is especially nerve-racking during a decline. However, the best opportunity to make money may be when stock prices are low. Buying low and selling high has always been one of the basic rules of investing and building wealth. Yet during these emotional and challenging times it is easy to be fearful and/or negative, so let’s turn to the wise advice of one of the world’s best investors, the late Sir John Templeton:

“Don’t be fearful or negative too often. For 100 years optimists have carried the day in U.S. stocks. Even in the dark ’70s, many professional money managers—and many individual investors too—made money in stocks, especially those of smaller companies…There will, of course, be corrections, perhaps even crashes. But, over time, our studies indicate stocks do go up, up and up”

Watching from the Sidelines May Cost You
When markets become volatile, a lot of people try to guess when stocks will bottom out. In the meantime, they often park their investments in cash.

But just as many investors are slow to recognize a retreating stock market, many also fail to see an upward trend in the market until after they have missed opportunities for gains. Missing out on these opportunities can take a big bite out of your returns.

Euro / Dollar Cost Averaging Makes It Easier to Cope with Volatility
Most people are quick to agree that volatile markets present buying opportunities for investors with a long-term horizon. But mustering the discipline to make purchases during a volatile market can be difficult. You can’t help wondering, “Is this really the right time to buy?”

Euro / Dollar cost averaging can help reduce anxiety about the investment process. Simply put, Euro / Dollar cost averaging is committing a fixed amount of money at regular intervals to an investment. You buy more shares when prices are low and fewer shares when prices are high, and over time, your average cost per share may be less than the average price per share. Euro / Dollar cost averaging involves a continuous, disciplined investment in fund shares, regardless of fluctuating price levels. Investors should consider their financial ability to continue purchases through periods of low-price levels or changing economic conditions. Such a plan does not assure a profit and does not protect against loss in a declining market.

Now May Be a Great Time for a Portfolio Check Up
Is your portfolio as diversified as you think it is? Meet with me to find out. Your portfolio’s weightings in different asset classes may shift over time as one investment performs better or worse than another. Together we can re-examine your portfolio to see if you are properly diversified. You can also determine whether your current portfolio mix is still a suitable match with your goals and risk tolerance.

Tune Out the Noise and Gain a Longer-Term Perspective
Numerous television stations and websites are dedicated to reporting investment news 24 hours a day, seven days a week. What’s more, there are almost too many financial publications and websites to count. While the media provide a valuable service, they typically offer a very short-term outlook. To put your own investment plan in a longer-term perspective and bolster your confidence, you may want to look at how different types of portfolios have performed over time. Interestingly, while stocks may be more volatile, they’ve still outperformed income-oriented investments (such as bonds) over longer time periods.

Believe Your Beliefs and Doubt Your Doubts
There are no real secrets to managing volatility. Most investors already know that the best way to navigate a choppy market is to have a good long-term plan and a well-diversified portfolio. But sticking to these fundamental beliefs is sometimes easier said than done. When put to the test, you may begin doubting your beliefs and believing your doubts, which can lead to short-term moves that divert you from your long-term goals. To keep from falling into this trap, call me before making any changes to your portfolio So that’s my tips for fighting your way through the emotional impact of investing. I hope it is beneficial to you. The main point to take away from this is that THE SHOW MUST GO ON.

Stay calm, stay invested, don’t make crazy rash decisions and in a short time, this will be a blip in the past. If you want to discuss the risk element or have a second opinion on your investments, I am happy to conduct an initial consultation and present any recommendations free of charge. You can get in touch using the contact details below.

Don’t delay your financial plans. For planning, yesterday is better than today, which is better than tomorrow

Life in Lockdown

By Charles Hutchinson
This article is published on: 14th April 2020

Here we are starting the 5th week of lockdown in the Costa del Sol. What a surreal world it is compared to what we have known all our lives. I would like to think it is good for us and our moral fibre. Certainly it is morphing into a much more pleasant environment to the mess mankind was creating until the virus came along. Depending on your take on things, this is either nature seeking to redress our mishandling of this fragile planet, or it is the force we call God taking action to prevent our mass suicide. Of course, it can be argued they are both one and the same, but that discussion is for another time. I and my wife are very lucky, as is my son and his family. We live in houses with space and gardens. We are particularly lucky as we have 1.3 hectares of land and are at least 300 meters from the nearest lone house. We have dogs and can take them out for walks at will, on or off our land, and nearly always meet no one. We have fabulous views and my wife is catching up with all the stuff in the garden for which she normally does not have the time. We both work from home anyway and so our work regime has not altered.

Some of my clients in similar circumstances are also not enduring too bad a time, but the ones I feel for are those clients of mine who live alone in small apartments in urban areas and have no dogs. These are the ones I try to stay in touch with most. I am calm in the knowledge that their money is safe because they are with highly reputable companies and investment managers. And it is all about when the markets will begin to recover. It is their wellbeing that concerns me most and part of that is the reassurance they need that their security is not threatened in the long term.

Little Estepona has only one case so far (so lucky), it’s like a ghost town when I go down for our weekly shop. No one on the streets and the police have check points to enquire to where you are going and why and from where you have come.

You have to carry evidence on you to show what you are doing. It’s all good stuff to keep this dreadful thing outside of our city limits. But it does feel very bizarre. Telecommunications and web communications have replaced face to face and touchy feely, but that’s tolerable. The peace and quiet is incredible, you hear so much more now without the sometimes distant murmur of traffic, fireworks, helicopters and the boy racers roaring up and down our mountain road across the valley. The nightingales have arrived which is so beautiful and you can hear them even louder than before. The dawn chorus is almost deafening.

I have to say that the Spanish are bearing up extremely well. When you consider that their life is all about being out and about, socialising, meeting, kissing and hugging each other, sitting out in cafés with friends and family and just enjoying the social interaction, making huge amounts of noise, so much so that they design their homes, not for entertaining, but for spending as little time in them as possible. So now they are imprisoned for an indeterminate sentence, where they cannot go out except to buy essential food once a day, directly there and back, no meeting or touching people and if meeting someone by mistake, it must be from a distance. At the end of all this, we reckon there will be a spike in suicides, divorces and births. Our son Simon and family in Luxembourg, in the same lockdown, go to virtual drinks and dinner parties in the evenings and weekends with friends in the area. He showed us a photo of him getting ready for a dinner party. He was wearing a winged collar, black tie and dinner jacket and shorts and slippers (they can’t see the bottom half!). We’ve started them too; we have about half a dozen friends for drinks and it is hugely enjoyable. We use Zoom so that you can see everyone at the same time and chat together.

Rhona, my wife, has joined Gareth Malone’s virtual choir – I wonder if you have heard about it? The Great British Home Chorus. So far he has more than 110,000 people from all over the English speaking globe and she rehearses with him in the early evening. It is hilarious sometimes hearing these extraordinary howls from another part of the house or outside, my not hearing or seeing the great teacher conducting her.

So, what now? We really don’t know – anything could happen – gradual eradication or a resurgence of the virus? We know here there has been a partial release of lockdown for some workers, especially those who cannot work from home. There is a natural conflict between those who want to continue the lockdown to protect the health of the population and the health service and those who want to protect the economy, jobs and companies. It is very difficult to navigate a sensible course between the two. The global stock markets, which always try to predict the future (not the present nor the past), have already come off bottom with a double bounce nearly a month ago. Now this rise seems sustained for the moment or is this another dead cat bounce? What is obvious is that the markets want to get going again and advantage is being taken of these low levels by many. Those who have cash should think seriously about getting in at these levels, even if drip feeding. Some markets are already up between 20% – 30% from bottom and the potential is still there for a very healthy start to an investment, but it is not for the faint hearted. Cash is king no longer and a home has to be found for it. Make a plan, invest for the long term (at least 5 years), diversify your investments (even in multi asset funds alone), choose good investment houses and funds and stick to the plan. You will not go far wrong if you observe these simple rules.
If you would like to discuss this further, do please get in touch by contacting me as per below. I would even like to hear about your lockdown experiences!

Health before wealth

By Jeremy Ferguson
This article is published on: 27th March 2020

27.03.20

Never has this expression been more relevant

After we received the news the Lockdown here in Spain is due to be extended until the 12th of April, and my best guess is that could be extended even further if we are on a similar path to Italy. Let’s hope we are not, but I for one am building myself up to accept that’s a real possibility.

My previous articles have spoken a lot about the benefits of living here in Spain: the glorious sunshine, beaches, the associated outdoor lifestyle we all came here to enjoy and the longer life expectancy that comes with all that.

Wow, how that has all changed in such a short period of time. I have to say how impressed I have been with how the authorities here reacted, in a very timely fashion, and as is typical with the Guardia here in Spain, no messing around! People respect them, and apart from some idiotic panic shopping at the beginning, they are showing a lot of decency towards the authorities and their neighbours.
The UK has reacted in a slightly different way, and I will be intrigued as to the level of intervention the police will take and how that will be received.

My wife and I have both been bed bound for a number of days with many of the virus symptoms, so we are pretty sure we caught the dreaded thing. Considering our age and state of health, together with the difficulty of getting tested, we could see no point in seeking the help of the already stretched hospital services, so we rode it through. The temperatures and headaches, together with muscle aches and sweats were awful, but over in a matter of days. It’s not like we can do anything other than stay at home anyway, so in a strange way, every cloud has a silver lining.

Whilst we are all very worried about the potential health threat, many of us will also be worried about the potential wealth threat as well; I know we certainly are. Our pensions and savings are both taking a big hit at the moment, and I am sure there are a great many of you out there who are feeling the same pain.

A bit like the virus though, just as the human body fights back, the economies and companies of the world have an incredible ability to do the same thing. There will be casualties of course, just like with the pandemic, but the ability of the human race to fight back in the face of adversity is quiet incredible.

So rather than worrying too much about the current downturns in investment markets, maybe just trust in mankind’s ability to come back from these things and get back to ‘normal’ as quickly as possible. I cannot even imagine what things must have been like after the end of the second World War, but the human race simply rolled up its sleeves, licked its wounds and eventually got back relatively quickly to economic good health, showing an incredible doggedness and determination in its quest to achieve that.

I am sure this event is going to have a profound effect on people in the future, and how they may act when we come out of this terrible situation. Maybe a lot less will be taken for granted, maybe things will be appreciated more, maybe people will have realised the importance of helping others with selfless acts, maybe the handshake will be a thing of the past.

I do know one thing though, that this will have a profound effect on me going forward.

So my message for both your health and your wealth: stay strong, be careful, look after others around you, and please don’t panic!

Jeremy Ferguson
The Spectrum IFA Group
Sotogrande, 11310, Spain
Office: + 0034 956 794409
Mobile: + 34 670 216 229

jeremy.ferguson@spectrum-ifa.com
spectrum-ifa.com

Feeling down about investments?

By John Hayward
This article is published on: 20th March 2020

20.03.20

Take advantage of this great opportunity

The last stockmarket crash was in September 2008. Here we are again. At the time of writing, the FTSE100 is more than 25% down, even allowing for dividends. For many, this is not an attractive situation when considering investments. For others, the few that look through the dark clouds, this is a great opportunity. It is very difficult, for the vast majority of people, to time when to buy into markets and when to sell out. When to sell can be simpler for those who have a nerve trigger point that will say enough is enough and they will take their profit. Those who sell when things are going down often get it wrong and crystallise a loss. Some will be forced to sell due to other circumstances and could be lucky that this happens when markets are historically high. Others who have to sell at a low point, such as now, are obviously not so lucky. This then leads to a lack of confidence in investing and the feeling of never wanting to be burnt again.

Anybody sitting on cash, wondering what to do with it, should seriously consider investing at a time like this when stockmarkets have crashed. Interest rates are close to non-existent so there is little to offer short term deposit savers. Inflation trundles on and so cash might be ”king” in the short term, but long term hardly ever. The problem is that whenever there is a crisis few can see beyond its end, so they will not invest until things have improved. By then, the potential profits on offer have disappeared. The fact is that that markets will bottom out. Where? Nobody knows for sure, but based on the fact that a big influence on why markets have fallen so much is fear and panic, it is felt that markets are artificially low. There may be further to go down but it is likely that there will be a significant rebound. Markets tend to discount the future. This means that, on the day that someone says the virus is under control, stockmarkets will have already been on their way up for some time.

One way of coping with the uncertainty of when the bottom of this particular dip might be is to drip feed your money into the markets. This means that if markets continue to slide, you don´t suffer a reduced value on all of your cash. Conversely, if markets increase in value, then you are part of that increase. By feeding your money in over a period of time you are able to reduce the downside and be part of the upside. In time, once this crisis has ended, you will already be invested and thus reap the benefits.

To find out how you could make more from your money, protecting your income streams against inflation and low interest rates, or for any other financial and tax planning information, contact me today at john.hayward@spectrum-ifa.com or call or WhatsApp 618 204 731.

How much do I need for a comfortable retirement?

By Chris Webb
This article is published on: 18th March 2020

18.03.20

How much money will I need in retirement?

This is one of the most common questions I hear as a Financial Adviser in Madrid, Spain.

The answer to that question differs from person to person and the numbers I discuss with my clients vary massively. To some, having a quiet retirement with little requirements is the goal; others will want to continue playing golf and attend social events weekly. There is a huge difference in what you will need in your pocket with these different scenarios.

So, what do the experts think?
Researchers have calculated how much money a person needs per year in order to enjoy a comfortable retirement. The numbers were calculated by Loughborough’s Centre for Research in Social Policy (CRSP), The Pensions & Lifetime Savings Association (PLSA) and Retirement Living Standards (RLS). A report from Loughborough University and the Pensions and Lifetime Savings Association aims to help people understand how much they will need for a minimum, moderate or comfortable quality of life once they retire.

In the UK a full state pension comes in at just over £8,500, but it’s the other savings you accrue over your working life that will make the difference in people’s post-work years.

Experts found that a single person will need about £10,200 a year to achieve the minimum living standard, £20,200 a year for moderate living standards and £33,000 a year for comfortable living standards. For couples, the minimum standard came in at £15,700, moderate was £29,100 and comfortable worked out as £47,500. The results are based on consultations with members of the public and consider what is needed in retirement for home DIY and maintenance, household and personal goods, holidays, food, transport, clothing and social engagements.

The new Retirement Living Standards describe three different standards of living with associated costs for each – all established by what the public considers realistic and relevant expectations. Associated costs are made up of household bills, food and drink, transport, holidays and leisure, clothing and personal and helping others. The standards cover a range of goods and services that are relevant to most people. These and other costs, such as tax on pension income, may need to be added depending on individual circumstances.

A series of profiles and infographics have been created on the PLSA website to help people calculate their own finances. The research for the Retirement Living Standards was adapted from the approach used to produce the Minimum Income Standard – a calculation of what the public thinks is an acceptable minimum standard of living. The data was gathered through 26 group discussions with around 250 members of the public already retired or approaching retirement, from a wide range of backgrounds. Expert views were taken into account for some areas, such as transport, energy usage and food costs.

The discussions set the parameters for how higher living standards should be described and defined. Through these discussions, three retirement living standards were agreed: minimum, moderate and comfortable.

The standards:
At a cost of £10,200 per year for a single person and £15,700 for a couple, the minimum lifestyle covers all your needs plus enough for some fun – including social participation and social occasions.

The moderate lifestyle (£20,200 a year for singles and £29,100 for couples) provides, in addition to the minimum lifestyle, more financial security and more flexibility.

At the comfortable level (£33,000 a year for singles and £47,500 for couples), retirees could enjoy some luxuries like regular beauty treatments, theatre trips and three weeks in Europe a year.

*Table from https://www.retirementlivingstandards.org.uk/

Breaking down the RLS:

House: Household utility bills, decorating and maintenance, furniture, cleaning supplies, lightbulbs, cooking utensils, appliances (e.g. fridge, washing machine), garden supplies, towels, bedding, gardener/cleaner/window cleaner & funeral plan.

Food and Drink: Household food shopping, eating out, beer & wine.

Transport: Car running costs, railcard/train travel & taxis.

Holidays and Leisure: TV, DVD player, laptop, printer, speakers, CDs, stationery supplies, TV license and subscriptions, internet, activities & holidays.

Clothing and Personal: Clothing, footwear, cosmetics, toothbrush, toothpaste, shaving supplies, hair styling, beauty treatments, dentist, opticians, podiatry & minor first aid supplies.

Helping Others: Gifts, helping others (if applicable) & charitable donations

Planning early is key to getting your retirement plans in order. You can look up another of my articles here on this subject titled “It Is Never Too Early”

Don’t delay your financial plans. For planning, yesterday is better than today, which is better than tomorrow. Contact me, Chris webb on 639 118 185 or chris.webb@spectrum-ifa.com if you want to discuss your own circumstances.

Sources:
Loughborough’s Centre for Research in Social Policy (CRSP).
Pensions and Lifetime Savings Association (PLSA)
Retirement Living Standards (RLS)

A flight to safety, or an opportunity for investors?

By David Hattersley
This article is published on: 13th March 2020

13.03.20

I am as conscious as anybody with regard to the above virus and its potential impact and consequence. A recent financial example would be the demise of Flybe, to which the coronavirus was a contributory factor. Natural animal instincts are fear, driven by fight or flee. So how can one consider investment at such a time, when currently 24 hour news channels and the press are swamping us with a savage feeding frenzy of headline information, with many showing a scant disregard to any in depth analysis and reality.

To clarify some facts, I did some research in the reliable analyses from the UK government, “Surveillance of influenza and other respiratory viruses in the UK” annual reports from 2014-2019. The following fact came to light: deaths in England with a contributory factor from the “flu” have varied from 14,000 to below 10,000 in each “peak season” during this period.

Viruses do mutate and new strains appear. With COVID-19 there is a documented risk for the elderly, in particular, those who may have pre-existing medical conditions, but you need to keep things in perspective.

Investing for the future

A simple phrase from Warren Buffet springs to mind, “When everybody is being greedy, be fearful; when everybody is being fearful, be greedy”.
So how do fund managers cope with this onslaught? How can they take into account all the facts referred to above? We live in a global world which has, nevertheless, regional differences. The multi-asset fund managers that we use have the resources to have access to massive amounts of data, which enables them to take all of this into account.

They invest for the long term, with an eye kept on short term risk. But they avoid short term “knee-jerk” reactions, taking a longer term view based on a minimum 5 year investment analysis and taking a balanced approach

So what’s our role as Financial Advisers? In previous articles I have eluded to each individual’s circumstances. Apart from the pure investment questions, so many other aspects need to be considered for effective financial planning including your personal situation, how much risk you want to take and how long you want to invest for. So a detailed fact find has to be the way forward, and that is carried out by us, not the fund managers. These fact finds are free, and are based on each individual’s requirements and circumstances. So feel free to contact me for a no obligation meeting, apart from the provision of a coffee!

Stock markets falling, should I sell?

By Charles Hutchinson
This article is published on: 6th March 2020

06.03.20

There are four big subjects dominating the public arena at present: life after Brexit, life after the coronavirus, life after climate change, life after the dramatic falls in the global markets.

We live in an interdependent world where news is instant across all continents (although I’m not sure whether the penguins are interested). We are aware of climate change, the antics of Widow Twanky Trump, the spread of the coronavirus and Brexit (an outdated game in which the British people have kicked off in the hope of a repeat performance of their imperial past). Hopefully we have taken onboard the catastrophy of climate change in time (not Widow Twanky, yet) before we are reduced to a desert of Mars proportions. Hopefully the coronavirus threat is a storm in a teacup. Hopefully Brexit will work out. These are all uncertainties – except one: the global stock markets.

All life is cyclical; this is enshrined in history. Take any historical event of extreme proportions; the pendulum will at some point begin to swing back the other way. The only possible exception I can think of is the reincarnation of the Dinosaurs and the Dodo. There will be other tyrants, exterminations, plagues and climate changes at some point; but in our lifetime at least you can depend on the markets bouncing back. Why? As I have described in other articles, the markets are like the tides, they come in and they go out. The sea does not disappear over the horizon in a great hiss of steam into the sunset. Money has to have a home and it is to the markets, at the end of the day, that money’s guardians largely turn. In a post apocalyptical world, bartering will still continue, even if it is with seashells and potatoes. Money is merely the lubricant of trade, whether it be between you and I or corporations or countries.

Believe it or not, the professional market traders relish market falls (or corrections, as they call them) because it presents them with the buying opportunities which are needed to make money. The falls are caused by a mixture of inexperienced emotional investors and market makers (to create the buying opportunities). What is sure now is that markets will move up again and it might be sooner than expected. No person, company or country can stay in lock down for long. We have to eat and carry on our normal lives. Sooner or later, a cure for COVID-19 will be found (they announced yesterday promising results with HIV and Ebola antiviral drugs). The old may be vulnerable, but they don’t need to go out to work, tilling the fields or driving the engines of manufacturing. They are mostly at home enjoying a good rest after a lifetime’s toil. So with a bit of care we may be able to keep them protected until the virus burns itself out.

The lesson is clear: stay invested, or if you are a little brave buy into these low levels to enjoy a potentially better return and maybe average down (don’t commit all your spare investment capital at once but buy into the falling markets in stages to increase the odds of buying near the bottom to increase your potential profits).

Remember, Spectrum does not risk our clients’ hard earned capital. We just know the tide will come in again and as long as we are in sound and sturdy boats (investment funds), it will take everyone back up the beach to new heights. Spectrum chooses fund houses for their experience and expertise, some of whom have been around for more than 200 years. It is their fund managers’ job to react to world events on a daily basis. We use them to protect our clients’ money. We arrange for our clients to access these superb funds through structures called Investment Bonds (or Insurance Wrappers) which are Spanish compliant and which offer unparalleled security (against corporate collapse) and low taxation with both income tax in Spain and the UK and also inheritance tax in Spain.

If you would like to talk to me more about this subject and the points raised, please contact me as per below and I would be happy to discuss this further.

Moving to Spain – When should I take financial advice?

By David Hattersley
This article is published on: 2nd March 2020

02.03.20

For the majority of those who move to Spain, speaking to a qualified financial adviser, who is regulated where you plan to live, is something which happens after you have made the move. But, talking to one before you embark on the journey can help avoid some of the issues that expatriates can find themselves encountering.

Many UK based advisers are not fully regulated to offer advice for Spain and may not be aware of the most current regulations or tax efficient solutions for your needs. A Spanish regulated adviser can ensure you are financially prepared for your move in terms of any investments, savings and taxes which can be due on both income and windfalls you may be expecting after your move. A local adviser will also be able to clarify the potential impact of Spanish succession tax.

An additional complication in Spain is the variety of laws in each autonomous area. The classic example is the differing laws between Andalucia, Murcia & Valencia, so it makes sense to deal with a regulated adviser who is based in or near the autonomous area you are moving to.

Many people buy in Spain with plans of using their new Spanish property to retire to, either now or eventually. If it is the latter, in the interim period the property may be used to produce rental income, either via summer rentals or long term rentals, so there will be tax considerations. Depending on how long you are planning on living in Spain each year, residency may also become an issue. When holding property both here and in the UK, “Cross Border” regulations and differing types of tax are applicable to each country. Having a “Partner“ relationship brings its own complications.

Everyone’s situation is unique and there is no single ‘recipe’ that we can give to navigate buying a property in Spain. A regulated local adviser has no vested interest in which property you buy, yet will have a long history of experience of the path you are undertaking and will be able to help you create a plan to fit your own specific circumstances.

Investing an hour of two of your time to go over your project with an adviser before you make the move to Spain can provide direction, peace of mind and financial comfort when planning your new adventure. Rules and regulations can change. The potential impact of Brexit provides an example of how quickly this can happen, so consider taking action sooner rather than later.

Why don’t you contact me to arrange a free, no obligation discussion of your plans – either you will get confirmation that everything is in order, or perhaps some points will come up that you hadn’t thought about. Please call or email me on the contacts below & I will be glad to help you. We do not charge for reviews, reports or recommendations that we provide.

Save Thousands in Gift and Inheritance Tax in Spain

By John Hayward
This article is published on: 27th February 2020

27.02.20

In Spain, you can transfer money or other assets to your children or grandchildren during your lifetime, but these transfers can be subject to gift tax. Tax on gifts in Spain is payable at the time they are made.

However, many autonomous regions have special tax allowances or deductions for these gifts. In the Valencian Community, for example, each child or grandchild could be eligible to receive €100,000 without attracting any gift tax, whereas the tax on €100,000, without any allowances, would be at least €12,000. Also, gifting an asset now will mean that any growth on that asset will be free of any future inheritance tax.

The same allowance is available on inheritance, which means each child can receive €200,000 of your wealth, tax free, saving many thousands in inheritance and gift tax.

Gifting your property whilst you still live it in it, with rights to remain, is another option which many people consider. Known as usufructo, children will inherit the bare ownership of the property, possibly paying some gift tax now, but freeing property from the estate when considering inheritance tax.

As with most things relating to Brexit, what will happen next year is not known publicly at the time of writing. Also, it has been suggested that gift and inheritance tax is about to change in Spain. Therefore, if you are thinking of gifting money, or other assets to your children or grandchildren, this might be an opportunity that will not be around for much longer.

Modelo 720 Reporting Time – 2020

By Chris Burke
This article is published on: 26th February 2020

26.02.20

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.