Viewing posts categorised under: Spain

Creating THE Folder…

By Jeremy Ferguson
This article is published on: 18th February 2019

18.02.19

It was only recently I wrote about the fact we are all living longer as a result of improved lifestyles and medication, and the lovely Spanish lifestyle we are all enjoying.

The point I was making is how it is all very relevant to our finances and how we best manage them. But what if you are the one who tends to manage the family affairs and finances: are you confident that all of the papers and documents you hold are not only all in order, but equally as important, somewhere where they can be found and easily understood in the event of your demise? I am aware of many couples who would not know where all of the important documents relevant to their lives are. It is all down to who normally runs the financials, and that can the husband or the wife.

We all spend time every year making sure the ITV for the car is sorted, house insurance and car insurance policies are up to date, tax returns are filed etc. How about putting some time aside to create ‘ THE Folder’ as I like to call it?

So what is THE Folder?
It is a single file (digital or physical) where you keep all of your important personal and financial information together. It allows easy access to these documents in the event that you are no longer around to help. It is really important to have it in place when one family member takes the lead on the family finances; this includes paying bills, managing accounts and storing documents. Even if that is not the case, it is an important exercise.

So what should be in THE Folder?
All documentation that is relevant to running your household with regards to finances, such as:

Birth, marriage and divorce (if applicable!) certificates
Bank account details, including online login details
E-mail and social media account details and logins
Life assurance policies
Funeral plan policy
Pension documentation and statements
Investment documentation and statements
Wills
House ownership deeds

THE Folder can be very simple, and I always suggest contact details for each of the relevant policies etc. should be clearly marked as well. Also, make sure that when THE Folder is complete, you sit down together and explain all of the information it contains, as it will be as useful as a chocolate tea pot if you don’t both know exactly what is there.

Is it worth the effort?
Well, I think it is worth the effort. At a time of loss it can be stressful enough, without having to try to piece together the deceased’s financial affairs. This can be a really difficult time for family members, even more so if your support network, typically children, is back home in the UK.

However, preparing THE Folder is much more than just avoiding stress; if you leave behind an administrative nightmare, you could delay access to inheritors’ funds and potentially cost a small fortune in legal fees.

To give you an example of this, the UK Department of Work and Pensions estimates that there is currently more than £400 million sitting in unclaimed pension pots in the UK.

Which is best…..physical or digital?
This comes down to personal preference. It can be done by either creating an electronic file that survivors can access in the event of death, or an actual paper file. An electronic file can be stored on your main computer, in the cloud or on an external hard drive. Make sure everyone knows how to access the computer, cloud or hard drive though!

Alternatively, if you use a physical folder to keep all of the important information together, make sure it is large enough to keep everything together. The good old shoe box has been a long time winner in this department, although a well organised file does make life a lot easier for everyone.

For what it’s worth, I find lots of people prefer paper and are happier with hard copies of everything. I personally prefer digital, which I have shared with some trusted family members. It may even be worth considering asking your legal advisers to hold the folder on your behalf (electronic is much better for this reason), so a simple visit to them if anything happens means they can assist you far more easily with everything.

Typically they will want all of the information it contains anyway, so by saving time when it becomes relevant, the small annual charge they may make for holding the information will normally be offset.

How often should THE Folder be reviewed?
It is sensible to note the date that it was last reviewed, so that anyone using it has an idea of how up-to-date the details are, and then going forward, reviewing the file on an annual basis should be sufficient, or of course, whenever a significant change occurs which you consider materially important.

And finally…
I have already stressed this, be sure to tell someone about it! There is little point going to the effort of creating such a folder if no one knows of its existence or where to find it…..

10 Rules of Successful Investments

By Robin Beven
This article is published on: 15th February 2019

15.02.19

Successful long-term investment is not just about buying low and selling high – although that is always a good principle to bear in mind.

Share prices can be susceptible to unpredictable external factors ranging from political newsflow to the weather, which can lead to investing – particularly during times of high volatility and uncertainty – feeling a bit like negotiating a minefield.

One way to make sense of such a potentially confusing world is to go back to basics – markets may rise and fall but the rules of sensible investment remain constant.

Buy what is right for you
Just because an investment works well for somebody else does not mean it is necessarily right for you. Consider your own situation – your future liabilities, your investment goals,
timeframes and, most importantly, your appetite for investment risk be it lower, medium or higher – and then make your decision.

Diversify
Spread your risk by diversifying your portfolio across a mixture of asset classes, industry sectors and areas of the world. If you put all your money into a single asset class,
sector or company, your portfolio becomes vulnerable and performance is likely to be volatile. However, mixing it up means that, when the value of one asset is falling, another
might be rising and so could help to compensate towards your expected returns.

Never buy what you do not understand
History is littered with funds that promised a great deal but when faced with pressure from the market, collapsed with all those promises broken. Some shares or funds might sound
very exciting – and perhaps straightforward – but if you do not really understand exactly what the company does or how the fund works, steer clear.

Do not become emotionally attached
It is wonderful if a holding has worked for you, but you do not have to feel too attached – the share or fund does not know you own it. You should look at every existing investment with the same clear-headed objectivity as you did before you bought it – and, when it is time to sell, do so with a clear conscience.

Be your own person – do not follow the herd
Many investors became caught up by the euphoria that surrounded the ‘dotcom’ boom of the late 1990s, simply because everyone else was excited and they did not want to miss out. Consequently, they bought into companies that promised much and delivered little or nothing. It is hard to swim against the current but always take a step back and consider not only what you are buying but why. There are a number of “multi-asset” funds in which to invest and are a good starting place for most. These offer a blend of equities, bonds and cash that are managed for you by very large institutions and cover most investment risk parameters.

Review your portfolio regularly
Your portfolio should have been constructed to meet objectives based on your existing needs and your goals for the future. However, over time, your needs and circumstances can change – as indeed can the markets – and your portfolio may require the odd tweak to make sure it keeps up. Review it regularly – perhaps every one to three years – and make sure
it stays on track.

Do not believe everything you read or hear
Headlines on television and in the newspapers can initially be just as misleading with regard to finance and investment as they are to, for example, sport or celebrity gossip. Try not to
be distracted by day-to-day ‘noise’. Instead, make sure you keep a clear head, remain focused on your objectives and take advice from a qualified professional to ensure you are making the most of your investment portfolio.

We are all living longer, and it’s not all good news

By Jeremy Ferguson
This article is published on: 5th February 2019

05.02.19

When it comes to the way in which we are leading our lives, the world in which we live has changed significantly over not that many years.

Do you remember starting the day off with a bowl of cornflakes smothered in processed sugar and full fat milk, followed by a couple of slices of white processed bread smothered in butter and marmalade (laden with sugar), then washing that down with a couple of cups of strong coffee before we rushed off to work? Then at work the stresses of the day were broken by coffee to keep you going, with a packet of sandwiches and a bag of crisps at lunch time. A sneaky stop off on the way home for a couple of pints for some, then dinner followed by bed. Sound familiar?

Through a combination of increased awareness of the dangers of processed food and sugars, non-stop articles and TV programmes warning us of health issues; people are becoming increasingly health conscious. Add to that the mass of personal trainers and nutritionists out there, and people nowadays are more active and much more aware when it comes to healthy eating and lifestyle.

If you are reading this, you probably made the decision to move to the south of Spain some years ago, and boy, how things have changed as a result. Longer days, constant sunshine, lovely salads, a relaxed life, and probably a lot more time spent outside walking, or for many, playing golf or tennis. Oh yes, and the big one, much less stress!

This is all resulting in something that is causing massive issues around the Globe for all sorts of reasons. People are living longer and needing more medical help along the way, because, despite being generally healthier now, older people still have more health issues than younger people. With that comes an ever increasing stress on healthcare systems. The ageing population also means that the ratio between retirees and workers is swinging in a way that means less taxable income is there to help fund the ever increasing medical needs.

So, while it is great we are all living longer, and therefore having a longer and healthier retirement, how much attention are we paying to this fact with regards to financial health? The pension pot and savings pot we hope you have accumulated now has to last for an ever increasing length of time. Have you considered the need for adequate medical insurance before it is too late to be accepted as a client (because you are too old)? Inheritances may be left to you at a much later stage of your life, and when they are, they could also be smaller due to the fact your parents lived so much longer.

In summary, it is really very important to spend time considering all of these factors. How many of us actually look at this in detail, with an honest reality check regarding the years ahead?

One of the things I like to do with my clients is to make sure we look at the big picture, assessing what you have and how long it is likely to last. Should you be putting the brakes on the lifestyle just a bit for that added longevity financially, or are you being too cautious? It is amazing the amount of couples I meet who are being too careful with money. Or have you got it just about right?

What happens if inflation rises or falls, or the money you have invested loses value or, hopefully, makes more than you expected? Oh yes, and what happens to your income when exchange rates move?

It is always said that you cannot buy time, but strangely enough, most clients I meet here in Spain look a lot younger than they actually are, so in my view, they all seem to have managed to do just that, aided probably by all of the things we know are good about living here. So, if by talking we can remove a little more stress by getting all of those financial ducks in a row, then maybe you can cheat the grim reaper for a good many more years to come.

Récapitulatif sur le MODELO 720

By Cedric Privat
This article is published on: 25th January 2019

25.01.19

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.

Possible effects of Brexit in Spain

By Charles Hutchinson
This article is published on: 6th December 2018

06.12.18

At 11pm on March 29, 2019, the United Kingdom will officially leave the European Union.

Much has been written about the millions of Europeans living in the UK and the millions of Britons living in Europe, but little about the tax consequences for Britons who are non-resident in Spain but have interests in the country, mainly owning real estate properties.

Britons could lose the following tax benefits in Spain when the United Kingdom leaves the EU:

Non-resident income tax on real estate: the Spanish Government imputes a benefit in kind to owners of holiday houses that is taxable as income. By definition, a house owned by a non-resident cannot be their main home, so every non-resident owner of a house in Spain, even if it is not rented out, has to declare an imputed income and pay taxes on that income annually. The income tax rate is 19% for those living in an EU member state, Iceland and Norway, but it is 24% for the rest.

Therefore, Britons could end up paying 24% tax on the imputed income instead of current 19%.

Rental income tax: non-resident owners of Spanish properties who get income from renting them out are liable to Spanish non-resident income tax on the gross income. However, those living in an EU member state, Iceland and Norway are entitled to offset some costs from their rental income and therefore are taxed only on the net profit.

Therefore, Britons could end up paying 24% tax on gross income with no deductibles, compared to the current 19% on net profit.

Inheritance and gift tax: regional governments are empowered to regulate this tax, the consequence being that the tax liability will vary depending on the region. The difference can be substantial.

Non-residents are subject to Federal law, which is normally less favourable than Regional law. However, those living in an EU member state, Iceland, Norway and Liechtenstein can choose the application of the most favourable legislation for their situation, Federal law or Regional law (in which the properties of major value are located).

Therefore, Britons could lose the right to apply for Regional law. In Andalucía, for example, there is a threshold of 1 million euro, meeting certain requirements, to which Britons could not be entitled.

This is just a short list of the possible tax consequences of Brexit. The UK may join the EEA (European Economic Area) like Iceland, Norway and Liechtenstein. If the Norway-style agreement is adopted, a major part of EU law could still apply, but that is by no means clear at this point.

*Source: JC&A Abogados (Santiago Lapausa)

BREXIT and our right to remain in Spain

By Barry Davys
This article is published on: 29th November 2018

29.11.18

Brexit and our Right to Remain in Spain

There is much work still being carried out by both teams in the Brexit negotiations, despite the Withdrawal Agreement. However, until all issues have been agreed upon, including the Northern Ireland border issue, fish and Gibraltar, and the UK Parliament has approved the agreement, nothing is certain about the Brexit.

For those of us living in Spain, there is something we can do now which provides some protection. We have been recommended to do this by the British Embassy in Spain. The action we can take now is to register for “Permanent Residency”.

Without having to give up our British passport or take Spanish citizenship, we can apply for permanent residence if we have lived here for more than five years. This gives us the same rights as a Spanish person to reside in Spain. Making this application whilst Britain is still part of the EU will be easier than when Britain is not part of the EU.

If you already have a residency card, please check to see whether it contains the word “Permanente”. If it does, you have already completed this process. If you have a card that does not include this word, you should complete this process.

I am applying for permanent residency as I write this article and it is not (famous last words) onerous. Other people who have completed it have found the same. There are good notes, including information on what is required to make the application, at this web address. There are two forms that are required: one is the application form and the other is the payment of the fee form. Supporting documentation is also required; this is listed in the notes on the website above.

The completed forms are submitted at your police station that deals with “extranjeros”. There are several in Barcelona, but in the Costa Brava, Girona is the place to go. Some advice suggests that the payment form should be first taken to the police station and then to the bank. Others suggest payment first (an online option is available) and then taking proof of payment with your application to the police station.

The application form is the Modelo EX-18 here and the payment form is the Modelo 790.

Confirmation of our residency status is essential for our tax situation too. I therefore recommend that if you can, you apply for permanent residency. Please feel welcome to Whatsapp me if you wish to discuss your situation at +34 645 257 525 or email barry.davys@spectrum-ifa.com

Deal or No Deal…?

By John Hayward
This article is published on: 20th November 2018

20.11.18

As someone who has lived and worked in Spain for more than 14 years, and keen to stay here with my family for the foreseeable future (children moving to other climes accepted), I am very interested in the rights of British citizens in Spain post Brexit. A colleague of mine is part of a group in Italy set up to protect the rights of British citizens there. A member of this group has put together a very comprehensive list (non-exhaustive) of things that you may need to do to prepare for a No Deal Brexit scenario, which after the events last week, seems to be becoming an ever-closer reality. I have made the list more Spanish.

Whilst there may be some deal agreed anywhere up to teatime on the 29th March 2019, there are several items on the list which many people should already be applying.

At the same time we don´t want to get caught up in scaremongering, I have come across several reassuremongers who just choose to live in the “it won´t affect me” world. There are already changes being made to British statutes in readiness for leaving the EU, with or without a deal. Getting one´s house in order now is almost certainly going to be easier than from 30th March 2019 onwards.

Here is your almost definitive list of things to do to prepare for a NO Deal Brexit.

1. MAKE SURE YOU ARE LEGALLY RESIDENT IN SPAIN UNDER CURRENT RULES.

That means you should:

Apply for residencia under the current rules. As an EU citizen you must register as a resident if you plan on living in Spain for more than 3 months.
You should register in person at the Oficina de Extranjeros (immigration office) or designated police station in the province where you live.
Before going to your local Oficina de Extranjeros or designated police station, you must make an appointment online, which can be done on the Spanish public administration website.
Once on the online appointment booking system, you should select the province where you live and then the option “Certificados UE” and follow the instructions to select and confirm your appointment time.
When you go to your appointment, you will be required to provide documents to support your application. You will need evidence of a specified minimum level of financial income which could be in the form of a letter from your Spanish bank manager and, if you are not working, private health insurance or an S1 (which you obtain from the UK if a pensioner). This will evidence your legal residence in Spain and give you proof that you were legally resident on 29 March 2019. This may be like gold dust in the case of a no deal exit, and if there is a Withdrawal Agreement it will help you benefit from a streamlined process to receive a new card if necessary under post-Brexit rules.
Years of living in Spain do not necessarily count – only legal residence. So if you have been living ‘under the radar’ so-to-speak, try to rectify the situation in advance of 29th March 2019.
Apply for a Residencia de carácter permanente (‘permanent residence’) under existing EU provisions if you have been legally resident for at least 5 years. It is the best evidence that most of us can have of our long-standing residence in Spain.
Make sure that you’ve submitted tax returns in Spain. As a resident, (whether in the first 5 years or afterwards with Residencia de carácter permanente, you are required to submit tax returns and pay tax in Spain on your global assets, income and gains even if all of them originate from the UK).
Make sure that you either have private health insurance (obligatory for the first 5 years of residence unless you have an S1 from the UK or are working), or that you’re registered in the Spanish health system (e.g. you already have a Residencia de carácter permanente under existing EU provisions).

2. CREATE, AND KEEP UP TO DATE, A DOSSIER, AS IF YOU ARE APPLYING FOR RESIDENCIA OR RESIDENCIA DE CARÁCTER PERMANENTE OR CIUDADANÍA ESPAÑOLA, IN PARTICULAR:

Collate copies of as many of your tax returns as you can get – tax returns, proofs of payment and receipt. These days there is online access to your tax files and records.
Put together a file of utility bills for at least 10 years if you can. This will prove your continued residence.
If your name is not on the bills for your household, or on any utility bills, get it added now.
For women in particular: make sure that the name on bills, bank statements, pension statements, payslips etc. matches the name on your passport if possible.
Put together a file of bank statements, wage slips and/or pension statements for the last 5 years if you’ve lived here that long. Longer is even better – 10 years is best. You may need these to prove the stability and sufficiency of your resources.

3. CHECK YOUR PASSPORT
Make sure your passport will be valid for several months after 29 March 2019. If not, consider renewing it early. Also, check your signature.

4. MAKE SURE YOU ARE IN SPAIN ON 29TH AND 30TH MARCH 2019
This is probably not the best time to make a family visit to the UK! Transport could be chaotic, with no agreements on air or other travel between the UK and EU.

5. TOP UP YOUR MEDICATION

If you currently rely on an S1 form for access to the Spanish health service and/or you need regular medication, think about making sure you have a good supply of it on 29 March 2019.
If the worst happens and the reciprocal health care system stops on that date it might take several weeks to get an alternative system up and running and there may be short term chaos. Making sure that you have the permitted 3 months of long-term medication would mean that you’d avoid having to pay full whack for your meds or being without a family doctor while the situation was resolved.

6. CHECK YOUR DRIVING LICENCE

If you’re still using a UK driving licence, apply for a Spanish licence now. It’s relatively straightforward and for most people, it can be exchanged (with some fees and a medical) without having to take a full Spanish driving test (theory and practical). It’s possible that UK licences will not be valid in the EU in the case of a no deal Brexit.
Consider applying for an International Driving Permit if you regularly drive in the UK.

7. THINK ABOUT MOVING MONEY
If you have bank accounts, savings or investments in the UK, consider moving them to Spain or into Spanish compliant vehicles, or some other EU jurisdiction now. Sterling may drop suddenly in the case of a no deal exit; there may also be temporary problems moving money in and out of the EU.

8. TRY TO HAVE A FINANCIAL BACKSTOP
If at all possible, try and make sure you have access to enough cash to see you through two or three months, especially if your income comes from the UK and is transferred monthly.

9. CONSIDER YOUR PERSONAL PENSION
If you have a personal pension (not state or public service occupational) and have not yet retired, think seriously about cashing it in if you’re old enough (take financial advice on the tax implications of cashing it in before doing so), or transferring it. A detailed pension analysis would be required to look at the suitability of doing so but it might just be possible to remove your pension from future UK political and tax problems as a result of No Deal Brexit scenario. There may be issues with passporting rights after Brexit that could cause problems with insurers making payments to those living outside the UK.

10. LOOK AT WAYS YOU CAN MAXIMISE YOUR INCOME AND MINIMISE YOUR EXPENSES

This applies particularly if the bulk of your income is in sterling, which may take a serious hit after a no deal exit. Can you survive if sterling hits parity? Goes below parity? What’s your bottom line? What can you do to turn your income into euro income?
Create a personal financial contingency plan. Look at ways you can cut your spending temporarily, and at ways you could create additional income.
Get any potentially expensive dental or optical work done now.

11. IF YOU HAVE A BUSINESS THAT RELIES ON ATTRACTING PEOPLE FROM THE UK.

Can you change your client demographic? Whatever the deal or no deal, British people may limit their travel to the EU next year and you may need to find new clients if you’re to survive financially. Make sure you have a website in the language of the nationality of people you may wish to attract, if you haven’t already, and that you begin to advertise NOW to attract other customers.
But …
If there is a no-deal Brexit, it is uncertain as to whether you will be able to continue to run a business at all.
Even if there is a deal, you may not be able to provide services to customers in other Member States: that is still to be decided.

12. PUT SOME WORK INTO LEARNING SPANISH

Whether there is a deal or not, we may be required to re-apply for residencia and/or Residencia de carácter permanente.
We do not know whether a minimum level of Spanish language ability will be required (to date it has not been), but it is a good opportunity to work on the language skills. If nothing else, it opens other social doors and means you don´t have to stick to the same bar, club, or shop

13. THINK ABOUT, OR RE-THINK ABOUT, APPLYING FOR SPANISH CITIZENSHIP

For many people, their British identity and nationality is important to them and the idea of taking out Spanish citizenship has been regarded as ‘only as a last resort’. For some of us, a no deal Brexit might be that ‘last resort’. Spanish citizenship won’t guarantee all the rights you currently hold as an EU citizen (mutual recognition of professional qualifications, for example) but it will guarantee you the right to reside and to work – and as an EU citizen you’d continue to benefit from full free movement rights.
It you are thinking of applying for Spanish citizenship, try to ensure your application is lodged before 29 March 2019. The Spanish authorities do not say how long the process will take but assume at least months (las cosas de pálacio van despacio). In addition, language tests will be required (see point 13). If you’ve already made the application, there is more chance of everything passing through than if you wait till after 29 March when all the rules may change.
Be aware that taking out Spanish citizenship may affect the taxation of certain pensions and you should take good financial advice before applying.

14. MARRY A SPANIARD
This may not be as easy as it once was, with changes to immigration laws, but it might be a solution for you, especially where children are involved.

15. GET YOUR PROFESSIONAL QUALIFICATIONS RECOGNISED NOW

The European Commission has said that, whatever the outcome of the negotiations, Brexit does not affect decisions made pre-Brexit by EU27 countries recognising UK qualifications under the general EU directive on the recognition of professional qualifications (Directive 2005/36/EC). For details of which qualifications are covered see
https://ec.europa.eu/growth/single-market/services/free-movement-professionals/qualificationsrecognition_en
So if you have a UK qualification covered by that Directive and you need to be able to use it, apply to get it recognised before March 30th 2019.

16. ABOVE ALL…DON’T PANIC.

This is about hoping (and working) for the best, while preparing for the worst. Whatever happens, you won’t be alone.

And there you have it. There isn’t a better list anywhere about what to do in a NO Deal Scenario. I would like to say that I think that some kind of deal/arrangement will be agreed in the end because there is too much at stake on both sides of the Brexit divide, BUT I have to admit that I was wrong about Brexit happening in the first place and also about the election of Donald Trump as US president. I was convinced neither would happen. This time I am taking precautions and implementing most of the items on this list. I hope you do too.

Arts Society de la Frontera – Costa del Sol, Spain

By Spectrum IFA
This article is published on: 20th October 2018

20.10.18

The Spectrum IFA Group again co-sponsored an excellent Arts Society de la Frontera lecture on 17th October at the San Roque Golf & Country Club on the Costa del Sol. We were represented by one of our local and long-serving advisers, Charles Hutchinson, who attended along with our co-sponsors Richard Brown and Harriette Collings from Tilney Investment Management. Tilney were invited to a private lunch afterwards where they met potential clients.

The Arts Society de la Frontera (previously named the Decorative & Fine Arts Society) is a leading arts charity which opens up the world of the arts through a network of local societies (such as in Spain) and national events throughout the world.
With inspiring monthly lectures given by some of the world’s top experts, together with days of special interest, educational visits and cultural holidays, the Arts Society is a great way to learn, have fun and make new and lasting friendships.

At this event, over 175 attendees (probably a record Spectrum sponsored attendance) were entertained by a talk on Gold in paintings and wall coverings entitled “As Good as Gold” by Alexander Epps who is one of the UK’s top experts in this field. She gave an excellent talk and engaged the audience for almost an hour!

The talk was followed by the sponsored drinks reception which included a free raffle for prizes including CH produced Champagne, wine, a tea set and a lovely coffee table book on Gold craftsmanship. Tilney also supplied a cocktail shaker designed and beautifully crafted by Viscount Linley, the Queen’s nephew, which caused a further stir after their last event’s prize!

All in all, a great turnout and a very successful event at a wonderful venue. The Spectrum IFA Group are very proud to be involved with such a fantastic organisation and we are booked to sponsor further lectures this December and March next year.

Brexit uncertainty and much more…

By John Hayward
This article is published on: 19th September 2018

Brexit uncertainty, losing access to UK bank accounts, victims of mis-sold pension and investment plans, personal visits from HMRC, and kids (sort of) go back to school

Brexit uncertainty
Not for the first time, I was asked how Brexit would affect my work in Spain. My standard answer is I don´t know, in the same way I don´t know for sure what the weather is going to be like tomorrow, irrespective of the forecasts which are given. Based on warnings, especially from social media sources, the weekend should have seen us floating down to Masymas on a dinghy. As it turned out, we had a pretty heavy shower providing some surface water in which a toy dinghy would probably have avoided running aground. Of course, I understand that other parts of Spain have suffered; coastal areas have been hit with tornadoes and waterspouts. My point is, even if you have a good idea what is going to happen, it is rare that things will happen as predicted. In fact, I´m not sure that anyone actually predicted the tornadoes. This happens so often in the financial world. With Brexit, I do not know what will happen. Deal or no deal. Take the money or open the box. Perhaps just phone a friend when necessary. I will just continue to jump the hurdles as they are laid out and not base my actions, or those of my family, on media guesswork, which is often a mile off the result.

Losing access to UK bank accounts
Headlines, both in newspapers and on the television, gave a couple of elderly people a shock. They believed they would lose access to their UK bank accounts after a no deal Brexit. This story first appeared in August this year and was highlighted again this week on television. The fact is that there will be certain banking facilities which, if there is no deal, may or may not, be available for a person living outside the UK. This refers more to deposit and loan arrangements, not to the account itself. Receiving money in the form of a pension may also be an issue in that, according to those who appear to know, making a payment from a UK pension to an EU country will be illegal. The alternative will be to have the payment made to a UK bank account for onward transfer to, say, Spain. For those, especially pensioners, who do not have a UK bank account after moving to Spain, it would be a good idea to open one in readiness for what might happen.

Mis-sold pension and investment plans
Unfortunately, I am being asked to help more and more with people who are suffering from poor financial advice. They have savings and pension arrangements that contain investments which arguably are not suitable and, to make matters worse, have not performed leaving policyholders with significant losses. In some cases, there is little we can do. The damage has already been done. However, in other cases we can restructure without incurring additional large set up costs, which are often part of the reason why these plans have not performed. We are always willing to take a look at investments without charging anything. If there is something that we can do, it will be organised in a fair and equitable manner with the details, blood, guts, and all, explained before you commit.

HMRC comes to the Costa Blanca
There was a presentation in Moraira this week with representatives from Her Majesty´s Revenue and Customs focusing on the obligation for UK tax residents to declare income from assets they hold outside the UK such as rent from a property or interest (no joke intended) on bank deposits or gains on investments. People have up until 30th September 2018 to make this declaration. For more detail you can visit this page from the UK Government website: https://www.gov.uk/government/news/hmrc-warns-its-time-to-declare-offshore-assets

The concern for some people was that they, as Spanish residents, had to declare, having missed the point, understandably, that the declaration was to be made by UK residents for foreign assets outside the UK. We already have the asset declaration for Spanish tax residents in the form of the Modelo 720. At Spectrum we can show you ways to position money within investments in what will still be EU jurisdictions post Brexit so that a) you don´t have to worry about what happens once the UK leaves b) you don´t have to declare the investment separately as this is carried out on your behalf and c) the beneficial tax calculation will still apply.

Kids back to school
Friday 7th September was the last day of summer holidays for our children, although my son will argue that they will continue until Christmas when the festive season kicks in. Since they were last in school, what seems like 10 months ago, but is actually only (!) 10 weeks, it is guaranteed that there will be a book missing or a broken pink pencil, our daughter´s favourite. However, we cannot get too excited. For our daughter, September is only half days and so work/school juggling is still a skill we have to develop.

To find out how we can help you with our financial planning in a manner protecting you and your loved ones, contact me at john.hayward@spectrum-ifa.com or call/WhatsApp 0034 618 204 731

Exchange of Information – CRS

By Chris Webb
This article is published on: 30th August 2018

30.08.18

It surprises me that today I am still meeting with people who are blissfully unaware of the global exchange of information, or common reporting standards, that started back in January 2016, with the first actual exchange of information taking place in 2017.

Why am I surprised? Well, for starters, I meet with and hear of people who still attempt to keep their assets under the radar of the relevant tax office, in the belief that if they haven’t declared it or aren’t actively using the asset it won’t appear on any tax or government system.

In Spain, this immediately brings the Modelo 720 reporting requirement to mind, but that’s another topic, which I have already written an article on and which can be found on our website. The CRS is bringing AUTOMATIC exchange of information to the table…

Ultimately, this means that it is now more important than ever to make sure you have reported and are declaring income and assets in the right country.

From January 2016, financial institutions in around 50 countries began collecting information on their clients and their accounts. The purpose of collecting the data in 2016 was to share it with the client’s country of residence in 2017, which was the start date for the actual sharing.

This is not a one-off thing; the exchange of information will be repeated every year, and every year more and more countries are joining the group. According to the Gov.UK website another 53 countries started collecting the information in 2017 to report it in 2018, and in 2018 another 4 countries will begin the process and fulfil reporting to the relevant authorities in 2019.

Looking at the list here: https://www.gov.uk/guidance/automatic-exchange-of-information-introduction you will see that most countries of any relevance to the majority of us are listed. Refer to the note relating to the US as the US exchanges information globally under its FATCA initiative – the Foreign Account Tax Compliance Act.

In fact, I only know of one person who could possibly be in the section where no agreement is in place… yet.

It is important to note that this is a regulatory procedure and there are no choices. It is carried out under the Common Reporting Standard (CRS), developed by the Organisation for Economic Co-operation and Development (OECD).

Quite simply, this means that there is nowhere to hide anymore; this loss of financial privacy affects us all. If you live in one country and have assets in another, your information WILL be shared between countries. Your local tax authority will automatically receive information on the financial assets you own overseas.

One potential client fully believes that this will only happen if your tax affairs are being investigated or if the tax office is querying a specific asset. This is not true, they do not have to request the information because they will receive it automatically.

As an example, if you are a tax resident in Spain and have bank accounts in the UK and investment portfolios in the Isle of Man, the Hacienda will automatically receive the information on these accounts / portfolios from the tax authorities in the countries where the assets sit.

You will probably have noticed that your banks or financial institutions, from outside your country of residence, have been sending you forms to complete to confirm your tax residency. This is a legal requirement on their part. Even not returning these forms doesn’t help you as they will simply assume you are still a resident of the country that you last registered with them, therefore will still report to that tax authority.

The information they will be sharing about your financial assets includes personal data such as your name and address, country of tax residence and tax identification number. They will also be reporting information relating to your accounts such as account balances, investment income, interest earned, dividend payments, income from certain insurance policies and any proceeds from the sale of assets.

As you will have seen above, this sharing / reporting requirement is now firmly in place. In September 2017 the first jurisdictions exchanged their data. Importantly for my clients this list of Jurisdictions includes the UK, Spain and most other EU countries. It also includes the Isle of Man, Jersey and the Cayman Islands which were, historically, places people looked at when placing their financial assets.

Hopefully you can see the importance of understanding exchange of information, or CRS. Think about the complications that could arise… When the local tax office receives information about your assets or income abroad, they will automatically be able to cross reference whether you have accurately reported total global income on your tax return.

For residents of Spain it has taken the Modelo 720 reporting requirement to another level. The Hacienda will now be able to compare the data they are given with your Modelo 720 declaration. In my opinion, it makes the Modelo 720 redundant, BUT it is still a legal obligation to file it!

Tax residents of Spain are liable to pay Spanish tax on their worldwide income, gains and wealth. This includes most income which is also taxed elsewhere, although double taxation agreements mean you aren’t taxed twice. It is still a common misconception that if you have income taxable in the UK then it doesn’t need to be declared in Spain. I can’t reiterate enough how wrong this is. Even if you have made a tax declaration in another country you still need to make the declaration in Spain.

If you haven’t been doing this, I strongly recommend that you regularise your tax affairs as soon as possible. This would also be the right time to look at all your financial affairs.

Most people I meet have several bank accounts and sometimes several investment portfolios and products. When asked they don’t really know why they are set up the way they are, it has just been that way for years. Streamlining your financial affairs can ease the administrative burden now and certainly later in life.

Living in Spain makes it even more important to review your financial assets. What may be “tax free” in the UK is not necessarily “tax free” in Spain.
Are your financial assets approved here in Spain? You probably wouldn’t know unless the differences had been explained to you.

In Spain we have what are deemed compliant products. If you have a compliant bond you will find it is EU based; if you discover your financial solution is based in The Isle of Man, Jersey or Guernsey it is deemed non-compliant. This isn’t meant to be confusing; they are not illegal, but they must be reported to Hacienda and please note that they are taxed differently to a Spanish compliant bond.

The Spectrum IFA Group will only ever recommend a solution that is compliant and tax efficient in your country of residence. In Spain we will not recommend solutions outside of the “approved area”. This is for your benefit!
For a free, no obligation review of you financial assets please get in touch at chris.webb@spectrum-ifa.com or 639118185. If you are in the Madrid region I will personally meet with you, if you live in any other part of Spain OR Europe let me know and I can put you in touch with our local office there.