Richard and Anne’s Move to Spain:

A Retirement Dream with a Hidden Cost

Scenario 1: Leaving the Money in the Bank

Each year, Richard earned 5% interest. However, Spain taxed those annual gains at 26%, meaning he was only compounding on what was left after tax.

(Note: While 5% is well above typical long-term interest rates, this figure is used to highlight the negative impact of tax on compounding.)

Effective annual growth: Just 3.7% (after tax)
Value after 20 years: €202,269
What it cost him: Thousands in lost growth potential

What looked like a safe, straightforward approach turned out to be far less efficient than it could have been.

Scenario 2: Using a Spanish Tax-Compliant Bond

A friend introduced Richard to a financial adviser, who explained the numerous benefits of Spanish tax-compliant bonds — fully legal investment vehicles often underused by expats. These structures allow investments to grow tax-free until funds are withdrawn.

Richard invested the same €100,000 into a compliant bond, again earning 5% annually. But unlike the bank account, no tax was deducted each year, allowing the full amount to compound uninterrupted.

After 20 years:

Bond value: €265,330
Tax due on gain (€165,330): €42,986
Net amount after tax: €222,344 — €20,075 more than the bank account

Compound Growth Comparison (No Withdrawals)
The graph shows how the tax-compliant bond (orange dashed line) outperforms the bank account (solid line) over time, thanks to tax deferral. Even after paying tax at the end, the bond delivers a much higher return.

Let’s Talk

I help expats across the Valencia region make their money work smarter within Spanish tax rules — always with a view to your entire financial picture, including what happens after you’re gone.

From Confusion to Clarity:

A US Family’s Journey to Financial Security in Spain.

A New Life, Unexpected Challenges

Meet the Johnsons—David, Sarah, and their two children. Five years ago, they moved from the United States to Valencia, seeking a slower pace of life and the Mediterranean lifestyle. They assumed managing their finances abroad would be straightforward. With healthy savings and US-based pensions, what could go wrong?

Quite a bit, as it turned out.

They quickly discovered that managing finances abroad wasn’t just about currency exchange or opening a local bank account. As US citizens, they still had to comply with complex IRS reporting rules—rules they didn’t fully understand. After several failed attempts to find the right financial adviser, they realised they needed expert help.

1. Clarity and Confidence
They now understand exactly how their investments work in both countries. Their monthly income is reliable, their savings are structured efficiently, and currency worries are gone.

2. IRS Compliance Without the Stress
Tax return season used to bring anxiety. Now, with Matt’s support, they’re on top of all IRS requirements. FBAR, Form 8938, and FATCA are no longer mysteries—they’re just part of an organised financial routine.

3. A Future They Can Enjoy
With their finances in order, the Johnsons are enjoying the life they envisioned—traveling, spending time with family, and making the most of their time in Spain without the cloud of financial uncertainty.

Conclusion: Why Expert Financial Advice Matters for US Expats

The Johnsons’ story is one of many. Managing US-based assets, navigating foreign tax laws, and ensuring compliance with IRS rules can be overwhelming for American expats.

That’s where Matt Green and The Spectrum IFA Group come in. Their expertise and network of professional contacts bridge the gap between US and Spanish financial systems, giving expats the confidence to manage their wealth effectively, stay compliant, and plan for the future.

From investment strategy to tax reporting and estate planning, Matt’s holistic approach ensures that you can enjoy your life abroad—without worrying about what’s happening back home.

New Country, New Challenges

Meet John, a British expatriate who moved to sunny Valencia five years ago to enjoy a relaxed retirement on the Spanish coast. While his new life brought exciting experiences and opportunities, John soon realised that managing finances in a foreign country was more complex than he had anticipated.

Back in the UK, John had a firm grasp of his financial situation. But once in Spain, the rules changed – international taxes, currency exchange, and estate planning added unexpected layers of complication. That’s when John understood the value of having local, professional financial guidance.

Conclusion: The Power of Professional Advice
John’s story shows the true value of working with a financial adviser—especially as an expat. Matt Green didn’t just help John manage his money; he gave him confidence, clarity, and security.

What sets Matt apart is his holistic approach. He combines deep expertise in international finance and tax with access to a network of specialists when needed, ensuring that every angle of your financial life is covered.

If you’re living in Valencia—or anywhere in Spain—and want to secure a reliable income while protecting your family’s future, partnering with an expert like Matt can make all the difference.

Have you ever hesitated over a property purchase due to the long-term commitment of taking on a mortgage? What if your investments could do the heavy lifting for you?

Let’s take a simple example. Imagine you want to buy a property valued at €400,000 but would prefer not to use your cash savings for the purchase. With a 30% deposit, you secure a mortgage of €280,000 over 20 years at a fixed interest rate of 3.5%. This results in monthly repayments of approximately €1,206.

You then invest a lump sum of €450,000 into a tax-efficient, Spanish compliant investment bond. Assuming an average long-term annual return of 5%, the investment could generate €22,500 in gross income per year.

After taxes, and recognising the tax-efficiency of the Spanish compliant bond, this income is sufficient to cover the monthly mortgage payments. This strategy allows you to keep your capital invested, potentially growing over time, while the income pays the mortgage. Essentially, your investments are working for you—generating returns that fund your property purchase without depleting your savings.

Working with an experienced financial adviser can help structure the right investment and drawdown strategy.

Using an investment to pay your mortgage isn’t just possible— with careful planning it can be a workable solution for preserving capital, generating income, and building long-term financial security, all while enjoying your new home.

The example above is simplified and intended for general guidance only.

Effective Estate Planning for British Expatriates in the Balearic Islands: A Brief Guide

Estate planning is a critical consideration for British expatriates living in the Balearic Islands. With assets potentially spread across the UK and Spain, and legal frameworks differing between jurisdictions, effective planning ensures that your wealth is passed on efficiently and according to your wishes. Here are the key points to consider:

Planning ahead is essential to safeguard your estate and reduce the likelihood of disputes or unnecessary tax liabilities. British expats in Spain often have assets in both countries, so your plan should address how these will be managed and distributed. Consideration should be given to residence status, the location of assets, and whether your heirs live in the UK, Spain, or elsewhere.

Wills. To streamline the probate process and ensure clarity in both jurisdictions, dual wills can be highly beneficial. This means having one will to cover your UK assets and another for your Spanish holdings. These wills must be carefully drafted to avoid legal conflicts or revocation—coordination between legal professionals in both countries is vital. A Spanish will must comply with local formalities and should reference the UK will, and vice versa.

Assets such as pensions, life insurance policies, and investment accounts may pass outside of a will, depending on the beneficiary nominations made. It’s crucial to regularly review and update these to ensure they align with your broader estate plan. Failing to do so can lead to unintended outcomes, especially if personal circumstances (like marriage or divorce) change.

Spanish Succession Law Spain operates a system of forced heirship, where a significant portion of an estate must go to specific relatives (typically children). However, EU Regulation 650/2012 (Brussels IV) allows foreign nationals residing in Spain to opt for the succession law of their country of nationality. This election must be clearly stated in your Spanish will. Without it, Spanish law may apply by default, potentially overriding your intentions.

UK Inheritance Tax (IHT) Even if you are a long-term resident of Spain, and recognising the recent favourable changes to UK inheritance tax (IHT) rules for many expatriates, you may still face IHT on both UK and non-UK based assets. Careful planning can ensure this exposure is removed entirely. At the same time, Spanish succession tax may also apply based on the location of assets or the residency of beneficiaries. This creates a risk of double taxation. However, tax treaties and relief provisions mitigate these liabilities if utilised effectively.

Solutions. There are several tools and strategies that can enhance estate planning efficiency, including the use of trusts, life insurance policies for tax mitigation, and gifting strategies. Spanish-compliant investment bonds, for instance, may provide tax deferral benefits and simplify succession. The suitability of these solutions depends on personal circumstances and goals.

Professional Advice. Given the complexity of cross-border estate planning, expert guidance is not just helpful—it’s essential. A qualified financial adviser and a solicitor familiar with both UK and Spanish succession laws can ensure your plan is both compliant and effective. Coordinated advice prevents legal conflicts and optimises outcomes for your heirs.

In summary, British expatriates in the Balearics must take a proactive, coordinated approach to estate planning. By understanding the interplay between UK and Spanish law and seeking tailored advice, you can protect your legacy and ensure your wishes are respected.

It is all about the planning, solutions, implementation and continuing support (PSIC). 

We take as long as is necessary to understand your situation and listen to your hopes and plans for the future. It is time well spent because to be effective for you, we work to understand first, which then guides the process for your planning.  In fact it governs how you and your adviser approach each step in our PSIC process..

So, why do wealthy expatriates become clients of The Spectrum IFA Group in Spain?

• • Secure document exchange and secure email
  • We take into account your views, especially in your approach to risk
  • We look forward, not just backwards at past performance
  • Cashflow modelling allows you to see what your financial future could look like and includes a “What if” function to allow you to see potential outcomes before you commit to a decision
  • Investment portfolios are built according to your individual objectives, using a discretionary fund manager if appropriate. Historic performance data from 1990 to 2023 is used for reliable and realistic cashflow forecasting
  • When you become a client of The Spectrum IFA Group in Spain, we take into account the impact of the following in our planning and investment recommendations: Wealth tax, Income tax, Capital gains tax, Inheritance tax, Gift tax, Property tax and how to mitigate the impact of these taxes
  • We plan across generations
  • We understand both UK and Spanish taxes, how they work together and where they conflict, to help with cross-border tax planning
  • Our assistance has included planning leading up to and post business sales, structuring share option vesting, managing property sale proceeds, investment of lottery/premium bond wins and gifts and advice for adult children of clients.
  • Ongoing service which follows a clear process to ensure long-term planning remains fully aligned with your circumstances
  • The Spectrum IFA Group has been advising in Spain for 23 years. We currently have 17 advisers across the group who have been with us continuously for 20 years or more
  • Additional tax guidance and reporting – in Catalonia I work with only two firms of tax lawyers after vetting dozens.
  • I call on the support of a specialist Visa lawyer to advise on and apply for visas
  • Easy to arrange a call with your adviser, Barry Davys, at a time that is convenient for you, using his online system.

• We have a specialist mortgage service within the group – Spectrum International Mortgages is a mortgage broker in Spain with extensive experience handling high value transactions. A search of one estate agent’s offering in the area around S’Agaro, Costa Brava, shows the following available properties:

How did our mortgage broker source a mortgage for a High Net Worth person who had become a tax resident in Spain wanted a mortgage as part of his strategic financial planning to improve his capital efficiency.”
Find out how here.

– 31 over €1M
– 13 over €2M
– 7 over €3M
– 3 over €4M
– 1 over €5M
– 1 over €6M
– 2 over €7M
– 1 over €8M
– 6 with Price by Request

• Our mortgage solutions are available as a stand alone service or as part of our PSIC process – the PSIC process itself is best suited to clients with €500,000 or more to invest

If this is how you want your planning to be managed, book an initial call directly with Barry Davys, at a time that is convenient for you, using his online service. You will be offered the choice of a phone call or a video call when choosing your time.

Are you planning to relocate to Spain and don’t know where to start? Are you a Spanish national thinking of coming back to Spain after more than 5 years in the UK?

Barry Davys was a guest with the Spanish Chamber of Commerce alongside Kle&Vera – the international law firm, in the UK for a recent webinar on Relocating to Spain & the Financial Insights.

You can watch part of this webinar below:

If you have any questions after watching the video or would like to talk to Barry, please use the online calendar booking system to choose a time that suits you.

Ever feel like your wallet has a mind of its own? You set out to save, but somehow end up splurging on that fancy coffee machine or the latest gadget. Let’s delve into the psychological phenomenon known as behavioural confirmation and see how it might be influencing your financial decisions.

What Is Behavioural Confirmation?

Behavioural confirmation is a type of self-fulfilling prophecy where our expectations about others lead them to behave in ways that confirm those expectations. In the realm of personal finance, this can manifest when we project our beliefs onto our spending habits, leading to outcomes that align with those beliefs—even if they’re detrimental.

Spending Habits: The Self-Fulfilling Cycle

Imagine believing you’re terrible at budgeting. This belief might cause you to avoid tracking expenses, leading to overspending, which then reinforces your initial belief. It’s a vicious cycle where your expectations shape your behavior, confirming your original assumption.

Similarly, if you think you’re a savvy investor, you might take on riskier investments without proper research, leading to potential losses that challenge your self-perception.

Investments: Confidence vs. Overconfidence

Believing in your investment prowess is great, but overconfidence can be costly. You might ignore warning signs or dismiss advice, thinking you know best. This can lead to poor investment choices, reinforcing the belief that the market is unpredictable, rather than acknowledging personal missteps.

Imagine believing you’re the next Warren Buffett after a couple of successful trades. This mindset, while empowering, can sometimes lead investors astray. Overconfidence bias is a well-documented phenomenon in Behavioural finance, where individuals overestimate their knowledge, underestimate risks, and exaggerate their ability to create returns.

Initial Success: An investor experiences early gains, attributing success solely to personal skill.

1. Increased Risk-Taking: Buoyed by confidence, the investor undertakes riskier investments without thorough analysis.
2. Neglecting Diversification: Believing in their ability to pick winners, the investor concentrates holdings, ignoring the benefits of a diversified portfolio.
3. Ignoring Contradictory Information: The investor dismisses data or advice that challenges their beliefs, leading to potential blind spots.
4. Potential Losses: Without proper risk assessment and diversification, the investor becomes vulnerable to market downturns, leading to significant losses.

Real-World Implications

• Excessive Trading: Overconfident investors often trade more frequently, incurring higher transaction costs and taxes, which can erode returns.
• Underestimating Risks: Believing they can predict market movements, these investors may overlook potential pitfalls, leading to investments in volatile or unsuitable assets.
• Confirmation Bias: Overconfident individuals tend to seek information that supports their views, ignoring evidence to the contrary, which can reinforce poor investment choices.

Mitigating Overconfidence

• Seek Diverse Perspectives: Engage with financial advisors or peers to gain different viewpoints and challenge personal assumptions.
• Implement Checklists: Before making investment decisions, use a checklist to ensure all factors, including risks and alternatives, are considered.
• Embrace Humility: Recognize the limits of personal knowledge and remain open to learning and adapting strategies.

Think of your financial beliefs as that friend who insists they’re bad at directions. Every time they get lost, they say, “See? I told you!” But maybe, just maybe, if they used a map or GPS, they’d find their way. Similarly, by challenging our financial self-perceptions and seeking guidance, we can navigate towards better financial health.

At the Spectrum IFA Group we can help you by being your GPS through the financial world and design your bespoke road map to make sure we you get to where you want to go.

Happy (Almost) Summer, everyone!

So far this year, the weather has been very unusual, to say the least. Hopefully, things will start to feel a bit more normal soon – which brings me nicely to the financial world, which has been anything but normal! Sometimes it feels like many of us are just pawns in the game that very powerful people play.

In my world, however, many of these ‘games’ are understandable from a financial perspective, and we don’t panic. Instead, we factor in all scenarios and focus on the medium- to long-term goals for our clients.

This month, I’ve put myself in my readers’ shoes and asked:

“What financial planning should I be doing while living in Spain?”

Whether you’re new to Spain (generally considered to be less than three years) or well-established, it’s important to stay financially organised and understand what actions you need to take.

Living abroad as an expatriate requires thoughtful financial planning to navigate both Spanish and international financial systems. Here are the key areas to consider:

1. Understand Tax Residency and Obligations
In Spain, spending over 183 days within a calendar year establishes you as a tax resident, meaning your worldwide income and assets may be subject to Spanish taxation. It’s crucial to understand the rules around tax residency to avoid unexpected liabilities.

2. Strategise Property Sales and Investments
If you own property in your home country, consider carefully when to sell. Selling property in the same tax year you become a Spanish resident can lead to significant capital gains taxes. Planning the sale before relocating may help mitigate this issue.

3. Establish a Comprehensive Estate Plan
Creating a Will that covers both your home country and Spain is essential to ensure your assets are distributed according to your wishes. It’s wise to consult with advisers experienced in cross-border estate planning to navigate the complexities.

4. Optimise Currency Management
Managing currency exchange efficiently can help minimise losses due to fluctuating exchange rates. Consider using multi-currency accounts or international banking services to provide greater flexibility and cost savings.

5. Savings, Investments & Pension Planning
Ensure these are structured to reduce future tax liabilities—whether that’s for withdrawals, passing assets to your spouse or children, or aligning with your investment expectations (e.g., risk/reward balance). Most importantly, work with someone you trust to help manage these assets.

6. Consult with Experts
Whatever your budget, make sure you work with a recommended lawyer, tax adviser, accountant, and financial adviser. In Spain, you are considered guilty until proven innocent, and it can take years to resolve legal issues—during which your bank accounts or assets may be frozen. Many expats are unaware of this, especially if they come from countries where the opposite presumption applies.

7. Use Your Life Experience
When choosing the right advisers, trust your gut—or your “spider senses,” as I like to call them. You’ve built up intuition through life experience, and more often than not, it’s spot on.

Engaging with financial advisers who specialise in expatriate services can provide tailored guidance on investment strategy, tax planning, and navigating financial matters in both Spain and your home country.

By proactively addressing these areas, you can establish a solid financial foundation for your life in Spain – ensuring both compliance with local regulations and alignment with your long-term goals.

I’m here to help you get organised and take those financial worries away. If you’d like to discuss any of the topics above in more detail, or would like an initial consultation to explore your personal situation, you can do so here.

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