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Viewing posts categorised under: UK investments

Do you need to submit a Modelo 720?

By Barry Davys
This article is published on: 16th January 2024


Do you need to submit your M720 to the Hacienda before 31st March?

If you have assets outside of Spain you may need to report these to the Spanish tax man on the Modelo 720. In effect it is a “census” as it does not trigger any payment of tax. However, it does help the Hacienda cross check information.

If you have bought or sold an overseas asset in the last calendar year, you may need to submit a M720, even if you have previously submitted a form. Also, if the value of your overseas assets have increased by more than 20,000€ since you last submitted a form you may also need to re-submit. If the answer is “Yes” you must submit your form before the 31st March.

Here is a link to the obligation to report on the Agencia Tributaria (Hacienda) website which lays out if you need to report your bank accounts, investments and properties that are outside of Spain. Google Translate does a good job of translating this, if needed.

You may have seen in the press that the European Court ruled on the M720 rules. I am pleased to report that the fines for non-reporting or mis-reporting have been struck out by the court and new, much lower, fines will be put in place.

Please note that we are seeing articles saying the M720 is no more. This is not the case. In fact the court, whilst removing the very high fines, also said in it’s ruling that they could see the need for the M720.

Please feel welcome to email me if you have any queries about your Modelo 720. If your query relates to share options and the M720 you can choose a time that is convenient tor you for a call using my online system.

UK investments living in Portugal

By Mark Quinn
This article is published on: 2nd August 2022


Can I keep my UK bank accounts, Individual Savings Accounts (ISAs) and other investments?

Moving to a new country is exciting, although it does present challenges. New processes, bureaucracy and language, but it also may mean you have to reshuffle your finances.

Each person should seek individual advice when it comes to financial planning, but here I touch on commonly held assets, the main points that you should be aware of and what you can do about them.

Bank accounts
Whilst many expats will open a new bank account in their new country, most of us also keep our UK bank accounts, not only for practical reasons but also because we understand and feel comfortable holding them.

However, post-Brexit many UK banks are asking account holders living outside of the UK to close their accounts. This can pose a problem because if you have already moved to Portugal, it is unlikely that you will find an alternative UK bank that will be willing to accept new non-UK customers.

The Channel Islands and the Isle of Man are popular alternatives to the UK when it comes to banking, but you should be aware that these are considered ‘blacklisted jurisdictions’ by Portugal and therefore interest is taxed punitively at 35%, rather than the usual 28% or 0% under NHR (Non-Habitual Residence).

Individual Savings Accounts (ISAs)
Firstly, consider the tax dimension. They do not retain the tax exemptions when held by Portuguese residents. For (NHRs), interest and dividends are tax exempt during the 10-year period but realised gains are taxed at 28%. For non-NHRs, interest, dividends and gains are taxed at 28%.

But whether you decide to retain your UK ISA or restructure it will depend on your longer-term plans, some things you might consider are: how long you will stay in Portugal, do you need to make withdrawals, do you want to top up, can you make changes to the underlying investments if a Stocks & Shares ISA, or what are the returns on Cash ISAs?

If your move to Portugal is short-term, or if you are not certain that it will be your long-term home, then there is a case for retaining your ISAs. Although you cannot add to them whilst non-UK resident, you can continue to hold them, and once you return to the UK they resume their tax efficiency.

A planning point you may wish to consider if you have a Stocks & Shares ISA is to ‘rebase’ by selling and then immediately repurchasing the same funds within your ISA prior to leaving the UK to ‘wash out’ any taxable gains accrued to the point of your departure. This way, if you did decide to restructure, encash, or withdraw from the ISA as a Portuguese tax resident in the future, there would be little or no tax to pay in Portugal.

As a general guideline, if you believe your move to Portugal is long-term (as a rule of thumb, 5 years or more) then restructuring and starting an investment vehicle that is suitable for residency in Portugal would make sense for greater tax efficiency, amongst other reasons. If this is the case, planning well in advance is advantageous, as there is no tax on ISA closure for UK residents.

UK investments living in Portugal

National Savings & Investments (NS&I)
NS&I savings and Premium Bonds are popular products held by many UK nationals and are seen as ‘safe and secure’ as they are backed by the UK Treasury.

Aside from this point, they do require you to hold a UK bank account which could be an issue for some. The interest rates offered are low, well below inflation, so you are losing money in real terms and interest is taxable in Portugal, unless you have NHR.

Premium Bonds on the other hand offer no capital growth or income, only the possibility of winning a sum of money. These winnings in turn are taxable in Portugal, not tax-free as they are for UK tax residents – this could be disappointing if you do win that million!

Investments with UK-based Financial Advisers
Most significantly, Brexit brought an end to the passporting rights that allowed UK-based advisers to advise clients across the EU member states and vice versa. This means that many advisory firms may not have the right permission to continue providing advice to clients living overseas.

Obviously, this can be worrying for those who have worked alongside their trusted adviser for many years, but in reality, good financial planning and structures for UK residents are unlikely to retain the same benefits for those living outside of the UK.

Understandably, many UK advisers do not want to lose their clients, and whilst you can continue your relationship with your UK adviser and pay their fees, without the right permissions, you should be aware that they cannot service your accounts e.g. provide investment advice for portfolio rebalancing or fund switches, and more importantly, you might not have proper recourse if anything were to go wrong. This will not only affect your investments and performance, but you will end up paying for advice that you cannot (legally) take advantage of.

Likewise, if you hold offshore investments provided by EU institutions, they may not be able to accept instructions from a UK-based adviser if they do not have the right licenses.

Lastly, there are practical implications. Does your UK adviser understand the rules in your new country of residence? Are you missing out on tax planning opportunities, paying more tax than you have to because you could be structuring or drawing your income better, or have they fully understood the knock-on effect of their advice in relation to income tax, interaction with NHR, or taxes on death?

What can you do?
The overarching message is that Brexit has changed the landscape for establishing and maintaining our investments. Reviewing your personal finances is more important than ever to ensure that you are not hindered when managing and making changes to your investments and savings, but that you are fully protected and have recourse should anything ‘go wrong’.

We are UK-qualified Chartered Financial Planners and tax advisers, so have a firm grasp of the planning and issues UK expats face. We have also been living and working in Portugal for a combined period of 15 years, so we not only understand the local rules and regulations but also have vital local experience and knowledge. If you would like an informal, confidential initial chat at no cost to you, please get in touch.

Can I keep my UK ISA living in Spain?

By Chris Burke
This article is published on: 19th November 2021


As explained on the UK government website, you can keep your UK ISA open if you move abroad. However, it is not possible to add money to the ISA in the tax year after you move (unless you are a crown employee working overseas or their spouse or civil partner). Furthermore, as soon as you stop being a UK resident you must inform your UK ISA provider. If you decide to move back to the UK in the future then you may continue to contribute to your ISA.

ISA’s in Spain – can I get a Spanish ISA?
In simple terms, it is not possible to get an ISA (Individual Savings Account) in Spain. In order to be eligible for a UK ISA, you must be a tax resident of the UK (or a crown employee working overseas or their spouse or civil partner). However, there are financial products available in Spain that are similar to an ISA which can be considered as a viable alternative.

Spanish compliant investment bonds – the ISA alternative?
Similar to the UK ISA, Spanish compliant investment bonds offer tax benefits. Only select accounts are eligible for these benefits, so one must be careful to open an account specifically designated as a Spanish compliant portfolio bond. Although in Spain the gains from the performance of the investment are not completely tax free like the UK ISA, the gains from the Spanish compliant investment bonds still hold notable tax advantages. These advantages can be summarised in the following table:

Benefit Explanation
Capital Gains Tax Reduction No capital gains tax is charged until a withdrawal takes place, allowing the power of compound interest to grow the value of the investment over time.
Tax Savings on Withdrawals Unlike ‘normal’ investments in Spain, you only pay tax on the growth of the investment as opposed to the overall percentage gain. The original investment is known as initial capital.
Annual Tax Return Does not need to be reported on the Modelo 720.
Different Currencies Can be held in a variety of currencies – it is not required to be held in euros.
Inheritance Tax Reduction It can be held jointly meaning that the policy would pass to the survivor in the event of death, preventing complex legal hurdles.
Fund and Provider Choice A wide range of regulated funds qualify, which are offered by international firms such as Prudential and Quilter PLC.

Spanish Compliant Investment Bond – Tax Saving Example

Initial Partial Surrender (Part Withdrawal) of €5,000)

Premium (Initial Investment) €100,000
Surrender Value €130,000
Partial Surrender (Withdrawal) Amount €5,000
Policyholder/Spanish Resident Before Chargeable Events Yes
(Initial Investment/surrender value) x partial surrender amount
(€100,000/€130,000) x €5,000 Non-taxable Portion €3,846
(Initial Investment – non-taxable portion) €5,000 – €3,846 Taxable Income €1,154
19% tax on the taxable income
€1,154 x 19% Tax Due €219
Amount Paid to Policyholder €5,000 – €219 = €4,781
Surrender Value – Partial Surrender Amount
(€130,000 – €5,000) Closing Surrender Value of Bond €125,000

In essence the more the Spanish Investment Bond grows, the more your tax is offset.

If you would like to find out more about the ISA alternative here in Spain or to talk through your situation and receive expert, factual advice, don’t hesitate to get in touch with Chris.

Click here to read reviews on Chris and find out more about his advice.’ ? Or the last few words deleted altogether.

New Spanish tax rules for UK ISAs and investment funds

By John Hayward
This article is published on: 28th May 2021


Brexit increases tax woes for UK nationals living in Spain

Slowly but surely, the impact of the United Kingdom’s exit from the European Union is taking shape. For those UK nationals living in Spain, this could mean higher, and possibly new, taxes. As I wrote last week in my Wealth Tax in Spain article, the Spanish government and regional governments are in desperate need of revenue to cover pensions and the consequences of Covid-19. One source of this revenue will be through applying taxes to people from the UK who hold investments that do not qualify for special treatment in Spain.

At The Spectrum IFA Group, trading as Baskerville Advisers S.L. in Spain, we encourage those who wish to invest to make more from their money in the bank, or those already invested, to use a “wrapper” that is tax compliant in Spain. The main benefit of this is that any tax on gains is deferred until the account holder receives benefits in the form of a withdrawal. There are also other tax advantages that Spanish compliant investments have over those that do not qualify for special tax treatment in Spain.

Part of the “compliant” nature of the products that we recommend is that the companies used to hold the investments report the values, and hence gains, to the Spanish tax authorities. They are also responsible for deducting tax from any withdrawals.

Other important factors to make an investment Spanish compliant are that the distributor (the company offering their products in Spain) must be officially registered with the Spanish authorities and that the funds invested in are based in the EU*.

We meet many people who have UK based investments such as Individual Savings Accounts (ISAs). Others invest in funds using platforms (Online investment facilities) or insurance bonds through UK based companies. Up until 31st December 2020, although gains on these investments may not have been reported to Spain annually by Spanish tax residents, they seem to have been largely ignored by accountants and gestors when completing the annual tax return in Spain. This is possibly due to the fact that the UK was part of the EU and at least part of the compliance stipulations were being satisfied. That is, the funds used were in the EU.

People think that completing the asset declaration using the Modelo 720 is some kind of tax return. It is not. Of course, it gives the Spanish tax office a snapshot of wealth, which in turn could possibly lead to wealth tax being charged, but it is not specifically designed to give the detail of the annual gains, or losses, that occurred in a particular tax year.

The picture has changed dramatically due to Brexit. If you hold investment funds in the UK, these will be some of your responsibilities moving forward:

  • You will have to report any gains each year
  • You have to itemise each element of the investment so that if, for example, you hold 20 different funds, you must detail each one
  • In addition, if your portfolio is made up of income paying funds, any dividends/coupons have to be itemised. Even cash within a portfolio has to be shown separately
  • You need to know exactly when you bought each fund

There is a lot more to consider but, as you can imagine, this is going to be a nightmare situation for many, especially for those who have bought, sold, and then bought funds again over the years.

We can simplify all of this.
For those who have yet to become Spanish tax resident, we can organise your investments so that you never have to experience this incredibly difficult situation. For those who are already tax resident in Spain, we can switch your non-compliant, and potentially painful, investments to compliant ones. If you wish, you can select the same types of fund that you currently hold but in a Spanish tax compliant manner. This is extremely important because it means that, if you move back to the UK without having withdrawn any money from the investment, you will have escaped Spanish taxation on gains made whilst resident in Spain. Added to that, through investment structures that we can guide you to, if you return to the UK, any gains made whilst you lived in Spain, are ignored for UK tax purposes (I will write more on this in another article).

If you would like to legally avoid annual Spanish taxation on your investments, as well as the headaches and additional accountancy costs, you need to act now. The problem is not going to go away unless you leave Spain, which might be an extreme measure. It might be that your investments are in poor shape or that your UK adviser can simply no longer deal with you since Brexit. There is a host of other ways that I might be able to help you so contact me today for a free and no obligation discussion.

*Source: JC&A Abogados

Beyond Brexit… What comes next ?

By Occitanie
This article is published on: 4th March 2021

Welcome to the ninth edition of our newsletter ‘Spectrum in Occitanie, Finance in Focus’, brought to you by your Occitanie team of advisers Derek Winsland, Philip Oxley and Sue Regan, with Rob Hesketh now consulting from the UK.

In this our first newsletter of the year, it is appropriate we say a fervent goodbye to 2020 and look forward to what we all hope will be a better and much kinder year. Although we are heartily sick of hearing the B-word, we can’t let the passing of the UK’s exit from the European Union pass without addressing the question “where do we stand now?” We also invite our investment partners to give their views on the markets for the coming year.

Post Brexit Situation
As far as financial services are concerned, it is (at this stage) a no-deal Brexit. Financial services in the UK employs 1.1 million people, yet so far more time has been spent negotiating fishing rights than financial markets access between Europe and the UK. This financial services relationship between the two sides will be discussed and negotiated over the coming months. What does this currently mean for us expats? We have already seen:

  • Banks threatening to close down bank accounts, because they struggle to find solutions for the ongoing servicing of non-UK resident account holders.
  • Financial institutions no longer being allowed to ‘passport’ their services into Europe – UK based investment managers, and Independent Financial Advisers (IFAs) being just two examples of this. To continue to offer services, each must now open European offices and apply to be regulated through the relevant EU regulatory system
  • We’ve seen the application of duties to goods imported from the UK from online shopping, a totally new concept for most of us
  • The need to apply for a French Driving Licence

These are but a few of the bureaucratic changes brought about by Britain’s exit from the EU.

We have covered some of these Brexit consequences in previous editions of our newsletter, but there is perhaps a more serious implication for those who hold UK investment bonds.

Why are UK Investment Bonds a problem?
Prior to Brexit, as investment bonds issued in an EU country, UK bonds were treated in the same way as assurance vie policies, with only the gain element of the investment subject to income tax and social charges. How quickly your local tax office recognises that this situation has now changed will vary, but in time it is inevitable that questions will start to be asked regarding those withdrawals that you are taking to support your lifestyle.

Why should that bother me?
As a non-EU qualifying bond, your local tax office could, as a worst-case scenario, treat the whole of any withdrawal as taxable income unless the split between capital and gain can be proved. It is more likely, however, that withdrawals from UK bonds will still only be taxable on the gain element, but the taxpayer will no longer benefit from the favourable tax treatment that the assurance vie enjoys, such as the annual tax-free allowance of €4,600 (€9,200 for a couple) after 8 years and the preferential 7.5% rate of income tax. We urge all our readers to assess their current savings and investments, to ensure that they are all France tax compliant. We can help you with those assessments.

investment manager

What can we expect from investment markets this year?
We have invited one of our investment partners to give us their Investment Outlook for 2021. These are the views of Tilney Smith & Williamson that we would like to share with you.

A review of a tumultuous 2020
The investment landscape in 2020 has been dominated by the COVID-19 virus, lockdowns and unprecedented policy easing by Central Banks and governments around the globe. The US election and UK-EU negotiations provided further risks to markets. The pandemic led to a global economic shock that established new multi-generational records. For instance, UK GDP fell by over 11% in 2020, the biggest decline since the Great Frost of 1709 (1).

In financial markets (2), the MSCI All Country World equity index fell 32% in total return terms (including dividends) once COVID-19 new cases spread outside China, while government bonds outperformed as investors became more risk averse. The low point came on the 23 March prompting the Fed to say that it was prepared to buy US corporate bonds as part of a new round of quantitative easing (e.g., asset purchases). Global equities then went on to rally 63% from the trough, supported by – at various points – fiscal and monetary stimulus, economic recovery and hopes of a successful vaccine rollout, to close out the year up 15%.

The main winners of 2020 were ‘growth’ equities and direct COVID beneficiaries such as Big Tech, following widespread adoption of e-commerce and working from home practices. Long-term government bonds benefited from central bank asset purchases. In turn, gold gained from concerns about the debasement of the fiat currency system from money printing: the US created 21% more dollars in 2020 than existed previously. Despite the virus originating in Wuhan, China was one of the quickest economies to re-open and MSCI China equities rose 28%. China’s economy benefitted from lockdowns in the West, since services were restricted, but buying goods was not. China even managed to boost its share of global merchandise exports, driven by stimulus in the West creating demand. The biggest losing sectors were energy (-32%), real estate (-9%) and banks (-11%), with the COVID-exposed UK and Eurozone the laggards in geographical terms.

Be positive

Reasons to be optimistic in 2021

We maintain an optimistic outlook for equities for several reasons. First, the rollout of vaccines and a gradual opening up of economies from lockdowns should encourage households to run down savings rates to sustain consumption.

Second, we expect a synchronised broad-based global economic recovery that supports company earnings. The IMF forecasts that a record 79% of nearly 200 economies will experience growth higher than 3% (3) this year. Not only would this recover much of the lost output last year, but it adds support to consensus global Earnings per Share growth of 28% expected in 2021.

Third, central bank liquidity is still projected to remain highly accommodative. The ECB topped up its pandemic emergency purchase program by €500bn in December to €1,850bn and extended the horizon of net bond purchases to the end of March 2022 (4). In a major policy change in September, the Fed made clear that it intended to “run hot” with regards to maintaining easy monetary policy in order to achieve above 2% inflation (5). Morgan Stanley forecasts that the combined balance sheet of G4 central bank assets will rise by $3.4trn by the end of 2021(6).

The UK and Brexit
Despite the widespread recovery in global risk assets, all UK equity indices were laggards, handicapped by the ongoing Brexit uncertainties and a compositional skew towards value orientated economically sensitive businesses. Should current assumptions over a vaccine inspired economic rebound prove correct, it seems probable that this skew, allied to the removal of Brexit trade uncertainties, could give rise to some relative recovery in UK equity valuations. However, with the longer term balance sheet impact of the Covid lockdowns still to be fully understood, remaining focused on the fundamental quality of the businesses selected, even in an ostensibly cheap market remains paramount.

Investment Risk

Risks to the outlook
In terms of the risks, we continue to monitor: i) a sudden removal of accommodative policy, perhaps if inflation returns at a pace that exceeds central bankers’ expectations, ii) fears of another COVID-19 surge, or a disappointment in the effectiveness in vaccines/a mutation to a more virulent virus, iii) social unrest in the politically polarised United States, and iv) extended valuations in some sectors triggering a broader market rout.

As a reminder to our readers, Spectrum is a registered French company, regulated in France. We are not passported in from the UK, so for us it’s business as usual.

For those of you who still have investments in the UK, whether they be stocks and shares ISAs, investment bonds, pension funds or other investment portfolios, now would be a good time to review these and discuss with your provider as to whether they will be able to continue advising you in a post-Brexit world. Even if your UK provider will be able to continue advising you, they may not be familiar with the French taxation framework and the investments you hold may not be tax efficient in France. We can advise you on investment products that are suitable and tax-efficient for living in France and provide you with ongoing advice to ensure that your financial plan remains on track as your situation and attitude to risk change over time.

Please do not forget that, although we may be restricted on where we can travel at present, we are here and have the technology to undertake your regular reviews and financial health checks remotely. If you would like a review of your situation, please do not hesitate to get in touch with your Spectrum adviser or via the contact link below.

We would love to hear from you with any comments and/or questions, as well as suggestions as to future topics for our newsletter. Please feel free to pass this on to any friends or contacts who you think might find it interesting.

UK pensions and investments after BREXIT

By Andrea Glover
This article is published on: 25th February 2021


After several years of uncertainty, the UK has now fully left the EU and whilst many of us understand exactly what that mean in terms of French residency requirements, the impact on the financial services world is only just starting to unfold.

We asked Andrea Glover, International Financial Adviser at The Spectrum IFA Group, for her thoughts on the matter and to provide guidance to those of you who are affected.

Andrea explained “Brexit ended automatic ‘passporting’ rights for UK financial services in the EU. So, if you either live in France or are looking to move to France, it is important to check that, if you have a UK financial adviser and/or UK insurer, that they can still support you.”

Andrea commented “For those of you living in France, contact your UK financial adviser if they have not already been in touch and ask if they are still able to provide financial advice to you as a French resident. Also, ask your UK insurer if they have put in place measures to ensure that your policy or pension can continue to be serviced. Your insurer or financial adviser should always act in your best interests. It is also important to note that in the case of a dispute with your insurer or financial adviser that you might not be able to refer the problem to an ombudsman or court in France.”

Andrea continued “My advice would always be to seek advice about the rules, from a French tax perspective, for any pensions and investments held in the UK and check that anyone offering you advice, or financial services, is authorised to do so in France. Further, a suitably qualified financial adviser who is based in France will undoubtedly have first-hand experience of living in France and therefore have greater empathy with their clients.”

Andrea went onto say “Giving advice on UK held investments and pensions is only one component of comprehensive financial planning. A qualified financial adviser will also be able to provide guidance on matters such as Inheritance Tax planning in France and look at alternative tax efficient investment vehicles such as an Assurance Vie.”

tax UK & France

For those of you looking to move to France Andrea explained further “Moving to France as a UK citizen is obviously more onerous than previously in terms of residency. I believe this places even greater importance on seeking suitable financial advice before any firm plans to move are finalised.”

From her own experience, Andrea commented “We are receiving a number of enquiries from people looking to move to France, which is firstly encouraging but secondly it means that we can really help clients structure their financial affairs efficiently before they move. We quite often work in partnership with international tax lawyers to assist clients who, for example, have a business in the UK but want to run it from France. Having a clear and defined plan, after seeking advice from the suitable experts, prior to any move to France, is undoubtedly beneficial and avoids any nasty surprises further down the line.”

*This article first appeared in The Local Buzz

Are you and your investments adapting to change?

By John Hayward
This article is published on: 11th January 2021


It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change

adapt your investments to the change

I didn’t write that and neither did Charles Darwin, even though many websites state that it is from Darwin´s Origin of Species. In a way, it doesn’t matter who wrote it. What is important is that it is not necessarily the strongest, or the most intelligent, who have survived this coronavirus. Many people have adapted their lives, with guidance, to avoid contracting the virus and/or passing it on in case they have it without knowing.

When lockdown took affect here on Friday 13th March 2020 panic was rife, which manifested itself through stockmarkets crashing across the world. If there is one thing that we have learnt about the human being, it is that he or she is likely to overreact in times of trouble. Toilet rolls, bleach, and selling off stocks and shares were the focus for many in March and April. Months later, it appears that we are not going to the loo so often, houses don´t need cleaning so regularly, and that the business world is in better shape than a lot of people realise.

I return to the “Darwin’s” theory, focusing on adaptation. Some companies were already struggling pre-Covid 19 (21st century companies with 20th century ideas), so the pandemic has accelerated their demise, whereas other companies have taken advantage of the online and digital world, made more prominent because of Covid-19, and have adapted to the demand created by Covid-19.

Brexit has gone (at last!). Boris Johnson has achieved what he wanted. We shall see where that leaves Britain and the consequences for those of us living in an EU country. We knew that there would be changes; deal or no deal. There will be more paperwork, more checks, more headaches, and less freedom. However, those with the desire to adapt, will. This adaptation should bring security, confidence, and an overall feeling of well-being.

So whether it was Darwin, Mrs Miggins from the cake shop, or the bloke down the tavern, who spoke of adaptation all those years ago, the important thing is to look forward, act responsibly, and ignore all the horrible and, at times, unnecessary press reports and local gossip. Not only will all the negatives affect your mental health but they could also impact your wealth. We are not doctors but we can perhaps help your wealth make you healthier.

How to avoid Spanish taxes on your UK property and investments

By John Hayward
This article is published on: 30th July 2020


Being tax resident in Spain is not your choice
once you have made the initial decision to move to Spain.

Generally, once you have spent 183 days (not necessarily consecutive) in Spain, you are deemed to be tax resident and have to declare income and assets to the Spanish tax office. The tax year in Spain runs from 1st January to 31st December. Unlike the UK, which works on a part tax year basis when someone leaves the UK, in Spain you are either tax resident for the whole year or you are not.

As soon as you know that you will be taking the step to eventually become tax resident in Spain, it is extremely important to make certain that you have arranged your investments and property(ies) in a way that isn´t going to open you up to unnecessary Spanish taxes.

A lot of people will be looking to become resident in Spain before Brexit on 31st December 2020, in case the process becomes more complicated after. However, for those who are worried that applying for a residence card will automatically make them tax resident, let me dispel this fear. It does not. Therefore, you have the opportunity to apply for a residence card whilst taking action to protect your assets free from Spanish tax for 2020, becoming tax resident in Spain in 2021.

UK Property & Tax in Spain

As a tax resident in Spain, a person has to declare all of their overseas assets (over certain levels) as well as the income from these assets. Anything sold, such as a property or investments (ISAs, shares, bonds, etc.), and even a lump sum from a pension which would be tax free in the UK, will be taxable in Spain and this is where there is a potential tax nightmare.

Our advice is usually to sell before becoming tax resident in Spain, if selling is feasible and practical. If you are eligible to take a tax free lump sum, do so before becoming tax resident in Spain. ISAs are also taxable in Spain and although there are ways to legally avoid taxes whilst holding this type of investment, things can become very complicated.

Let me make this clearer with examples of someone who has a UK property and sells it after becoming tax resident in Spain.

Example 1 – Property Purchase 1986

  • You move to Spain and become a permanent resident, and thus a tax resident, in Spain.
  • You own a property in the UK which has been your primary residence since you bought it in 1986.
  • As you have now moved to Spain, it is now a secondary property.
  • You bought it for £48,000. You are selling it for £600,000. As this is no longer your primary residence, Spanish capital gains tax is due on the sale.
  • Even with indexation (which only applies to pre-1994 purchases), the tax bill is over €50,000.

Example 2 – Property Purchase 2004

    • You bought a property in the UK in 2004 for £150,000 and are selling it now for £250,000.
    • The Spanish capital gains tax on the sale would be over €20,000.
    • Unlike the UK, there are no capital gains tax allowances in Spain.

The same principle applies to shares, investment bonds, and ISAs.
You have to pay Spanish capital gains tax on the difference between what you paid for them and what you sell them for, again with some indexation for pre-1994 purchases.

Plan early: Before you move to Spain to help avoid Spanish Tax

You need to draw a line under your asset values now so that you can take advantage of the more beneficial capital gains and property tax rules in the UK and start afresh in Spain without the fear of unavoidable Spanish taxes in the future.

Contact me today to find out how we can help you make more from your money, protecting your income streams against inflation and low interest rates, or for any other financial and tax planning information, at or call or WhatsApp (+34) 618 204 731.

The results are in…

By Chris Webb
This article is published on: 10th June 2020


I trust you are all safe and well and enjoying the additional bit of freedom that moving into Phase 1 has afforded us herein Spain. By the time you read this there is every chance we are into Phase 2 allowing even more freedom. It’s been a long haul for Madrid to get there and there are mixed feelings about how long it has taken…

Personally, I´d rather be safe than sorry, so whilst there have been frustrating times over the last few months, it is probably for the best. Recently I sent a survey out to my clients, who are based all over the community of Madrid. The survey was twofold:

Secondly, being in lockdown has given us all the time and opportunity to evaluate our personal situations. To address administrative tasks we had put on the back burner and to look at all aspects of our financial wellbeing, whether that be assessing emergency cash reserves, job security or even making sure an up to date will was in place.

The response to my survey was fantastic with many responses. Some just answered the questions but the majority also wrote additional comments, which gave a greater insight into their situation. It was interesting for me to read the results and compare the answers to how my family have felt and what we had looked at changing or updating.

I´d like to share some of the results from the survey, but I won’t detail all the questions as this Ezine would be never ending.

It might be beneficial for you to compare the data with your own situation or feelings.

1. Only 30% felt that lockdown was a struggle; the vast majority were not concerned by the restrictions.
2. 80% were comfortable with the transition to online communication, whether that be email or video calling.
3. 100% were concerned about their investments – completely natural when you were watching the fall out on the news.
4. 42% were concerned for their jobs.
5. 95% had sufficient emergency cash reserves to see them through – something we always encourage when dealing with our clients.
6. 50% had excess cash reserves sitting idle in the bank.
7. 62% believed that NOW was a great time to get invested and put more money into the markets. Of that number 55% proceeded and bought in at the discounted prices available.
8. 57% had an up to date will in place. Some admitting to doing it recently after my article titled “The Folder”.
9. 80% felt that their insurance policies were sufficient for their situation; however 40% of these people have requested further information and alternative quotes.

The results made for interesting reading and it was great to see that a lot of people had reviewed things and were keen to look at alternative options.

As a company we have a huge network of 3rd party companies that can assist our clients with all the points raised in the survey.

In Madrid I can recommend teams of lawyers who will offer a free initial

consultation and discounted rates, providing they come from me as a direct referral. This is great for anybody that needs to review their will – you can have the initial conversation at no cost and then pay for the will upon completion.I can recommend teams of accountants or gestors to assist with tax returns, inheritance, and other administrative issues.

During lockdown I also set up a collaboration with an expat insurance broker, which allows us to assist with health insurance, life insurance, car insurance, house insurance and more. The great thing about this relationship is that ALL quotations and policy documentation are in English. Whilst most of you will speak and understand Spanish perfectly well, there are times when something is easier “to get” when it’s in English.

If you want to review your insurances, or just obtain alternative quotes to compare with what you already have, get in touch – there is no charge for a quotation.

Do not delay reviewing your will, insurances, or investments.

Planning yesterday is better than today, which is better than tomorrow.

PS. If you did not receive the survey and want to complete it, send me an email and I´d be happy to share it with you.

UK Investments & ISAs – Tax Treatment in Spain

By Chris Burke
This article is published on: 16th April 2018


With automatic exchange of financial information between most countries now standard practice, most of us already recognise the importance of declaring our assets properly and fully. In the UK, if your accountant or tax adviser declares your assets incorrectly, they are liable; however, that is NOT the case in Spain. I have been contacted by many people with various stories of how their accountants in Spain have reported assets. Sometimes it feels like people are speaking to numerous accountants until they find the one with the answer they want – if the declaration is incorrect though, and leads to an investigation, you are personally liable. Therefore, it is essential to have your assets reported correctly.

It is quite straightforward to understand the Spanish tax treatment of your UK assets. If they are NOT Spanish compliant – that is to say, not EU based and regulated AND the company holding these assets doesn’t have a fiscal representative and authorisation in Spain – then income and investment growth are taxable annually. Note that investment growth on assets such as shares, ISAs and premium bonds is taxable regardless of whether you have taken any income or withdrawals.

Below you will see the main list of investments that need to be declared and the tax rates that apply annually:

Type of Assets/Investment Tax Payable Type of Tax
Investment funds/stocks/shares Yes, on growth Capital Gains Tax (19-23%)
ISAs Yes, on growth Capital Gains Tax (19-23%)
Premium Bonds Yes, on gain/win Income Tax (19-45%)
Interest from Banks Yes, on growth Capital Gains Tax (19-23%)
Rental Income Yes Income Tax (19-45%)
Pension Income Yes Income Tax (19-45%)

Expenses may be able to offset some of the tax on gains, and for long term property rentals you can receive up to 60% discount on net rental income. However, tax reliefs and allowances that applied in the UK are not available to you in Spain.

There are ways of reducing these taxes, by having your finances organised correctly, and in many cases there is also scope to defer tax. This means there is no tax to pay if you are not taking an income or withdrawals from your investment. In fact, the more your money grows, the greater the potential tax saving.

The first thing you should do, and any financial adviser or tax adviser should do, is consider ways of mitigating your tax, both now and in the future. Otherwise you could end up with a ‘leaking bucket’. Many accountants are starting to increase charges for declaring UK assets, which need to be listed individually and where there is often lack of familiarity with the assets held. By the time you have paid the tax for NOT drawing your money, paid your accountant and lost any tax relief that applied in the UK, in most cases there are more cost effective, tax efficient, Spanish compliant options available. Furthermore, for those returning to the UK, there is still generous tax relief which applies to certain Spanish compliant investments.

For an initial discussion regarding your finances and practical guidance on planning opportunities, please get in touch – my advice and recommendations are provided free of charge without obligation –