Financial Tips in Spain – November 2025

I often hear from people who are used to tax-efficient savings and investments in their home country (for example, UK ISAs) and want to find the same here in Spain. Immediately, I explain two key things:

• Unless you qualify for a specialist tax regime such as The Beckham Law, you will generally pay more tax living in Catalonia (and Spain in general) — we pay to live here (and most would agree it’s worth it!).
• It’s not easy to get the right advice when it comes to setting yourself up tax-efficiently in Spain — covering everyday income taxes, deferring and mitigating savings/investment tax, and avoiding common pitfalls that can lead to problems with the Spanish tax authorities.

When arranging your finances, there are three professionals you should have on your side — and in this order:

1. Tax Adviser / Lawyer
They’ll explain, implement, and advise on the best way to set yourself up from a tax perspective in Spain. This is your starting point. Once you’re resident, the “tax clock” starts ticking — so it’s crucial to get it right from the outset.
2. Accountant (Gestor)
They ensure you declare what you should, claim what you can, and stay compliant with Spanish tax obligations. Remember: in Spain, you’re often considered “guilty until proven innocent” — bank accounts can be frozen or assets seized until you legally prove otherwise, which can take years.
3. Financial Adviser
A good financial adviser will first make sure the above two areas are in order. Then, they’ll take the time to understand your situation, your questions and priorities, and build a tax-efficient investment strategy that matches your goals and comfort with risk. They’ll also ensure you’re administratively organised — for example, having the right Will.

Tax-Efficient Investing in Spain

If you’re resident (or becoming resident) in Spain, here are some key points and strategies to be aware of:
1. Taxation for Residents
If you are tax resident in Spain (over 183 days here, or your “centre of interests” is in Spain), you’re taxed on your worldwide income and gains.

• Investment income (dividends, interest, and capital gains) falls under the savings tax scale:

• 19% up to €6,000
• 21% from €6,000–€50,000
• 23% from €50,000–€200,000
• 26–28% above that

• Wealth tax (patrimonio) applies in many regions — some exempt it, but Catalonia it is not.
• Tax-free wrappers from abroad (like UK ISAs) are not recognised as tax-free in Spain.
• Non-compliant investments can lead to worse tax treatment and extra reporting (e.g., Modelo 720).

2. Key Tax-Efficient Investment Structures

Spanish-Compliant Investment Bond (SCIB)
A life-assurance based investment bond recognised by Spanish authorities.

Benefits include:

• Growth inside the policy rolls up tax-free (no annual taxation).
• Withdrawals are taxed only on the gain portion, not the full amount.
• May reduce reporting obligations (like Modelo 720).
• Can assist with inheritance planning.

Important: Ensure it’s a Spanish-compliant product — otherwise, you lose these benefits. While it offers tax deferral, you’ll still pay savings income tax when you withdraw gains (unlike a UK ISA).

Holding Company / ETVE Regime
For those with corporate structures, the Entidad de Tenencia de Valores Extranjeros regime can be highly tax-efficient.

• Dividends and gains from foreign subsidiaries may be 95% exempt from corporate tax.
• Dividends to non-residents can often be distributed tax-free. This is generally for higher-net-worth individuals or corporate setups.

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

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