No more wealth tax in Andalucia

By Charles Hutchinson
This article is published on: 21st September 2022

21.09.22

THIS NEWS IS SO GOOD, WE’RE TELLING YOU
ABOUT IT FOR A SECOND TIME!

Yes, you heard us right, Wealth Tax in Andalucia has been abolished.

The Government in Andalucía is in the process of approving today a 100% allowance for the Wealth Tax liability, as announced by Juanma Moreno, the President of the Junta yesterday, which means in practice the elimination of this tax in the region.

The measure will be effective from Wednesday 21st September 2022 , applicable to Residents in Andalucía and Non-Residents who are liable to Wealth Tax for assets located in this region.

Ten of the top 20 wealth tax payers in 2019 left Andalucia in 2020, resulting in a loss of income for the region of nearly 18 million Euros (3.5 m in wealth tax and 14m in personal income tax). Moreno said he wants people who spend long periods here to make it their permanent home and pay tax here. He estimates it will attract 7,000 new residents which will more than make up the loss of previous revenues.

The Conservative Party, following the tax policy of Madrid where the Wealth Tax was eliminated years ago, has put Andalucía on top of the list of the most attractive locations to live or invest in Spain in terms of taxes, along with other previous decisions taken to practically eliminate the inheritance and gift tax for close relatives, or the reduced transfer tax flat rate of 7% approved in 2021. He also announced a reduction in Income Tax by at least 4%.

Moreno also announced that water consumption tax in the autonomous region will be suspended in 2023.

This measure will boost the Region by removing one of the main barriers for foreigners moving to Spain permanently, or just to buy luxury properties in their personal name, but also attracting those living in other less favourable regions in Spain.

A very welcome and largely demanded decision. If you are planning to move to Andalucia or have delayed doing so until now, please contact me to discuss this important step taken by the regional government and how it could change your and your family’s life style for the better into the future.

Top Tips for expat finances in Spain

By Chris Burke
This article is published on: 21st September 2022

21.09.22

I hope you are well and had an enjoyable summer. This month we cover the following topics (if there is anything you would like to understand more or wish to see covered in these Newsletters, don’t hesitate to ask):

Early Retirement State Pensions in Spain
New Cryptocurrency reporting regulations in Spain
Free Train Tickets in Spain

Early Retirement Pensions in Spain
Did you know that in Spain, under certain circumstances, you can take early retirement before the legal retirement age? But what are these circumstances and what requirements must you meet?

What are you entitled to and how can you apply for it?

This can be quite complicated depending on your situation, and we would recommend taking professional advice so that you can be sure of exactly what you are entitled to.

Book a telephone call or zoom chat with Chris now

New Cryptocurrency Regulations in Spain
From 2023 onwards, Spanish residents will have to declare cryptocurrency holdings in their tax returns. Currently, cryptocurrency holders are only obliged to declare any profits or losses in their income tax returns. The 2022 tax return has a special section for these assets. However, from 1st January 2023, a new regulation will be implemented meaning that all Cryptocurrency transactions must be declared. This has been regulated by Spain’s new anti-fraud law, which is currently at the public hearing stage. It has been set out in a draft bill incorporating several anti-fraud amendments.

The new tax declaration will have to be submitted using the form Modelo 721. Information will have to be included on those who have held cryptocurrency or have been authorised beneficiaries of cryptocurrency at some point during the year (from 2023 onwards). Furthermore, cryptocurrency holders will have to include information on what their final balances are at the end of the year, as well as information on the types of cryptocurrency and the amount of units that they hold, along with the equivalent amount in Euros. This new regulation further reinforces the need to seek professional tax advice if you are a cryptocurrency holder or thinking of becoming one.

If you would like any more information regarding any of the above, or to talk through your situation initially and receive expert, factual based advice, don’t hesitate to get in touch. You can book an initial consultation via my calendar link below or email/send me a message.

Book a telephone call or zoom chat with Chris now

At Last, Wealth Tax is abolished in Andalucia

By Jeremy Ferguson
This article is published on: 21st September 2022

21.09.22

Monday the 19th of September 2022 will be in the history books forever. Having watched the coverage of the Queens funeral on TV, it made me think there is no other country on earth who could have put on such an impressive show for the world to see. It made me feel very proud to be British.

Moving overseas is an exciting and daunting thing to do but if you, like me, have lived overseas for many years, that homesick feeling does hit home sometimes, and the Queens funeral was certainly one such example.

It has been a tough year in many ways. Everything it seems is changing. The reopening from the pandemic has changed the way many people work. Russia’s Invasion of the Ukraine changed the idea of a peaceful Europe. The cost of living has increased due to rising inflation, and now rising interest rates are back with us. All of this has happened after years of peace, cheap energy, low interest rates and non-existent inflation. It seems the longer we live with something, the more powerful it’s passing, something that no doubt made the Queens funeral very emotional for many people.

We now have a King, and the world in which we live is without doubt going to continue to change. Any of you filling up your car will have noticed the cost has come down from the previous highs in the summer, and the general consensus is that inflation will start to slowly come down between now and the end of the year. It isn’t however expected to hit the floor, but rather fall to a much more acceptable level.

When you are retired and keeping a close eye on your savings, investments and pensions, inflation and interest rates are two critical factors to take into account when trying to work out the future. If you have a fixed pension income, it is commonplace to then substitute this with ‘income’ from investments, the spending power of which is affected by inflation. If the investment returns are all over the place, and inflation is doing the same, it’s really important to monitor things closely and on a regular basis. As an example, if things carry on as they are, we may see a return of interest on bank deposits, which has been a factor not taken into account for a long time when making plans for your money.

Contact me now if you would like to discuss your Wealth Tax situation

Tax is something I’ve not really mentioned before, but this of course has an effect on your disposable income. Pension and Investment income can be very tax efficient here if the right planning is taken, but something that has always been a difficult one to deal with is the annual Wealth Tax.

In the past many Wealthy individuals have decided against moving to Andalucia because of the punitive Wealth tax, which in real terms doesn’t actually generate that much revenue each year (estimated at €95m per annum for the Region). It is felt that by attracting more Wealthy Individuals, the increased expenditure and resultant revenues will far exceed that amount, so it does seem to make perfect sense.

Financial planning in retirement isn’t rocket science, but with so many variables effecting how things may look financially going forward, it’s never been more important to make sure your previous plans aren’t sitting gathering dust. Maybe they are not being best suited for the new environment we find ourselves in.
The news has been very negative so far this year, and although the passing of the Queen was a very sad event, it marks a line in history and just goes to show nothing lasts forever. It will be interesting to see how the new King makes his mark in history.

If you would like to find out more about how we help our clients here in Spain, please feel free to get in touch.

The challenges faced when Downsizing

By David Hattersley
This article is published on: 20th September 2022

20.09.22

For many of those that are considering downsizing numerous factors influence this decision. Offspring have grown up and follow their own paths, the need for a family home is surplus to requirements. The death of a partner, or their worsening ill health is also a major factor in making changes. The ageing process makes it harder to “self maintain”, therefore external contractors are required. Recent extreme weather conditions have contributed to additional maintenance requirements around the home. High demand has also reduced the availability of professional contractors and trying to find them can be frustrating and expensive.

Having made the emotional decision , to downsize does it get any easier ? Moving to a smaller property might seem easy, but one has to decide which accumulated treasured possessions and artefacts will be disposed of or left behind.

The next question is where are you going to live? Trying to predict the future is difficult, trusted close friends have died or moved away. Potential reduced mobility, death of a partner,lack of easy access to healthcare and amenities and public transport facilities must be considered .No longer can one live up the side of a mountain, in the country or away from a central urban hub when one will depend on the aforementioned facilities. Very few residential “warden assisted community retirement” homes exist in Spain, unlike the UK.

The next consideration once the property is sold, is what to do with the capital. Does it make economic sense to buy yet another albeit smaller property, or rent ? With the average life expectancy being in the mid 80’s, for those in their late 60’s does it make sense to buy ? With the cost of purchase estimated at between 13% -14% *, and subsequent disposal costs of 7% due to a future change of circumstances does it make sense to “waste” this residual capital when it could be invested to provide an income ? Bear in mind many smaller properties here still require maintenance. If it is a proprty that has a communal pool and gardens, there are annual maintenance fees and in the summer when hordes of holiday makers “invade” what was peaceful and tranquil for 10 months of the year can suddenly become stressful. Having experienced both owning and renting I understand the upside and downside of both scenarios.

Finally the last and most important element is the investment of the capital. There are a viable sensible solutions instead of Spanish banks. With rising inflation sensible capital growth and income are vital as is the relative ease that after the death of a partner the investment can be passed to the survivor without unnecessary complications. The same can be applied to leaving this to one’s heirs. It is both tax efficient and compliant and is accepted by the Spanish regulators. Finally should one eventually move back to the UK, it can be taken with you. It is essential the that your investment has been set up correctly as it is currently not treated as a capital asset when calculating the costs of living in a care home. This means that it stays intact to pass onto one’s nominated heirs. My own experience with my in-laws proved this was the case.

So if you have any concerns, doubts or interest please contact me to arrange a no-obligation initial meeting over a cup of coffee.

Live webinar – 22nd September – Golden Visa in Portugal

By Mark Quinn
This article is published on: 20th September 2022

20.09.22

Thinking of investing in your dream property in Portugal
to acquire a Golden Visa?

On the 22nd of September, our panel of experts will be able to answer your questions about the Portuguese Golden Visa scheme, the health care system, taxes, renting out your holiday home, insurance and currency exchange in addition to explaining the buying and selling process in Portugal.

Our knowledge and expertise in the marketplace will allow us to assist you with the application professionally from start to finish.

Spaces are limited so please register your interest now
to avoid disappointment.

Please feel free to submit any questions or topics you would like to see discussed so that we can make these events as interesting and useful as possible for you.

Your expert panel:

🇵🇹Joe Pyke – Berkshire Hathaway Home Services for your property questions
🇵🇹Steve Eakins – Lumon for all your currency management questions
🇵🇹Mark Quinn BA ATT APFS – The Spectrum IFA Group for tax and investment questions
🇵🇹André Nunes Melo – Nunes Melo Advogados Law Firm for your legal questions including the golden visa
🇵🇹Claudia Schuets – Quinta Finance for all your Portugal mortgage questions

Transferring your pension to a QROP

By David Hattersley
This article is published on: 31st August 2022

31.08.22

Deja-vu, why urgent action is required to transfer your pension to a QROP

A sense of deja-vu is now apparent as the UK is experiencing a similar situation compared to the 70’s. Drawing comparisons especially for those that lived through that era would be unhelpful. However a minor point worth considering were the restrictions on the flow of capital out of the UK. For those lucky enough to travel abroad then a limit of £25.00 cash per person was the restricted limit under the Exchange Control Act 1947. My wife still has her old passport with form PP/A dated 14.02.73. One of her clients of 100 years still remembers how difficult it was to bring money into Spain to buy a plot of land.

For those that already are living in Europe or plan to in the very near future under the golden visa rules, I am not suggesting a wholesale restriction of capital movement . A difference though between the 70’s and now is the growth in personal wealth, with the primary asset being property.

The 2nd biggest asset and perhaps underrated was the growth of money purchase pensions after Mrs Thatcher came to power and for those in their 50’s & 60’s this could be quite considerable. The opportunity to “ distance work “ may have an impact on younger professionals and for those relocating here.

The current government is under extreme pressure, especially the need to raise tax revenue to balance the books, along with the alleged reports of threats to tear up all agreements with Europe.

One politically “safe option” and unlikely to cause uproar and outrage by the general public would be to curtail or even stop transfers to a QROP for those lucky to live or move to Europe.

Why would the government do this ? The payment of a pension held in the UK could be taxed at source as are the current Civil Service Pensions, thereby retaining the long-term tax revenue stream. It would mean filing tax returns both in the UK & Spain. The pension commencement lump sum could also come under review. There certainly wouldn’t be a public outcry for those “ lucky” enough to have sizeable pension pots.

The UK Budget Bill normally has to be debated and passed into law which takes about 3 months. In 2015 negative amendments were made to the QROPs rules that took effect immediately on the day after the budget and was quietly “slipped in”. A case of “ the devils always in the detail”! After all the principle of if one can get away with it once, why not try to repeat a similar process again?

There are many advantages in transferring to a QROPs and at The Spectrum IFA Group we offer and recommend a thorough assessment and report of your individual situation by our qualified specialist at no cost to you. An additional benefit is the long-term service provided as UK based advisers can no longer provide this for residents in Spain and the individual can retain control via a local adviser. A transfer to a QROP doesn’t only apply to UK nationals but any European worker that has built up a “pension pot”.I have been heavily involved in the pensions market since 1987 and have a wealth of experience in this field so if you have any concerns or interest please contact me to arrange a no-obligation initial meeting.

Making a Will in Spain

By John Hayward
This article is published on: 22nd August 2022

22.08.22

Make the list. The kids will love you even more

After what has been a long hot summer, made even hotter with the wild fire we experienced here on the Marina Alta last week (I didn’t panic although my 10-year-old daughter asked me why I did. Thank you to the fire services), I felt that it was time to assess what is going on generally.

I now have a huge list of topics to cover and I aim to get bits and pieces out to you over the coming weeks. I will make just one point regarding investments. Those who are waiting for the war in Ukraine to end, or inflation to return to 2%, before investing could be in for a long wait and miss an opportunity. We have seen a significant bounce in financial markets after a nasty first half of 2022.

I wanted to start this new batch of information with a subject that I have written about before but is still relevant and extremely important. I was with a client a few days ago and we were discussing how essential it is that his children know what assets he has for inheritance purposes. He then commented on the fact that a neighbour died recently and nobody knows her next of kin. What a crazy situation. As in other countries of the world, unclaimed assets will end up boosting Spain’s coffers. From what I have researched, there are many millions, if not billions, of euros that will possibly help us all (no guarantee) if left unclaimed due to there being no will or any other notification of the next of kin.

For help with getting more from your savings, click here to arrange a personal call

Even if there is a clear instruction regarding who inherits what, I have experienced the problem of looking through draws and cupboards and sorting through documents, most of which had been kept unnecessarily.

Plans that we at The Spectrum IFA Group arrange have the facility to nominate beneficiaries. Not only does this save a lot of hassle for inheritors but it can also take the policies outside probate thus making funds available much sooner.

Click on the link below to access The Important Information Document which is here to help and can be used in whatever way you want to use it. It is editable and so you can alter categories, etc. Some people might be uncomfortable telling their next of kin exactly what they have. I appreciate that. However, it is still useful to provide the name of banks, insurance companies, etc., and to note things like Premium Bonds and other investments. You can also name your gestor, accountant, lawyer, and even your financial adviser. I can assure you that your beneficiaries will be grateful, in more ways than one.

The Important Information Document

If you would like to discuss managing your money in these volatile and uncertain times, please do not hesitate to contact me using the details below.

Visit John Hayward of The Spectrum IFA Group or click on the link below. You can also take a look at an overview of who I am and how, with the support of The Spectrum IFA Group, I can help you.

Who are John Hayward and The Spectrum IFA Group (Video)

August update for expats in Spain

By Chris Burke
This article is published on: 17th August 2022

17.08.22

I hope you are well and managing to keep cool, stay safe and ‘push back’ a little if possible. This month we cover the following topics (if there is anything you would like to understand more or would wish to see covered in these Newsletters don’t hesitate to ask):

Covid Update (the last one ?)
Golden Visa Changes in Europe
An Update on having a UK bank/investment/building society account

Covid Update
A quick Covid update to start things off – The Catalan health department have announced that people who have Covid-19 symptoms will be able to request an automatic 5-day sick leave. This announcement was made as a response to the seventh wave of Covid here in Catalonia, which has seen an increase in visits to primary care centres. The measures allow residents of Catalonia to fill out a form on the website of the Catalan health department, ‘La Meva Salut’, explaining why they feel ill.

The measures will not require a Covid test to be taken, and will be automatically lifted on the fifth day. This could prove particularly beneficial for those who are sick and cannot work remotely. The idea behind the new measure is to simplify the process and reduce in-person paperwork for someone who may not be able to attend a health centre.

Golden Visa Changes
The European Parliament is considering implementing changes to the ‘golden visa’ scheme, which is prevalent in many EU countries, including Spain. The scheme allows families who invest over €500,000 into residential property or qualifying investment schemes to receive citizenship and/or residency in the respective country.

Some MEPs have demanded a ban on ‘golden passports’ and specific rules for ‘golden visas’ to fight money laundering and corruption. MEPs have become concerned that EU membership is for sale and have pledged to regulate this area throughout Europe. This includes stringent background checks, reporting obligations for member states and requirements surrounding minimum physical presence in the country for applicants.

Book a telephone call or zoom chat with Chris now

Banks Accounts, Savings and Investments accounts in the UK
There have been reports of UK Financial Institutions requesting Non-Resident UK clients to close their bank, savings and investment accounts in the UK.

National Savings & Investments, home of the NS&I accounts and Premium Bonds which is government backed, is reminding clients that they need a UK bank account to retain their accounts. That would be fine in itself as many people who have lived in the UK still have one of these, however, there have also been reports of Barclays asking clients with EU residential addresses to close their accounts. Therefore, this is having a knock-on effect – for example, to have an account with NS&I you need a UK bank or building society account in your name. If this account is closed (imagine if you had an account with Barclays) then you cannot have an NS&I account also.

This may be a little unsettling if you are living here in Spain and have bank, savings or investment accounts in the UK, but do not worry. If you are affected or concerned by this then feel free to get in contact with me. There are good alternatives to Savings & investment accounts that are Spanish compliant, meaning your money is likely to be more tax efficient and remains with UK based institutions.

Book a telephone call or zoom chat with Chris now

Is it better to pay off your mortgage early or save for retirement?

By Chris Burke
This article is published on: 10th August 2022

10.08.22

One of the more common and difficult questions to answer for clients, more because emotionally people like to pay off their debts and specifically their mortgage (its most likely the biggest debt you will have in your lifetime, if you exclude children!) is ‘Is it better to pay off my mortgage early or save for retirement?’ Well, I am very analytical, which is great being a financial adviser, so I need facts to make decisions and to look forward for clients planning.

Whether you’ve received a pay rise or you’re just planning for the future in general, it can be a challenge deciding how to employ use your hard-earned cash. From a psychological perspective, in a way it makes sense making clearing your debts a priority. However, will you be better off this way or by doing something else with that money/investing those funds? Which option will provide the better return on investment and generate long term wealth for you?

The first step is to evaluate your personal financial situation with a professional financial adviser if possible. There are many variables to take into consideration here such as:

What are your objectives/goals?
Do you have surplus cash each month?
Do you have an emergency fund in place?
What exactly are you looking to achieve?

Choosing to pay off your mortgage early
It can be very enticing to pay off your mortgage early and being debt free whilst owning your home outright. This may be able to save you thousands in the long-run and reduce your monthly outgoings, which could be a solid financial decision. Certainly, in the early years of your mortgage, if you are paying mainly interest on your monthly mortgage payments, then this may be the best option for you. However, have you considered the interest rate you have on your mortgage? Is this favourable when compared to other options? And furthermore, have you looked in to the potential early redemption penalties?

Pros of paying off your mortgage early	Cons of paying off your mortgage early
Save on paying off the interest borrowed	You may cut into your savings (and emergency fund)
Debt free earlier (psychological)	Have you diversified? Is your mortgage your only investment?
More money available to you after	Early redemption penalties
	Are you losing an opportunity to increase your wealth, by missing out on doing something more effective with the money?
	Money is historically cheap to borrow

Choosing to invest your money
Even though paying off a mortgage early can have many benefits and lifts the burden of repaying a large debt, in many cases it may be wiser to invest extra cash instead in the form of investments or retirement funds. With regards to investing for the future, the earlier that you do this the better. Interest builds up over time (the power of compound interest!) so the longer you have your funds invested ‘working for you’ the more they will be worth when it’s eventually the time to use them.

Pros of investing (vs paying off your mortgage early)	Cons of investing (vs paying off your mortgage early)
Potential to see a higher rate of return and increase your wealth	Riskier – returns are not guaranteed
The assets are more liquid – easier to sell if you are in need of cash	Still requires that you make payments
Depending on the type of investment, there may be opportunity for tax savings or for your employer to match the amount	Doesn’t make your debt ‘go away’

So, as I said earlier, I am analytical and its not for me to decide whether anyone should pay off their mortgage early or not, that’s their decision. However, mathematics doesn’t lie so let’s look at a real-life example. The Mortgage payments, rates of return and end results are real figures obtained from our mortgage department and professional investment calculator:

In the below examples I have used €1,930 as the monthly amount in total as this is what came back as the monthly payment for borrowing €300,000 over 15 years:

Case Study 1

Paying your mortgage off over 25 years and also saving for retirement along the way:

Property Value €600 000
Mortgage of €300 000 EUR (50% Mortgage)
25-year term fixed rate at 2%
€1,271 EUR monthly payment
Mortgage paid in full after 25 years

Meanwhile whilst also saving for retirement:

Investing €659 a month for 25 years (€659 + €1,271 adds up to €1,930, the 15-year monthly payment amount below)
5% compound interest
Value of investment/retirement plan after 25 years: €377,425

Case Study 2

Property Value €600 000
Mortgage of €300 000 EUR (50% Mortgage)
15-year term at 2% fixed rate
€1,930 EUR monthly payment
 Mortgage paid off in 15 years

Then (after the 15-year period and mortgage fully paid off)

Investing €1,930 a month for 10 years
5% compound interest
Value after 10 years: €291,000

Comparison Results
After 25 years in case study 1, you will have the value of the property you are living in plus €377,425 towards a retirement fund. After 25 years in case study 2, you will have the value of the property plus a retirement fund of €291,000.

Surmise
The difference is nearly €86,000, which I think most people would consider a decent amount of money. The main reason for this is that investing over a greater period of time will statistically bring you a greater return in your investments than shorter. Emotionally, people may like to pay their mortgage off first and then save for retirement, this will either mean you will have less for retirement in the above example or it will cost you a lot more. You would actually need to save €2,500 per month for the 10 years in case study 2 to achieve the same retirement pot, a whopping €68,400 more for the same outcome.

Should I pay off my mortgage or invest?
Before making a decision, it’s important to do a full-scale financial review (ideally with a financial adviser). For example, do you have an emergency fund in place to cover you in case of any unexpected surprises? Furthermore, take your life situation and goals into account. Do you have any plans to travel which you will need the money for? Or a wedding? Furthermore, how long do you think you will be in your home for? If you are considering moving to another place in the near future, it does not make sense to pay off your mortgage (and potentially paying a penalty).

Both options can be seen as very smart financial decisions, depending on your personal circumstances. But everyone’s financial situation is different. It’s important to take everything into consideration and consult a professional.

If you would like to speak with a Financial Adviser in Spain, I am experienced, qualified and legally able to discuss your financial matters. I am also able to review your current pensions, investments and other assets, with the potential to make them more effective and tax efficient moving forward. If necessary, we can perform in depth financial planning to get you set up/back on the right path/or ready for retirement once I fully understand what you are looking to achieve and your situation.

You can get in touch via the form below – or click the button below to make a direct virtual appointment here.

Book an appointment with me here

Buying a property in Portugal | Webinar

By Mark Quinn
This article is published on: 3rd August 2022

03.08.22

Watch the webinar below

At the end of July Mark Quinn from The Spectrum IFA Group joined an expert panel to discuss the whole process of buying a property in Portugal.

The live event hosted Berkshire Hathaway Home Services and moderated by Lumon was attended by over 50 people from around the world interested in relocating to Portugal.

The questions and answers session touched on subjects such as the various visas options, obtaining a mortgage, overseas payments, wealth management and the legal process.

Our panel of experts based in Portugal

Joe Pyke – Berkshire Hathaway Home Services for your property questions
Steve Eakins – Lumon for all your currency management questions
Mark Quinn BA ATT APFS – The Spectrum IFA Group for tax and investment questions
André Nunes Melo – Nunes Melo Advogados Law Firm for your legal questions including the golden visa
Claudia Schuets – Quinta Finance for all your Portugal mortgage questions

View our guides to living in Portugal

No more wealth tax in Andalucia

THIS NEWS IS SO GOOD, WE’RE TELLING YOU ABOUT IT FOR A SECOND TIME!

Top Tips for expat finances in Spain

At Last, Wealth Tax is abolished in Andalucia

The challenges faced when Downsizing

Live webinar – 22nd September – Golden Visa in Portugal

Transferring your pension to a QROP

Deja-vu, why urgent action is required to transfer your pension to a QROP

Making a Will in Spain

Make the list. The kids will love you even more

August update for expats in Spain

Is it better to pay off your mortgage early or save for retirement?

Buying a property in Portugal | Webinar

Watch the webinar below

Our panel of experts based in Portugal

THIS NEWS IS SO GOOD, WE’RE TELLING YOU
ABOUT IT FOR A SECOND TIME!