Making a Will in Spain
By John Hayward
This article is published on: 22nd August 2022
22.08.22
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.
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.
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.
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.
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.
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.
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.
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
UK investments living in Portugal
By Mark Quinn
This article is published on: 2nd August 2022
02.08.22
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.
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.
Spain’s Golden and Non-Lucrative Visas
By John Lansley
This article is published on: 29th July 2022
29.07.22
Prior to Brexit, British residents had the freedom to live, work and travel anywhere in the EU, subject to local requirements, but those wishing to move to an EU country since 31.12.20 face a number of hurdles. Fortunately, there are two schemes that make a move to Spain much easier than would otherwise be the case, which is good news for those who have held long-cherished hopes of a retirement in sunnier climes!
Both schemes have similar basic requirements:
- You must not be a citizen of an EU or EEA state, or of Switzerland, and must be over 18 years of age
- You cannot have a criminal record (past 5 years)
- You must have health insurance, either via a state scheme or from a Spanish insurer
- You must not have entered or stayed in Spain illegally
Golden Visa
Coming from the UK, you will of course not be a citizen of an EU state, but you would need to comply with the other points above and certain others, depending on your situation. The most important aspect is that you must purchase a property in Spain for at least €500,000, without using a mortgage or other loan, and that you can demonstrate you can support yourselves financially. No specific amounts are quoted, but clearly you must be able to prove that the cost of running a property of this value plus general living expenses can be met, the figures mentioned below being a useful guideline.
There are alternatives – rather than investing €500,000 in property, investments of €1million in a Spanish bank deposit or in a Spanish company, or €2million in Spanish bonds, will also qualify you for a Golden Visa.
What are the benefits?
- The Visa will apply to the main applicant and his/her spouse, plus minor children. Adult children or dependent parents can accompany them, but full details will need to be provided
- It allows the holder to work in Spain, subject to meeting local requirements
- The Visa holder does not need to reside in Spain or spend a certain amount of time here in order to renew it
- The Visa provides a residency permit for one year initially, and can then be renewed for a further two years and then 5 years. After 5 years, you can apply for permanent residency and, after 10 years, Spanish citizenship (if you have actually resided in Spain during that time)
- The Visa allows travel within the Schengen area for 90 days out of any 180 (the same as the current restrictions for those resident in Spain)
- The property can be sold once permanent residency is obtained
Non-Lucrative Visa
Again, if you are coming to Spain from the UK, or any other non-EU country, you will satisfy the first general requirement above, but you will also need to meet the other requirements. However, the non-lucrative visa is aimed at those who do not need to work and as such will appeal specifically to those who are retired but who have sufficient income, because you are not allowed to work. It’s also known as a retirement visa for this reason, but it is also possible to undertake work as long as it is for clients based outside Spain.
In addition to the above qualifications, it is necessary to demonstrate income of at least €27,936.96pa for the main applicant and an additional €6,984.24 for each additional family member. So, for example, a married couple would need to prove €34,921.20. This can be in the form of pensions or investment income, but if in the form of dividends from a company it may be necessary to provide confirmation that no work is performed for the company concerned.
It can also be in the form of bank deposits, showing that you have sufficient funds to live on for the first year.
After one year, you then apply to renew your visa for a further two years. The income requirements will have no doubt increased slightly since then (the IPREM figures, on which the calculation is based, is updated annually), and, if basing your renewal application on cash in the bank, you would need to prove at least two years’ worth.
The visa needs to be applied for at the Spanish Consulate in the country of residence of the applicant, and only when the visa is granted can the applicant move to Spain.
What are the benefits?
- As above, the visa can be applied for the main applicant and spouse, plus minor children and dependent children over the age of 18
- The visa provides an initial one year residence permit, followed by the ability to renew for a further 2 years, then another 2 years, and after that for a further 5 years. After 5 years, permanent residency can be applied for
- The ability to travel within the Schengen area, as above
- Even though you are unable to work in Spain, you are permitted to work remotely with clients located outside Spain
- Once established in Spain, it should prove easier to apply for a working visa
Other Issues
Remember that being able to live in Spain, and spending most of the year there, will mean you will be fully exposed to Spanish taxes. Also, coming from a non-EU country will almost certainly mean your investments and perhaps some sources of income may no longer be suitable. For these reasons, it is essential to take professional advice well in advance of a move to Spain in order that any rearrangements can be considered.
Living in Spain after BREXIT
By Chris Burke
This article is published on: 26th July 2022
26.07.22
In this months regular article I’ll be discussing three main concerns I’ve heard from clients recently:
- Changes to UK driving licenses in Spain
- Living in Spain after Brexit, managing your personal finances
- 18 months on from Brexit in Spain – What has changed / what do you need to do to move here?
Changes to UK Driving Licenses (When Living in Spain)
Up until the end of 2020, British driving licenses were valid in Spain. Furthermore, Brits were able to exchange their British Driving License for a Spanish one up until 31/12/20. From this date onwards, Brits residing in Spain prior to this have not been able to exchange their British driving licenses for a Spanish one.
For those residents who failed to meet the Spanish deadline to exchange their licences for a Spanish one, they currently (as of 08/07/22) cannot drive on their UK licence – this does not apply to holidaymakers hiring a car. The Spanish Government has already issued four extensions to the ‘grace period’, allowing Brits to still drive using their UK license. The grace period ended on 30/04/22.
Hugh Elliot, the British Ambassador to Spain and Andorra, issued an update on Twitter stating that they were working on a resolution to this. The belief is that they are hoping to secure a deal, similar to the UK’s deal with France, Sweden and many other European countries, in which UK Driving Licenses can be swapped for the license of that country (providing that the individual is resident).
According to SpanishNewsToday, the proposed deal would allow Brits living in Spain to swap their UK driving licenses for a Spanish one for an additional period of six months. The deal would also see UK Driving Licenses valid for a further six months. If this proves to be the case and you have not yet exchanged your license, I would recommend that you seize this opportunity.
Spain and Italy are the only EU countries in which Driving License exchange conversations are ongoing.
Financial Matters for Brits living in Spain after Brexit
From a tax perspective, for Brits living in Spain before Brexit there should not be a change as it is highly likely that you were a tax resident prior. Being a tax resident in Spain means that ‘your centre of economic or vital interests is in Spain’. As a result, if this is the case you must declare your wealth and worldwide income accordingly.
However, what has changed is the Private Pension agreement in relation to the Wealth Tax. In 2019, a ruling by Spain’s Directorate-General for Tax declared that Private Pensions from non-EU states are now eligible for Wealth Tax. Please read this article on Wealth Tax to find out more about it.
Furthermore, it is now more important than ever that Brits ensure that their finances are managed correctly. From 2021 onwards, Financial Advisers based in the UK are no longer permitted to advise clients based within the EU. The same situation applies to UK based banks, investment and insurance companies and stockbrokers.
If you are still using a UK-based financial adviser or service whilst a resident of Spain, they may well be breaking the law whilst servicing you. This could still be the case even if you only engage with them when returning to the UK to visit, providing that you are a resident of Spain. Furthermore, their professional indemnity insurance may not cover you. This may leave you vulnerable if you were to receive poor advice.
18 months on from Brexit in Spain – What has changed?
We are now over a year on from the end of the Brexit Transition Period (31/12/2020). Whilst British Expats in Spain continue to enjoy their life as it was before the Brexit, overall things are a little more complex than they once were. It’s important to understand these changes – some are more complex than others.
For Brits wanting to move to Spain in 2022, although it is far from impossible, the changes imposed have made this more complex. The door has not closed, however, it is important to seek clarification from experts who are aware of the legislation and will be best suited to providing you with available options.
Many Brits in Spain have experienced frequent ‘run of the mill’ changes to their lives in Spain compared to before Brexit. Whether this be extended queues when going through passport control, taxes on imports or companies no longer shipping to EU customers, most British people in Spain will have been effected at least in a minor way. However, there are bigger issues which people need to be aware of.
90 Day Travel Rule
To summarise, unless you are a Spanish resident or have a visa you can no longer spend more than 90 days in Spain in a rolling 180-day period. This rule has particularly affected Brits who have holiday homes in Spain and used to come and go as they please. Now, it is important to plan your trips to Spain throughout the year to ensure that this 90 in 180-day rule is not broken. Furthermore, this rule does not only apply to Spain. It applies to everyone country in the Schengen Zone.
Brits who are non-residents must also now get their passports stamped as they enter and exit Spain. However, this is a temporary procedure. The EU are working on the European Travel Information and Authorization System (ETIAS), which is set to come in to force towards the end of 2022. This system will allow for the electronic tracking or arrivals and departures.
Spanish Residency Permits – Green Card and TIE
Those who were resident in Spain before the Brexit will keep their Spanish citizens’ rights. They should have the old green NIE card or a new TIE. The TIE, also known as the ‘Tarjeta de Identidad de Extranjero’ in Spanish, should state on it ‘Articulo 50’, meaning that it was issued as part of the Brexit Withdrawal agreement.
Although according to Spanish Law the green card remains valid, Brits have been encouraged to change it. Certain authorities have been said to no longer accept this card as suitable verification. Furthermore, the TIE is far more durable, can simplify administrative processes and acts as a valid form of ID as it contains a photo. In Spain, the law is that you must carry a form of ID when outside of your home. The TIE is allowable whereas the NIE ‘green card’ is not.
Spanish Residency Permits – Post-Brexit Arrivals
There are several ways in which you could apply for a residency permit post Brexit. However, although far from impossible, it must be said that this process is significantly more complicated than if you had arrived pre-Brexit. Working visas have proved challenging to obtain and, depending on your individual circumstance, sponsorship may be required.
If you are retired, you may be able to apply for a Non-Lucrative Visa and Residency Permit. To qualify, you must prove that you are financially stable (with sufficient resources to support yourself moving forward) and have suitable medical insurance along with a clean police record. It is also imperative that you go through the application process in the UK, before arriving in Spain.
Another option is the Golden Visa. You must invest a minimum of €500,000 into a qualifying investment scheme or property. If you were the obtain the Golden Visa, you would not need to abide by the 90 in 180-day rule and you could enter and exit Spain as you please. Please note that this does not give you freedom of movement around Europe, but only in Spain.
If you would like to speak with a Financial Adviser in Spain, Chris Burke is experienced, qualified and legally able to discuss your financial matters. Chris is 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 you would like to find out more or to talk through your situation and receive expert, factual advice about living in Spain after Brexit, don’t hesitate to get in touch with Chris via the form below – or click the button below to make a direct virtual appointment here.
Succession planning in Portugal
By Mark Quinn
This article is published on: 22nd July 2022
22.07.22
How to protect your loved ones
Death and taxes are the two certainties, but it is surprising how many of us fail to properly plan during our lifetimes.
The key considerations for most of us in this area of planning are ‘control’ and ‘taxation’. This is ensuring that assets are passed to the right individuals, in the right proportions, at the right time with minimal taxation. But as expats, in order to ensure this happens, you must carefully consider the succession rules of Portugal, your originating country, and any interaction between the two.
Understanding the Portuguese rules
Unlike the UK, where you can generally leave your assets however you wish, Portugal has ‘forced heirship’ rules. These force you to leave certain proportions of your assets to specific family members and applies to your worldwide estate (except for non-Portuguese real estate).
For expats, the ‘Brussels IV’ regulation means that the rules of your country of habitual residence will apply, so forced heirship could apply to you unless you specifically elect for the succession law of your country of nationality to apply via your Will, or other appropriate legal documents. This must be done during your lifetime and cannot be changed after your death. But it is important to note that this does not affect the tax rules that apply, only the rules around succession, and these two issues should be looked at independently.
There is no inheritance tax in Portugal. Instead, Stamp Duty is due at 10% on assets located in Portugal that pass to someone other than a spouse or direct line ascendants or descendants. This tax is paid by the recipient irrespective of where they live and must be paid before receiving the asset. It is due within 6 months of the death, so for large gifts and inheritances, this could be a problem for your loved ones.
Impact of your nationality
A particular issue for British expats is that their liability to UK inheritance tax (IHT) is not determined by where they live (as with Brussels IV), but by their domicile. This means that even if you live in Portugal, and have done so for many years, you can still be subject to UK IHT as well as Portuguese taxes. There are rules in place to avoid double taxation, but again this will have to be sorted out by the recipients and your executors which might be complex and costly.
It is possible to shed your UK domicile however this is very complex, so specific advice should be sought.
Tax mitigation
IHT is sometimes considered a voluntary tax as with the right planning, there are many steps you can take to reduce the tax liability on your estate and gifts. From a Portuguese perspective, this can be as simple as holding your assets outside of Portugal. For UK nationals, the planning is likely to be a little more complex such as utilising all allowances and the gifting rules, trusts or trust-like structures, or domicile changes.
What about Wills?
UK Wills are valid under Portuguese law but practically, it is likely to be more difficult, costly, and time-consuming for your executor or heirs to go through the bureaucracy in Portugal. We suggest that you have a separate Will for each country in which you hold assets. They should acknowledge the other Wills, however, they must not override or conflict with each other.
Even if you already have a plan in place, it is important to review this periodically, or if your family or financial circumstances change.
With careful planning and our specialist cross-border advice, we can help you create the right estate plan for you and your family.
Are you paying too much on your investments?
By Jeremy Ferguson
This article is published on: 19th July 2022
19.07.22
Paying too much for something is never a good idea!
Unless you have been spending all your time either on the beach or playing golf, it would be almost impossible not to have seen what´s been happening in the financial world at the moment.
Stock markets have had their worst start to a year in 50 years. Almost every day all you see and hear is doom and gloom about rising inflation, rising food prices, rising fuel prices, rising interest rates, supply chain issues, falling consumer confidence. And on and on it goes.
As usual with such issues, it can affect retirees who live here the most, as their Pensions and Investments are normally exposed to the stock markets and various other investment instruments, pretty much all of which are falling at the moment. How much worse can it get? Who knows.. When will it recover? Who Knows.. How long will it take to make up for all of my losses this year? Who knows…!
Nobody does, and looking at history can give a good indication as to the likely answers, but as I keep saying, this could well be history in the making, as opposed to history repeating itself.
Looking at history can help calm the nerves and add perspective. Over the last 150 years there have been 13 major stock market crashes. In 1877 markets fell by 33%, in 1970 they fell by 25% and again in 1974 by 39%. The latest memorable events were the financial crisis of 2008 which resulted in losses of 49% and the Covid lockdown period, which again resulted in heavy losses.
Taking the median of all of these 15 events, an average fall of 33% has taken on average of around 2 years to recover. So, although I have said this may well be history in the making, what we can all be sure of is that things will eventually get better. It’s just a question of how quickly, and that again is an unknown. The speed of recoveries is always quite impressive. Many people miss the fact that if you lose 50% on something, that something has to double in value to return to where you were.
One thing I do know though, is that if you have Pensions and Investments which are expensive, trying to reduce the costs incurred is one thing that will have an immediate positive effect on your returns, and can have an incredibly positive effect on the long-term returns.
Something else that is also relevant to costs, is the type of investments retirees are in. One of the first things to assess when I meet a client is what risk they are prepared to take with their investments. Typically, (as most are retired), I think being driven by caution (or fear) rather than greed is paramount, meaning a client should typically be very concerned about protecting their capital, and therefore their investments should be at the lower end of the risk scale.
Therefore, it makes perfect sense if you are looking to achieve a certain annual return that reducing the annual costs as best you can will mean you can take less risk to achieve your objectives, and therefore see better capital protection.
Many people are coming to me asking if we can take a look at their existing arrangements, and very often we are able to offer a solution to reduce the costs and achieve a more suitable strategy in view of where we find ourselves.
In these times of rising costs, every penny helps, and very often just talking through situations like this and having someone to listen to your worries can be a great help, so if you would like a quick chat in confidence about your financial situation, please get in touch.
Buying a property in Portugal seminar
By Mark Quinn
This article is published on: 18th July 2022
18.07.22
Are you thinking about buying a property in Portugal?
Do you have questions about tax, currency, mortgages, the visa options available or financial planning in Portugal?
Join us on Thursday 28th July at 6pm for this live and free event to learn about everything involved in buying a property in Portugal and talk direct to our panel of experts.
Mark Quinn, our Portugal office Manager will be joining the esteemed panel including:
- Joe Pyke from Berkshire Hathaway Home Services Portugal Property
- André Nunes Melo from NMA – Nunes Melo Advogados
- Steve Eakins from Lumon Currency specialists
- Claudia Schuets from Quinta Finance
