When living in Spain it shouldn’t take too long to discover that personal finances work very differently from many other European countries, particularly the UK. Independent advice is hard to find – most people talk to their bank and are told that their main option is to invest in the bank’s own standard products and solutions, which for many people are not suitable or appropriate.
Are there ISAs in Spain?
By Chris Burke
This article is published on: 14th January 2024
14.01.24
Many people from the UK are used to a more sophisticated way of investing, maximising tax efficiency and mitigation through solutions such as ISAs and pensions. These can greatly reduce the tax you pay making a big difference to the amount of money you end up with, in some cases incredibly so.
Is there a Spanish equivalent of a UK ISA?
In short, there is something very similar. It can greatly reduce the tax you pay as your investment grows and can even be set up for your children to benefit independently.
Are there Spanish equivalents of a private pension in Spain?
Yes, there are, however these are vastly different to in the UK. In the UK you can contribute up to £60,000 per year to a private pension. In Spain you can only contribute €1,500 per year. A self-employed person can contribute an additional €4,250 per year. Very few employers in Spain have their own pension schemes and those that do have a limit of €10,000 per year that can be jointly contributed to.
How does the equivalent of the UK ISA in Spain work?
As your money grows any gain you make is not taxable until you receive this money (achieving compound growth). When you access this money, any gain is offset proportionally against the original investment amount, and as such removing this proportion of the gain. For example, if your investment grows by 50%, any partial withdrawals you make have this portion deducted against the gain you have made. Over the years this can make an incredible difference to the tax you pay, particularly as this investment income falls under Capital Gains tax (savings tax) and not income tax, which can become VERY important when paying tax on your monies (pension income falls under income tax).
As a reminder, the tax rates are:
Capital gains tax ranges from 19-26%, income tax from 24-47%.
Many people use this option for their mid-term and retirement planning because they have some flexibility, are portable should you move elsewhere and are also highly tax efficient and compliant in Spain.
Important note on UK ISA’s
Whilst UK ISAs are tax efficient in the UK (all gains are tax exempt), as a Spanish tax resident this is not the case – any gains that arise in your UK ISA must be declared annually and tax paid on these even if you do not access the money. This makes UK ISAs as a Spanish tax resident very inefficient and why many people look for alternatives.
UK ISA Tip when moving to Spain
Before you become a Spanish tax resident, if you encash your UK ISA you realise any gains that would be taxable when you become a Spanish tax resident. This not only includes any annual gain, but more importantly the gain from inception, which as a Spanish tax resident you would be liable for when you encash.
If you would like any more information regarding any of the above, or to talk through your situation initially and receive expert, fact based advice, don’t hesitate to get in touch with Chris.
Click here to read independent reviews on Chris and his advice.
Interest in deposit accounts
By John Hayward
This article is published on: 11th January 2024
11.01.24
Timing when to invest for long term needs is trickier than solving a Rubik’s Cube wearing boxing gloves
As we enter a new year, we face another year of known and, so far, unknown global problems which could impact our finances. Many “experts” will guess and then advise us what will happen but, as so often in the past, be wrong, or lucky if the guess works out to be true. The world is governed by a handful of people. Therefore, there are very few who really know what is happening.
Fortunately, in the Western world at least, we are allowed to get on with our lives with an element of freedom. As financial advisers, especially as old as me, we can make some judgement based on how people react to global events. Some people over react, fed by questionable journalism. In the investment world, this leads to the wealthy becoming wealthier aided by panic selling by the less wealthy enabling the wealthier to buy into the market at a lower cost.
2022 was a rotten year overall for investments. 2020 was not great but people then were more concerned about living with Covid-19 than what was going on with their money. Stock and bond markets both had a torrid time, mainly as a consequence of Covid-19 which introduced high inflation once we had a chance to spend money again. A consequence of this was a reluctance in 2023 to commit to investing at a time where inflation was rampant. History has shown us that investing in traditional markets can overcome inflation. With high inflation came attractive interest on cash, something that we had not seen in decades. Back to the history book and we see that interest rates on deposit accounts have not outpaced inflation over the long term. However, the expression “long-term” seems to disappear from the vocabulary of some investors and short-term problems become the index to follow. Many have caught the interest rate bug over the last few months feeling that doing this would be sensible in the short term and then switch into investment markets when the time is right(?). Paraphrasing Jim Bowen of Bullseye fame, “Let’s look at what they could have won” had they not taken this approach.
Let us look at two different examples of investors. One who was invested on 1st January 2022 with 50% in the Rathbone Strategic Growth fund and 50% in Aegon High Yield Bond fund who decided to sell on 31st December 2022 due to the downturn in 2022 and another who was thinking about investing on 1st January 2023 but decided not to. In both cases, they eventually put their cash into a deposit account with a fixed rate of 5% (for 12 months) in July 2023.
| 1/1/22 to 31/12/222 | 1/1/23 to 31/12/23 | |
| Rathbone and Aegon | -9.10% | 11.45% |
The person who sold from the two funds at the end of 2022 was 9.10% down for the year and only recouped 2.50% (6 months at 5% p.a.) by the end of 2023 instead of 11.45%.
In a similar way, the potential investor, who was holding off until things improved, missed that particular bus. Again 2.50% versus 11.45%. I appreciate that there are underlying charges with our products but nowhere near 9% a year and there are also tax considerations with the deposit account being taxed annually whereas the Spanish compliant bonds that we promote have tax deferred, if not completely negated.
Very few are smart enough or knowledgeable enough or lucky enough to time markets correctly. In the last year we have seen this proven once again.
When I tell people that they should be prepared to leave their money invested for at least 5 years, I often get the response that they are not young and that they may not survive 5 years. In a region such as the Costa Blanca where I live, with 300 plus days of sunshine a year and plenty of olive oil, the risk people face is living too long! In the “good old days” when the life expectancy was 65 or less, long term care and dementia were not a consideration. Making money work over the long term is not only a good idea but possibly essential.
We have products that can work with you and your family throughout your life, and beyond. Following the scaremongering headlines is not a great idea and can be very harmful to your wealth, and your health.
I know that it is possible to solve a Rubik’s Cube wearing boxing gloves but try it.
Italian Tax Changes 2024
By Andrew Lawford
This article is published on: 9th January 2024
09.01.24
Happy New Year to everyone! I hope that you have had an enjoyable festive season and are feeling ready for 2024.
In keeping with the long tradition of Italian governments fiddling with tax rules, 2024 brings with it a number of changes, so let’s dive in and have a look at what to expect.
IRPEF marginal tax rates
For 2024 we will have only 3 marginal tax rates:
| € 0 – 28,000 | 23% |
| € 28,000 – 55,000 | 35% |
| € 55,000+ | 43% |
This abolishes the previous band from €15 – 28,000 which was taxed at 25%, which will result in a net saving for someone with an income of €28,000 of €260 per annum. Don’t get too excited though, because if you have an income above €50,000, the reduction in IRPEF rates is offset by the withdrawal of certain tax breaks, which could lead to you paying the same amount as before.
Residency rules
2024 introduces a modified formulation of the definition of tax residency, in particular through Art. 2 of the TUIR (the Italian tax code). Without getting too deeply into the details, the emphasis seems to have moved from a strict presumption based on whether you have, in fact, declared residency in your local municipality to one based more generally on your physical presence and an evolved conception of domicile. Not much will change for you if you live year round in Italy and are already used to filing tax returns, but if, for example, you have made a determination that you aren’t tax resident in Italy in spite of the fact that you spend a large amount of time here, it would be a good idea to review your position to make sure that it is (relatively) clear under the modified formulation. The changes also need to be considered in the light of any double tax agreements and, from what I have been reading, even the experts are confused about what all this will mean in practice. None of the above is helped by the fact that the Agenzia will not give an advance ruling on whether a given individual is tax resident or not – they will tell you what they think if they ever subject you to an audit!
Careful planning and prudence remain key to protecting your position, so do get in touch if you would like to discuss further, as I can provide an introduction to an experienced tax adviser as part of an overall review of your financial situation.
Inbound Workers Incentive
Those who took up residency before the end of 2023 can continue to use the previous rules, which are far more generous than the updated version, in force from the beginning of 2024.
The incentive currently available is reduced from the previous 70 – 90% income tax reduction to a 50% reduction, capped at an annual gross income of €600,000. The requirement for the time spent as non-resident of Italy prior to making use of the incentive has been increased to 3 years, (or 6 – 7 years if there is continuity in the employment relationship). There is also an increased requirement to maintain Italian residency for 4 years (previously 2), and a requirement for a high level of specialisation in the qualifications necessary for the job in question.
Given the growing complexity of the requirements, it is worth spending some time assessing your personal situation if you are considering making use of these incentives. It is also worth noting that the incentives do not apply to pension contributions, which may reduce considerably the value of the tax break for anyone not planning on being resident in Italy for the long-term.
It is worth reminding anyone making use of these incentives that they apply only to work income; any investments or passive income generated must be declared and taxed according to the ordinary rules. There are plenty of tax planning opportunities available for people transferring residency to Italy, so please do get in touch to discuss your own particular situation – it is never too early to start this process, as a number of potential tax efficiencies are lost if they are not put in motion before becoming Italian tax resident.
Short-term rentals and cedolare secca
For anyone offering short-term property rentals in Italy through Airbnb or similar, there are some changes coming in 2024. In particular, in order not to be considered a business activity, you can’t be renting out more than 4 separate properties. You are also only eligible for the cedolare secca flat tax of 21% on 1 property, while the rest will be taxed at a
rate of 26%. Platforms like Airbnb will continue to withhold 21% from the amounts charged, but this will only be by way of a provisional tax payment, with the property owner having to make up any shortfall in their tax returns.
Aside from the above, you should also take care to register for the new obligatory CIN (codice identificativo nazionale), details of which should be available in the coming weeks. This is a new registration requirement and the CIN must be displayed outside the building in which the short-term rental property is located, or you risk a fine of up to €8,000. There are also new safety requirements relating to fire extinguishers and gas alarms, so make sure you review the new regulations as soon as you can.
Increased IVIE (wealth tax applied to foreign real estate)
As if life wasn’t already tough enough for those owning property outside of Italy (and particularly outside of the EU), the IVIE rate goes up in 2024 from 0.76% to 1.06%, calculated either on the equivalent of the valore catastale (if the property is within the EU), or on the lower of cost or market value if it is outside the EU.
For many people, owning foreign property is simply a sign of the connection they maintain with their country of origin. However, unless you really do need a property in another country, it may ultimately be more trouble (and cost) than it is worth once you take into consideration the difficulty of managing property from afar and its tax treatment. Consider that financial assets, which are vastly easier to manage and can provide a tax-efficient income if set up correctly, are subject to a wealth tax that is more than 80% lower than the tax applied to real estate and can qualify for a 100% inheritance tax exemption. I can provide an objective financial analysis for anyone considering alternatives to their foreign property investments.
CFCs and holding companies
Controlled Foreign Companies (CFCs) have long been a difficult area and tend to get mixed up in the general issue of residency, given that foreign corporate entities can be classified as Italian residents in a similar way to individuals who may consider themselves to be non-resident for tax purposes. The Italian tax treatment of CFCs has hitherto based itself on a threshold level of taxation for the CFC in question: if it is taxed at less than 50% of the equivalent Italian tax, this will attract negative consequences. This threshold level has since been simplified to 15%, with further consideration being given to holding companies that may enjoy a participation exemption. This is a very complicated area, but suffice to say that reviewing any holdings you might have in foreign corporate entities, especially if these are controlling interests, should be part of your Italian financial planning. I can provide appropriate introductions to experts in this field as part of an overall review of your situation.
Financial Update France January 2024
By Katriona Murray-Platon
This article is published on: 8th January 2024
08.01.24
The new year is a great time for setting goals and making resolutions. I read that, according to a recent survey, saving money was the most popular resolution (after losing weight)!
Saving money is a very important habit to have throughout your life. The great thing is that it is never too late or early to start saving and you don’t need to put aside a lot. Just like it is not a good idea to do fad diets but more to make manageable improvements to your lifestyle, it is better not to make too ambitious savings plans but to put aside small regular amounts that build up over time.
The French standard savings accounts are currently earning 3% which will remain as such until the beginning of 2025. You are allowed to put €22,950 of capital into a Livret A and €12,000 into a LDDS. Once you have reached these limits you cannot put any more into it but the interest compounded over the years can be added to these amounts. The LEP is the highest remunerated savings account, currently at 6%, however if you are eligible for this account you should take advantage of this rate as soon as you can as it may drop to 4.2% on 1st February. If you are eligible you can have 2 LEP accounts per household and can put up to €10,000 of capital into it. To be eligible one person alone must not have earned more than €21,393 in 2022 as declared in 2023. Your bank will not automatically suggest that you open this account so it is for you to check whether you are eligible and request to open a LEP. There are other savings accounts and term accounts that the banks may offer but the rates on these are around 3% and unlike the above mentioned accounts, they will be subject to tax and social charges.
Whilst we don’t know how the market will react to various events and political developments in 2024, fixed income assets could continue to provide good earnings this year. Our investment providers have seen good steady returns in 2023 in their more cautious funds. Whilst savings and fixed interest assets are good to have, it is also important to have some equity based investments. According to a Credit Suisse study published in February 2023, the actual annualised return (after inflation) on the savings accounts in France was -0.8% per year between 1923 and 2022, compared with +6.1% from shares.
On the 15th January, if you have had home help expenses (cleaner, gardener etc) you will get 60% of this tax credit paid to you. The remainder will be taken off your taxes in September.
I will be attending our annual conference in Budapest from 22nd to 26th of January and will have lots of information to pass onto you when I hear the presentations from our product providers. Also coming in my February Ezine will be the news from the adopted French Finance law for 2024.
It is never too late or too early to financial planning so do get in touch and recommend your friends to get in touch with me for a free financial consultation.
Happy New Year 2054
By Richard McCreery
This article is published on: 4th January 2024
04.01.24
A tongue in cheek look at the world
three decades from now
The year is 2054. The Trump family presidency is about to enter its fourth decade of ruling power, with Ivanka in charge ever since her father abolished the 22nd amendment of the US constitution that limits anyone to two terms.
Today, the government has a 99% approval rating, according to the state-sponsored broadcaster Fox News, and the Trump family continue to win each election in a landslide, having introduced new rules to make the voting system fair and honest following the collapse of the Biden regime.
However, America is not the technological superpower it once was, having stubbornly doubled down on the use of oil, coal and gas whilst the rest of the modern world switched to clean, abundant renewable energy and electric cars. The technology-hating president Donald Trump eventually decided that the Big Tech billionaires such as Bezos, Zuckerberg and Musk were getting too big for their boots and nationalised their companies, declaring that it was his duty to the people to use his talent for business to run them himself. This move ushered in a new kind of capitalism as their huge profits were directed to fund the collapsing social security system, the construction of border walls sealing off America from Canada and Mexico, and enabling the Trump White House to install gold-plated toilets in every room, making it the envy of African dictators and footballers wives.
The US national debt has climbed to $340 trillion, a tenfold increase since The Donald regained power in 2024, but the Fed has kept interest rates at zero for most of the past three decades. The US Treasury has been able to fund the debt by creating a series of $1 trillion digital coins and by selling NFT trading cards. As a result, the ‘Trump’, the new name for the US Dollar, is one of the weakest currencies in the world – you currently get 250 Trumps to the Euro. The Trump administration has managed to stave off financial collapse by regularly threatening to ‘renegotiate’ America’s sovereign debt with its creditors, a scenario that everyone wants to avoid.
Whilst America has begun to resemble a strange version of Cuba or North Korea, Europe has enjoyed a surprising renaissance, thanks to its early adoption of artificial intelligence as a key element of government. For once, the hype turned out to be real (albeit 15 years after the first AI stock market bubble had popped) and AI advanced rapidly as it was entrusted to take over from politicians. A new law in 2035 stating that anyone who expressed a desire to go into politics would immediately be banned from going into politics meant that a new way to govern had to be found. By harnessing AI for the common good, rather than allowing it to be controlled by a few large companies or rich individuals, Europe has been able to rebuild its infrastructure, increase the leisure time of its working population with the introduction of the 3-day week and overtake the US and Asia in the development of new virtual reality worlds where most retired people now spend their final years – it has become possible to see the world, live out your dreams and fulfil your fantasies, all without leaving the comfort of your armchair.
Norway has become the most admired nation in the world, an example of good resource management and social equality. It’s oil fields were eventually depleted but, unlike other oil-rich nations like Saudi Arabia and Russia, Norway had invested its wealth for future generations into thousands of companies around the world. As the only country to have virtually no debt, Norway’s Krone has since taken the place of the US Dollar as the world’s reserve currency.
The Krone has gold-like limited supply, is backed by real wealth and an economy powered by an abundance of clean thermal and hydro electricity. In 2031, Norway became the first country in the world to have an all-electric transport system, having waved goodbye to petrol engines long before anyone else. It’s cooler climate has also made it one of the world’s most popular holiday destinations now that parts of the Mediterranean region have become too hot to support life outdoors during the summer months.
Technological advances in the early 2040’s mean that global poverty, water shortages and hunger around the world may soon become a thing of the past. The spread of AI-powered nanobots throughout industry and agriculture has increased productivity by thousands of degrees of efficiency. No longer is output restricted by physical human strength, labour laws, poor education, the need for holidays or sick leave. Tiny machines that are able to reproduce as the work requires are now populating factories and fields in vast numbers, freeing humans from the slavery of the daily struggle to feed themselves or earn a living. This new workforce has massively increased our efficiency when using finite natural resources, it has created a recycling movement that ensures nothing is wasted and has generated an abundance of goods and services.
Education is now available to anyone who is connected to the world wide web, which these days is everyone. Society’s best teachers no longer stand in a lecture hall in Cambridge or Harvard, educating only a few privileged students. Today, they are treated like rock stars as they broadcast their lessons around the world to millions of people at a time, giving students everywhere the chance to be taught by the best in their field. However, despite a leap in global education levels, AI has not been able to come up with a way to genetically eliminate stupidity, even if it is now recognised as a medical condition for insurance purposes.
Instead, advanced neuroscience technology, first brought to the mass market by Elon Musk, allows a person to switch between their original brain and a Tesla artificial brain that is installed alongside. The new technology is prone to make mistakes and somewhat fails to live up to the hype but it is very popular thanks to its ability to allow the user to function in ‘self driving’ mode and switch off their real brain.
War has largely been eliminated in 2054. The spread of the internet to every part of the globe helped people of all nations and religions to bond and empathise with each other. For the first time in history, people were able to see and really understand how other people lived. They might not all agree with each other but the urge to kill has been reduced dramatically (except in America) and the need to occupy more territory has been negated by expansion into new digital universes and, soon, into space. The end of corruption in politics also meant that the world’s largest arms companies suddenly found themselves facing a demand shortage as government budgets were directed elsewhere, so they naturally directed their skills towards space exploration.
War isn’t the only thing that has been eliminated – so has smoking, alcohol, red meat, close human contact (unless you have a license), telling off children, boxing, speeding, fast food and swearing. The proliferation of cameras everywhere ensures the population remains polite and well behaved, much like Japan. Only the Clarksonites remain in defiance, an underground movement dedicated to preserving what they describe as the lost arts of fun, debauchery and common sense.
However, despite the relative sanitisation of humanity, in the year 2054 the future is looking bright. The stock market is up, house prices are up and most people around the world have food on the table and more tv programmes than they can ever watch. The depression years of the late 2020s, a hangover from the locked-down COVID era, have given way to a time of greater optimism, more peaceful co-existence and rising prosperity. Climate change has been arrested thanks to clean-tech, space travel is opening up new frontiers in human exploration and the virtual reality worlds are enabling new lives in the digital universe. It may not be perfect, but it is a lot better than anything the science fiction writers of the late 20th century were predicting.
Financial update France December 2023
By Katriona Murray-Platon
This article is published on: 6th December 2023
06.12.23
Here we are already at the end of the year. 2023 has been a year of highs and lows, not for me personally or professionally, but in the markets. If you look at any of the main markets or indexes you can see that 2023 has been a challenging year for investors. Of course there are still several weeks left in December so it is too early to say how the year will end.
At the end of November the UK chancellor presented the autumn statement. Whilst much of this does not affect those of us in France, Mr Hunt did confirm that the triple lock would be maintained and the pension payment would increase by 8.5% in April 2024. If you are entitled to the new State pension you will get £221.20 a week from April. Those pensioners who qualified for their pensions before April 2016 will also see an increase from £156.20 currently to £169.50 per week. Unlike in the UK the tax bands in France have been increased for 2024 so this means that, subject to the exchange rate, pensioners in France will get more income but pay less taxes next year.
The Bank of England decided in November that it would not increase interest rates and would maintain it at 5.25%. Whilst this is unlikely to change in the medium term, with inflation falling to 4.7% in October, it has been no surprise to me to read in the UK press that many banks are dropping the high interest rate accounts that have been on offer over this past year.
Please remember that most companies and business owners have to pay CFE by 15th December. As the CFE is a local tax and the other local taxes like the taxe d’habiation and taxe foncière increased this year, it should come as no surprise if you find that your CFE has also increased.
As we head towards the end of the year there may still be some things you might want to consider doing to alleviate your tax burden next year. Tis the season for giving so if you haven’t already been making charitable donations monthly during the year or you want to make one off donations at this time of the year, you can deduct between 66% to 75% of the amount donated, depending on the status of the chosen charity, and up to 20% of your annual taxable income. Also, if you have a PER and are in a position to make a contribution to it before the end of the year, this is also deductible from your taxable income.
There was good news for those invested in the Pru as, at the quarterly review of the Expected Growth Rates on 27th November, there was no changes to the EGRs and no Unit Price Adjustments. This was welcome news since there had been three consecutive downward Unit Price Adjustments in the PruFund Growth Sterling fund in previous quarters.
Looking forward, I always like to remain positive and hopeful however I have learnt that it is also important to manage expectations. One of our product provides reminded me that there will be many countries heading to the polls in 2024 and that this is likely to cause turbulence and volatility in the markets.
The OECD predicts that “In the absence of further large shocks to food and energy prices, projected headline inflation is expected to return to levels consistent with central bank targets in most major economies by the end of 2025.” It further stated that whilst “Global growth is projected to be 2.9% in 2023, and weaken to 2.7% in 2024. As inflation abates further and real incomes strengthen, the world economy is projected to grow by 3% in 2025”. Of course, whilst these are based on careful analysis and good information, they are just predictions and as we have seen things often turn out better than most analysts ever predicted.
No matter what happens my job is to be there for my clients, to advise them on their investments and provide them with the proper information to help them make the right financial decisions so please do get in touch if you would like to arrange a phone call, video call or face to face meeting.
I shall be celebrating Christmas here in France and then New Years in the UK. There are still plenty of dates available for meetings before the end of the year but if I don’t speak to you before then I wish you all a very happy holiday season and all the best for the new year!
Livret A : Protection ou illusion face à l’inflation ?
By Cedric Privat
This article is published on: 5th December 2023
05.12.23
«Vous voulez faire fructifier votre épargne de manière sécurisée et sans payer d’impôt ? Vous pouvez ouvrir un livret A». source site officiel de l’administration française.
Avec pas moins de 56 millions de livrets A comptabilisés à fin 2022, cette publicité semble avoir séduit les Français, mais qu’en est-il réellement de ce placement dont le taux d’intérêt est fixé par l’État ?
Le livret A est le placement préféré des Français. Huit Français sur dix le détiennent et ils ont déposé près de 26 milliards sur ce produit d’épargne sur les six premiers mois de l’année 2023. Du jamais vu…
Le Livret A est un placement sûr et liquide, ce qui signifie que vous pouvez retirer votre argent à tout moment sans pénalité. Le ministre de l’Économie et des Finances, Bruno Le Maire, a récemment fait le choix de maintenir son taux de rémunération à 3% soit l’assurance de bénéficier d’un taux fixe jusqu’en 2025.
Malgré son succès, ce produit d’épargne est souvent critiqué pour sa faible rémunération.
Ci-dessous un comparatif des 5 dernières années face à l’inflation :
| Années | Taux annuel du livret A | Taux d'inflation |
|---|---|---|
| 2023 | 2.92% | 5.60% (prévision Banque de France) |
| 2022 | 1.38% | 5.20% |
| 2021 | 0.50% | 1.60% |
| 2020 | 0.52% | 0.50% |
| 2019 | 0.75% | 1.10% |
Sources: Banque de France, Insee
Récemment, le gouvernement a dérogé à la formule de calcul fixant son rendement, calcul qui aurait potentiellement amené le taux à plus de 4%.
Le Livret A ne protège donc pas les Français d’une perte de pouvoir d’achat, et ne constitue pas un “rempart” contre l’inflation. Le taux réel étant négatif, l’argent placé perd de sa valeur au fil du temps.
Le livret A reste pertinent pour certaines situations
Par nature, le Livret A étant garanti, son rendement est faible. Mais malgré sa faible rémunération, il peut toutefois convenir à certains épargnants.
Il est simple, accessible à tous et garantit un capital entièrement disponible à tout moment.
Il permet de limiter le phénomène d’érosion monétaire pour ces sommes épargnées à court terme, afin de faire face à des besoins exceptionnels.
Le livret A est conçu pour constituer un matelas de sécurité. Il est recommandé de laisser sur son Livret A une épargne de précaution correspondant à 3 à 6 mois de dépenses courantes, de manière à faire face aux imprévus.
Quelles alternatives ?
La réponse dépend principalement des objectifs d’épargne, de la disponibilité recherchée et du profil de risque de chacun.
Pour les épargnants prêts à accepter un peu plus de risque et limiter la disponibilité quelques années, il existe des placements offrant de meilleures perspectives de rendement.
L’assurance-vie (produit le plus diversifié), le placement en actions (le plus dynamique) ou les SCPI (le plus stable) seront les options les plus cohérentes.
Le pouvoir d’achat est au centre des préoccupations des français et l’investissement est un moyen qui permet réellement de se prémunir de l’inflation et de construire ses projets d’avenir. L’épargne et l’investissement ne répondent pas aux mêmes enjeux.
Lorsque l’on dispose a minima de trois ans devant soi, il est inutile de laisser dormir cet argent, que ce soit sur un compte courant ou sur un livret.
N’oublions pas ce principe phare de la finance : il n’y a pas de rendement sans risque.
Le groupe Spectrum à Barcelone se propose d’étudier gratuitement votre situation afin de vous aider, de vous conseiller, de vous orienter ou de vous guider dans vos démarches patrimoniales.
N’hésitez pas à nous contacter afin d’obtenir les réponses d’un professionnel aux questions que vous vous posez.
NHR in Portugal is over
By Portugal team
This article is published on: 2nd December 2023
02.12.23
What has happened?
The NHR (Non-Habitual Residence) 10 year tax incentivised scheme to new residents will officially end from 1st January 2024.
There is a new 10 year scheme introduced as a result of the 2024 Budget Law that offers benefits to select individuals. This is aimed at attracting those involved in the scientific research and innovation fields and will apply to those with roles in higher education and specific high value sectors.
Key points
Residency obtained after 1st January 2024
Those who obtain Portuguese residence after 1st January 2024 will not be able to apply for the NHR scheme unless you meet one of the transitional criteria below.
Those who cannot claim NHR status will be subject to the standard rates of Portuguese tax.
Transitional rules: applications open until 31st December 2024
Those who become resident in 2024 may still be able to apply for NHR if certain conditions are met. These are individuals with:
- A promise of employment or secondment, or a work contract before 31st December 2023 and where the work is performed in Portugal
- A contract in respect of purchase, lease or use of property in Portugal concluded before 10th October 2023
- A reservation or promissory contract over a property in Portugal before 10th October 2023 i.e. a `contrato-promessa de aquisição de direito real sobre imóvel`
- Enrolment or registration of dependants in education within Portugal before 10th October 2023
- A residence permit or visa obtained prior to 31st December 2023
- A residence or visa process registered with the relevant authority before 31st December 2023
Existing NHR individuals
Those with NHR already will continue to benefit from the scheme until the end of the 10 year period.
Final words
It is expected that there will a high volume of applications for NHR and for embassy appointments so if you can, take action now.
If you do miss the NHR boat, Portugal can still be a very tax efficient place to live however more careful planning will be needed both before and after your move.
Reduction of Succession and Gift Tax in Valencia
By John Hayward
This article is published on: 29th November 2023
29.11.23
Making gifts to spouses is no longer a tax worry.
In September, the Valencian government approved the draft bill reducing succession tax (Inheritance tax) and gift tax for certain beneficiaries
The reasons were that the taxes formed a very small part of the region’s revenue and many people were refusing inheritances as the tax worked out to be more than the overall benefit. Does the son or daughter in the UK really want to inherit the casita in the campo housing pigs and chickens?
We have had to wait for the bill to become law and this occurred on 24th November 2023 taking effect from 28th May 2023, the date that Carlos Mazón was elected president of the regional government of Valencia as leader of the Partido Popular. The backdating of this law is significant for beneficiaries who are dealing with deaths and inheritances since 28th May.
It is important to understand that the taxes for certain beneficiaries have been reduced but not abolished. The reduction in the tax has increased from 50% to 99% of the tax bill. This reduction applies to Class 1 and Class 2 beneficiaries and includes the proceeds of life insurance. These classes cover children, grandchildren, adoptees, parents, grandparents, adopters, and spouses. The €100,000 allowance per qualifying individual beneficiary (up to €156,000 for children under 21) will remain.
Suggesting that it is a better time to die now may sound a little crass but it would appear to be a very good time to make gifts, taking advantage of the gift tax reduction and mitigate future succession tax. Another important aspect to gifts is that they need to be formally documented.
Over the last 10 years, Valencia has changed the basis of succession and gift tax on a number of occasions. There was a 99% reduction before. This fell to 75%, then 50%, and is now back up to 99%. Therefore, it is reasonable to suggest that there could be changes to the law again.
Strangely, before these revisions, spouses in the Valencian Community did not receive an allowance on gifts and this caused a problem when planning financial structures. Spouses in the Valencian Community are now eligible for the allowance of €100,000 on gifts along with the 99% reduction on the tax on any excess. In my case, the “What’s hers is hers and what’s mine is hers” principle still applies.
Contact me to discuss ways of reducing the tax liability for those you care about no matter what the law is at the time.
UK extends Overseas Transfer Charge on transfers to QROPS
By Portugal team
This article is published on: 27th November 2023
27.11.23
In his Autumn Statement, Jeremy Hunt announced the introduction of an Overseas Transfer Charge (OTC) when higher value UK pensions are transferred to a Qualifying Recognised Overseas Pension Scheme (QROPS).
This is to take effect from 6th April 2024.
The implication
Each individual will have an “overseas transfer allowance” of £1,073,100.
Where the transfer to QROPS exceeds this limit, the excess will be taxed at 25%.
The limit applies to the total value of transfers to QROPS, not per scheme.
For example. Mr A has 2 pensions valued at £900,000 and £600,000. He transfers both of these schemes to a QROPS after the new rules have been introduced. The excess above the lifetime limit is £426,900. This excess is taxed at 25%, therefore the tax due is £106,725.
The result
If you are considering a transfer to QROPS and your pension benefits are close to or exceed £1,073,100, this should be done before the introduction of the new rules in April 2024.
If you would like to understand how a transfer to a QROPS could benefit you or if it is appropriate, please do not hesitate to get in touch.