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Transferring Irish Pensions Abroad

By Craig Welsh
This article is published on: 7th December 2021

07.12.21

Irish expatriates, or indeed anyone who has previously worked in Ireland, may have accumulated Irish pensions along the way. If it’s unlikely that you will return to the Emerald Isle, it may be worthwhile looking into moving these pension pots.

At Spectrum, we can help you with that.

First, there must be a bona fide reason for wishing to transfer those pensions away from Ireland. It cannot be done just to circumvent Irish taxation. Professional advice from a regulated adviser should be sought.

You may be able to transfer your Irish pension to either a Malta QROPS (Qualifying Recognised Overseas Pension) or a UK SIPP (Self Invested Personal Pension). And no, you don’t have to be living in either Malta or the UK to do so. Moving them can give you far more flexibility by allowing ‘income drawdown’ and avoiding the need to buy an annuity.

Maybe you have more than one pension scheme in Ireland? In that case, you might benefit from consolidating them into one pot. Again, that makes things a bit easier to manage; we can then help you manage the investment side too.

irish pension

So, a bit more detail;

  • Drawdown option; no need to buy an annuity. Withdrawing money from an Irish pension can be complex and inflexible, with some pretty complicated rules. For instance, you will find it difficult to access an Approved Retirement Fund (ARF) or an Approved Minimum Retirement Fund (AMRF) if you are non-resident in Ireland. And without an ARF / AMRF you will most likely have to buy an annuity, with no ‘drawdown’ option. Transferring out means you can access lump sum and drawdown options with no requirement to buy an annuity
  • Pension benefits can be accessible from age 50 upon a transfer, and a lump sum of 30% could be taken. How the lump is assessed for taxation depends on where you are resident, so again, advice is essential
  • Easier to manage when you live abroad. UK SIPPs and Maltese pensions are a bit easier for ‘expats’ to manage. In Ireland you must firstly transfer €63,500 to an AMRF/Annuity, unless you are receiving €12,700 p.a. in lifetime guaranteed pension annuity. On the other hand, UK and Maltese products have no annuity requirements
  • No Irish taxation. Even if you live abroad, income from your Irish pensions will be taxed at source, as income in Ireland. Withdrawing from a UK SIPP or a Malta QROPS instead means that this income can be paid gross, with no tax at source. This depends on where you are resident however and if a double taxation agreement (DTA) is in place. Again, professional advice should be sought
  • Death benefits. Irish pensions, once in payment, are liable to Irish inheritance taxes (CAT) on death, even if you are no longer resident there. With a Malta QROPS there is no Maltese inheritance tax on the remaining pension pot, although tax may be payable in the country of residence of the deceased or beneficiaries

Basically, transferring out could make your life easier. Each situation is different however, and a full review of your circumstances should be carried out.

If you do have an Irish pension and do not intend to return, please feel free to contact us at Spectrum for a no-obligation, initial discussion where we can explore your options.

I’m an Expat in Portugal – where do I pay tax?

By Mark Quinn
This article is published on: 6th December 2021

06.12.21

Many clients I have helped have been paying tax in the wrong country, often because of incorrect advice received in the past, or just because they were not aware of the rules.

It is critical to establish your tax residency position to avoid complications and possible penalties in future. I discuss these issues in this post and my next post later this week, with the latter focusing specifically on Portuguese tax residency.

If you are a Portuguese tax resident you are required to declare, and pay tax on, your worldwide income and gains in Portugal. If you are non-resident, then you are only liable to pay tax in Portugal on Portuguese source income.

If you have assets and/or income in more than one country, you will always have a “controlling tax authority” (CTA). This is not based on where most of your assets are located, where income is earned, ‘where you have always paid tax’ or where you ‘choose to declare tax’. Your CTA is normally the jurisdiction where you spend most time in that given tax year i.e. where you are tax resident.

Having said this, you may have to pay tax in more than one country. For example, if you are permanently living in Portugal and you have rental income generated in the UK, you will have to pay tax on that rental income in the UK first. However, as Portugal is your country of tax residence, you will also have to report the income in Portugal and potentially pay tax. Similarly, if you own and run a UK business, you may have to declare and pay tax and social security in Portugal instead of the UK if you are resident in Portugal.

Paying tax in the wrong country may not only result in heavy penalties but could also mean that you are paying more tax than you should and may affect any state pension, healthcare or social security rights you have.

There are rules in place between most countries to avoid tax being paid twice (double taxation agreements) but generally the highest rate of tax will always remain payable.

Pension scams – what you need to know

By Chris Burke
This article is published on: 2nd December 2021

02.12.21

The pension scams in Spain – What they are, how they work and how to avoid them

Pension scams have cost UK expats residing in Spain millions of pounds over the last few years. The reality is that anyone can fall foul to a pension scam, irrespective of how financially savvy they think they are. The fraudsters often seem very professional and trustworthy and promise guaranteed lucrative returns, but in reality, the victims are usually left with nothing.

How do pension scams work?
Fraudsters normally contact the individual by phone, text or email. They may claim to be a fictitious company or they may even falsify their identity, for example claiming to be from HMRC (HM Revenue and Customs) or the FCA (Financial Conduct Authority). After establishing a rapport with the individual, the scammer will then try to persuade the victim to part with their pension. There are multiple different strategies for this, but each strategy effectively entails persuading the victim to transfer all or a large part of their pension to the fraudster.

The pension may be stolen outright, or it may be invested into rare, high-risk investments such as overseas bonds, infrastructure or obscure technologies. The scammer may also promise early access to the pension through various ‘loopholes’ or by offering loans to be paid back upon receipt of the pension. In this scenario, alongside potentially losing their entire pension, if they transfer it out early the victim may also face a large tax bill from HMRC. If HMRC class the early pension withdrawal as ‘unauthorised’, the tax bill can mount up to a maximum of 55%!

Only in very specific circumstances are you able to withdraw your pension early. If you are contacted by someone trying to persuade you to do this, it is likely to be a scam.

How to avoid pension scams? Top 5 Tips

1.Research the individual/company – are they genuine?
Research the individual and the company that they work for on the internet. Depending on how they contacted you, perform a search on their phone number, email address or even their LinkedIn profile. Next, look for news articles and/or reviews on the company, ideally from an independent source (companies in the past have falsified reviews or even paid news outlets to publish positive publicity).

2. Contact a government regulated body for guidance
After conducting your own research online, why not contact an official government regulated body for additional verification? Companies such as Pension Wise, the Pensions Advisory Service or the Money Advice Service may be able to assist and ensure that the proposition is legitimate.

3. ‘If it sounds too good to be true, it probably is’
Have you been promised guaranteed returns at an exceptionally high rate? If the proposal sounds too good to be true, it probably is. Furthermore, high rates of returns often also result in high levels of risk.

4. Offers of early pension access – thoroughly research
As mentioned above, this is a very common pension scam. In only very rare case scenarios are you able to access your pension under the age of 55, so if this has been offered to you please conduct thorough due diligence. It may furthermore result in a tax bill of up to 55%.

5. Investing in an unusual asset class – be vigilant of scams
Be mindful of proposals to invest in strange and obscure assets. The assets which you invest in should all have easily accessible information available on them. For example, the funds that you invest in should all have factsheets available online (on Trustnet for example) and the shares you invest in should all be listed on a reputable exchange.

Pension advice, either managing or planning, is very important and that advice can greatly improve the amount you receive in retirement, or for your loved ones after death. What it will also give you is peace of mind that your pension money is safe and not falling foul of any risks/scams, and that you are being given ongoing, good advice.

Book a telephone call or zoom chat with Chris now

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

Bad experiences with financial advice

By Jozef Spiteri
This article is published on: 1st December 2021

01.12.21

Within any sort of market, people have different experiences which contribute greatly towards how that person feels about that specific market, or a vendor within that market. One might think that the feelings and emotions which a person experiences in everyday markets might not apply to the financial markets. However, opinions about financial services and products can be formed in a similar manner to any other common market.

I can explain this quickly using the fruit analogy, a market which most people can relate to. In this market, consumers can choose from a number of different vendors, selling similar products. Even though products might seem to be pretty much the same, individuals still tend to have their preferred fruit sources. How can this be? Well, preferences are formed through experiences and opinions of people surrounding that individual. If you have a negative experience purchasing fruit from a particular vendor, you will probably avoid going back to that seller and look to take your business elsewhere. Similarly, you might avoid purchasing fruit from a store if you hear negative feedback from someone else. This human behaviour is very similar to what goes on in the financial market.

Financial services is home to many financial advisers offering a vast range of products, and, unfortunately, some customers might not get the satisfaction they would have expected prior to investing their money. This can either be poor investment performance, or irregular service from the adviser. For example, the original adviser may have left the firm and the ongoing service is unsatisfactory.

Fortunately, just like in the fruit example discussed earlier, investors are actually able to move their business from one adviser to another if they are not satisfied.

Some clients may not be aware that they have this option. Often, people keep the original investment in the hope that performance improves. Whilst some patience is recommended when taking a long-term view, regular contact and discussion with the adviser is essential. Clients should do some research and be prepared to look for an adviser who will listen to their needs and offer the level of ongoing service they require.

This is something which the Spectrum IFA Group understands. The group has a dedicated fund research team who use a strict research process before recommending suitable investments for clients. Criteria includes, among others, performance, regulation and liquidity, ensuring clients are as protected as possible. Clients also receive regular updates and reviews of their financial goals.

As regulation continues to evolve, advisers must keep up with rapid change. Brexit has also had a big impact for expats in Europe who were still using British advisers who no longer have the necessary licence to advise these clients.

Spectrum advisers are all living in the region in which they are advising, allowing advisers to have a much better understanding when dealing with clients either living there, or who are looking to move to that part of the world.

If you are looking for a fresh look at your financial planning, with a regulated adviser who can offer the level of service you deserve, please feel free to contact us, no obligation upon initial discussions.

Inflation: food for thought

By David Hattersley
This article is published on: 30th November 2021

Governments use a variety of measures to calculate inflation figures, but in the main consider about 600 items that are in popular demand. Hand sanitizer has recently been added to the list as an essential item. But, it will also include TVs, clothing, smart phones, new gadgets etc. If one strips out something that is considered by some as non essential or has no need to be replaced, then within an individual’s budget the cost of food will take on greater significance.

Within the food chain costs are going up. Farming and breeding have been badly hit by increased production costs; electricity has gone up by 270%, tractor diesel 73%, fertilizer 48%, water by 33% and seeds by 20%. Growers have to pay more just to cultivate and pick their crops. In Galicia dairy farmers who produce 40% of Spain’s milk are being “strangled” by soaring production costs, estimated at 25% by the Union of Agrarians. Bad weather, such as the recent “Gota Fria”, can also have a negative impact on crops. The complaint from farmers is that whilst supermarket customers are paying more for their milk, the Food Chain Law has not been applied, i.e. “no link in the chain may charge less than what it costs to produce.”

Distribution is also part of the food chain. The majority of Spanish truckers are self employed, but have been unable to offset their increased costs of diesel plus the future cost of automated motorway toll roads. A three day strike has been called for 20th-22nd December.

So perhaps a perfect storm of reduced supply and increased demand will, if you excuse the pun, “add fuel” to the inflationary upward spiral. This is perhaps lessened in Spain, as it is relatively self sufficient in relation to food supply and is a major exporter. It is worse for countries that are not self sufficient and need to rely on Spain’s exports and alternative supplies from across the globe.

To many of my retired clients who remember the UK in the 80’s, inflation has again become a concern. I have been able to help them find some financial protection against this for their savings, in particular those that held surplus cash in banks in excess of an emergency fund. Each client had their own attitude to risk which does vary, hence the need for regular reviews. I have access to Spectrum’s preferred investment partners who can provide a multi asset and globally diversified tailored solution.

We do not charge fees for reviews, reports, recommendations or future service meetings. Should you wish to contact me to explore your needs further, please feel free to do so either via the web site or directly using the contact details below.

How is my pension taxed in Portugal?

By Mark Quinn
This article is published on: 30th November 2021

30.11.21

Should I review my pensions if I live in Portugal?

Pensions are somewhat a confusing area in Portugal and the tax system does not easily accommodate the many different types of pensions individuals may have. We have seen many professionals report pensions in different ways, depending on their interpretation or understanding of the pension in question.

As there are many types of pension schemes and ways of funding them, maybe with overseas or UK elements, this area can be quite tricky to navigate and it is best to seek advice from a professional with a proper understanding of the details.

Speaking generally, for those with NHR, UK pension income is taxed at a flat rate of 10% in Portugal, unless you successfully applied for NHR before April 2020, in which case it is free of tax.

For normal residents, pension income is generally taxed at scale rates. There are some exceptions to this for example, annuities or certain pensions that are treated as long-term savings.

UK pensions are usually taxed at source but in most cases, you can ask your pension provider to make payments out to you gross; this avoids you having to reclaim the tax paid at source from HMRC. You will need to inform your pension administrator that you are no longer UK resident and obtain an ‘NT’ tax code.

The UK State Pension is taxable in Portugal and you can also ask for this to be paid out to you gross.

UK government service pensions are always taxable in the UK e.g. civil service, armed forces. Portugal does not tax these pensions or include them as income for reporting and tax purposes.

Taking your ‘tax free cash’

An important point in relation to the taxation of pensions is with regard to the pension commencement lump sum (PCLS) and withdrawals under “pension freedoms” arrangements.

In the UK, it is possible to take a lump sum of up to 25% of the value of your defined contribution (e.g. a personal pension or SIPP) pension pot tax free. A tax-free amount is also available from a defined benefit scheme (final salary scheme) pension although this uses a different calculation method. Please note, these PCLS amounts are not tax free in Portugal. As a general planning point, we would therefore suggest utilising any PCLS entitlement prior to becoming Portuguese tax resident. However, your personal circumstances will dictate the best course of action.

We recommend that your pensions are reviewed regularly and at least on an annual basis.

This is a highly regulated and complex area that should only by undertaken by suitably qualified professionals.

If you would like to discuss your pension, are concerned about charges or performance, or would like to know if moving or adjusting your pension is the right thing for you, please contact us.

Non-Habitual Residency in Portugal

By Mark Quinn
This article is published on: 29th November 2021

29.11.21

What is Non-Habitual Residency (NHR)
and can I apply?

The Non-Habitual Residence (NHR) scheme is a 10 year beneficial scheme of taxation introduced to encourage individuals to come to live and work in Portugal.

Provided certain conditions are met, the primary scheme benefits are:

  • a 10% flat rate on non-Portuguese sourced pension income. Some forms of UK pension income, generally government service pensions, will always be taxed in the UK
  • tax free interest and investment income generated outside of Portugal
  • tax free capital gains generated outside of Portugal
  • 20% flat rate tax on earned income (self-employed or employed) for those with a qualifying profession. There is a prescribed list of qualifying professions

To meet the eligibility requirements, you:

  • must not have been tax resident in Portugal in the last 5 years
  • must have a permanent residence in Portugal. This residence can either be rented or owned

Applications for NHR must be submitted by the 31st March following your permanent arrival in Portugal.

If you are moving to Portugal, planning early is the key to favourably positioning yourself and obtaining NHR is highly advantageous as the tax savings can be very significant.

Having said this, whilst in the vast majority of cases NHR is beneficial, we have come across instances where NHR would have actually increased a clients’ tax liability.

Seeking advice is crucial and we welcome you to contact us.

Do I need a different Will as an expat living in Italy?

By Gareth Horsfall
This article is published on: 24th November 2021

24.11.21

Here I am again after a recent trip to the UK. I am pretty sure the whole affair of travelling internationally with a family during Covid restrictions has taken 10 years off my life. What a nightmare! The evening before we flew to the UK I spent 5 hours in front of the computer trying to work out which forms were needed, for when, and which Covid tests would be required, and when. We also had to spend approx £150 on Covid tests to travel. I have spoken to many people who have had a similar experience. The whole process was not aided by the fact that we were diverted through Barcelona because the direct flight to London had been cancelled, and even transitioning means that the necessary Covid protocols must be adhered to in the transiting country as well. Despite the administrative and logistical headache of planning all this pre-journey, the actual trip itself went well.

So, after surviving that experience and deciding not to travel outside Italian borders again until it starts to eventually settle down, I got called to another meeting in Barcelona in December. I will have to go through it all over again!

Anyway, after all that I thought I would write about something which is ordinarily outside my field of expertise in this Ezine: making a will. I haven’t touched on this subject for some time, but recently we have teamed up with another International lawyer called Jessica Zama of Buckles solicitors. She is British/Italian and is well versed in the world of whether to make a will in Italy or not, and not just for Brits. I asked her to write a piece that I could share with you about the importance of making a will in Italy when you have assets in the country, i.e. a property in most cases, which I have copied below.

However, before I get into that I wanted to write about a couple of other things which may come in useful if you need to travel, post-Brexit banking arrangements in the UK and a new Italian website that might come in handy.

Travel Insurance
I myself used to have travel insurance through a UK firm, pre Covid, pre-Brexit. This firm no longer offers insurance to EU resident individuals due to Brexit so before my trip to the UK I needed to shop around to find a cost effective option. Unfortunately, it was quite difficult to find a solution that wasn’t going to cost the earth. The usual Italian market suspects (Generali, Allianz, Zurich, Unipol) etc were rather more than I wanted to pay. However, on doing some research I stumbled into my favourite comparison website: facile.it It was there that I discovered that they were offering travel insurance packages from a French firm ‘InterMutuelles Assistance’.

One of my colleagues in France informed me that MAIF, MACIF and MATMUT are big French insurers and this firm is a part of the group, so likely to be a solid firm.

The French company is merely using its European license to passport its services into other EU states, in much the way that the UK firm I used to buy travel insurance from used to do. So, I wanted to communicate that there are lower cost more competitive options in the market place. This is by no means the only option and I would urge you to do your own research if you require travel insurance, but if you are interested you can find them under their brand in Italy:
https://www.traveleasy.it/

Closed UK Banks

UK banking arrangements
A lot of my clients who are UK account holders with Natwest have now received a letter informing them that likely action to close their account will take place before the end of 2021, as a result of Brexit, and the fact that Italy has been very clear (as early as April 2020. See document HERE) that they do not want non-Italian, non-EU financial firms, advisories, or intermediaries operating on Italian soil or for Italian resident individuals. Italy, along with the Netherlands, seem to have the most strict measures in place, and it would appear that in both cases accounts of clients of Natwest are now being shut down, if they haven’t done so already.

This obviously leads to the question, what can you do for continuation of banking services in GBP? Thankfully in the last few years with the development of the Fintech industry, a myriad of options have arisen. The most popular seems to be Wise (formerly Transferwise) who are offering not just currency exchange services, but different currency accounts through which you can move money. Wise are not a bank, so you may be restricted on exactly what you can do and who can send money to that account, but it does work for some. I myself use Fineco bank in Italy and they provide current account holders with EUR, GBP and USD accounts, to which money can be sent, and then moving money between one and the other does not attract any currency conversion costs. There are also a number of online banks and services offering these options and so you shouldn’t be short of options.

The only problem
There is however one area which may still cause an issue if your UK account is closed down. UK direct debits. I myself have not been contacted yet to close my First Direct account in the UK, but should it happen it would cause a very big problem as I have a number of insurances which I took out years ago in the UK that provide protection for me and my family. However, they only accept payment through direct debit on a UK account. Should my banking services be pulled I may find myself losing my insurance. You may find yourself in a similar situation with UK direct debits. In this situation, there really is not a lot you can do about it, I am afraid.

But moving on from banking arrangements, I want to now lead into the idea of making a will in Italy. It still surprises me how many people have not done so yet. I understand it is one of those ‘to do’ list items, but the truth of the matter is that it shouldn’t be. It should be a priority item. To die, leaving an asset such as a property in Italy, without clear instructions as to how you want this asset to be treated, could create all sorts of complications for your family and/or beneficiaries. I made my will a few years ago now and whilst it probably needs updating again, I know that I have a valid Italian will in place in the event of my death.

So without further ado I am passing to the words of Jessica Zama, who wrote the following piece, and which I hope spurs you into making your own will if you have not already done so.

A very useful Italian website
From the 15th November a new Italian government website has been launched called ‘Anagrafe Nazionale Popolazione Residente’ https://www.anagrafenazionale.interno.it/servizi-al-cittadino/ (ANPR for short).  It allows every Italian resident the ability to download all those certificates which traditionally you had to take an appointment at the comune, to attain.  As anyone who has lived in Italy long enough, at some point or another you will need one of the certificates, mentioned below, and since they only have a 6 monthly validity the fact that you can now easily download them online is fantastic.  Other services do exist, which I have used myself to avoid queuing at the comune offices, but they do charge a pretty penny for the service.  For the moment they are also free of charge through this website, and it is expected that this will be the case until the end of 2022, at which point you may be expected to pay just the ‘bollo’ at the point of download.   The certificates include:

  • Anagrafico di nascita;
  • Anagrafico di matrimonio;
  • di Cittadinanza;
  • di Esistenza in vita;
  • di Residenza;
  • di Stato civile;
  • di Stato di famiglia;
  • di Stato di famiglia e di stato civile;
  • di Residenza in convivenza;
  • di Stato di famiglia con rapporti di parentela;
  • di Stato libero;
  • Anagrafico di Unione Civile;
  • di Contratto di Convivenza.

To enter in the website you will need a SPID or Carta d’Identità Elettronica.

Expat Wills
Protecting your Italian assets – where there’s a will, there’s a way
 

If you hold assets located in Italy, it’s important to obtain legal advice to draw up a will that covers them, regardless of whether or not you live there.

There are several reasons for doing this. If you have any specific wishes relating to the distribution of your Italian assets following your death then you need to put them in writing, in a will that is considered legally valid in Italy.  If you do not have a valid will in place, your Italian estate will pass to the beneficiaries set by Italian law (in most cases the spouse and children).

The validity of your will in Italy is crucial, particularly if it is drafted and/or signed abroad and is to cover all your Italian assets, both present and future. For example, if you were to specify in your Italian will that you wish to leave a specific property in Italy to your wife, but this is then sold during your lifetime, your Italian will would not cover the proceeds of sale held in an Italian bank account.

Your will must also take into consideration the Italian inheritance laws and succession procedures. In Italy certain relatives, such as the spouse and children, have a right to a percentage of the deceased’s estate regardless of the terms of the will. This is known as forced heirship and it must be taken into consideration when drafting a will relating to Italian assets, as it can somewhat limit your testamentary freedom.

However, there may be the possibility to avoid this restriction by electing for the law of your country of nationality to apply to the will and the succession (thereby allowing for more freedom in disposing of your assets) although you would need legal advice on whether this can be applied in your case and how to draft your will so that the Italian forced heirship rules are avoided.

It is also important to consider the wording of the will and the legal terminology used within.  A will signed in another country may potentially cover all your worldwide assets, including your Italian assets, but its wording may cause issues regarding the administration of your Italian estate in the future. Therefore, once again it’s important to obtain legal advice on this subject.

When you also have a separate will which covers your assets in another country (even if this will excludes Italian assets), it’s important that your lawyer checks to ensure that there are no conflicts between the two wills which could render one or both invalid and thereby potentially leave your assets exposed in both countries.

Can I keep my UK ISA living in Spain?

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

19.11.21

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

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

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

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

Spanish Compliant Investment Bond – Tax Saving Example

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

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

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

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

Trust not Trusts

By Charles Hutchinson
This article is published on: 15th November 2021

In this article I want to explore trust in business, although the two in the title have always been synonymous with each other. Trusts were created at the time of the Crusades in the Middle Ages to enable the Crusader Knights to leave their estates in the hands of someone they alone trusted. To this day you place your trust in someone to look after your assets which is why that someone is called a trustee.

Trust is an abstract concept and without it business could not function – certainly not at the volumes and levels it does – or else one would be reduced to solely carrying out transactions which were guaranteed by some 3rd party.

In financial services, trust is the basic ingredient, the bedrock, the lubricant if you like, which allows the flow of capital to its destination for the good of both individuals and companies. In Spectrum’s case, it is of course for the benefit and well being of our private clients. It must be remembered that Spectrum’s business model is built neither on publicity nor advertising, but on referrals. This means that if new clients come to us because they know of someone who has benefited from our services, they do so solely on trust.

Spectrum in turn places its trust in its providers (whether they be tax lawyers, life assurance companies or pension trust companies) and investment houses. We are responsible for the financial well being of all our clients and for that reason we have to be very careful in whom we place our trust. We are not in the risk business but in the wealth preservation business, for today’s clients and their future generations.

Trust is spawned by truth. They are intertwined. If you always tell the truth (whether it be good or bad) a relationship will form between the speaker and the listener which cannot be eroded by other parties whose ethics are somewhat less than ours. Spectrum has a mantra – the client before the business – which in simple terms is the question: to whose advantage is a particular step – the client or the company?

Trust is a two way street. If our clients trust us, then we must trust our clients to tell us the truth from outset and to behave responsibly in this relationship. We have a duty to our clients and so they must reciprocate likewise.

Trust in banks nowadays is not as fruitful as it once was. This can almost certainly be attributed to them treating their customers as numbers, not as people. I have a widowed, infirm client whose grandfather was the chairman of a major UK clearing bank. She was treated with disdain – it simply meant nothing.

Finally, you take trust to a breaking point if you cannot show professional credentials. Would you be flown by an unqualified unlicensed pilot (the recent tragic death of that well known soccer player being the most recent example)? Would you have medical treatment from an unqualified medical practitioner? Or an architect without him/her being accredited to the relevant professional body in your country?

Trust is an incredibly rewarding relationship. You only have to read the testimonials on this website to see how rewarding it is – for both parties. If you would like to explore in more detail these rewards and find out more of how we do business with our clients and what we can do for you, do please contact me below: