Brexit – What now?

By Katriona Murray-Platon
This article is published on: 18th December 2019

Some of you, like me, might have woken up on Friday and after hearing the election result felt utterly depressed. Irrespective of how the vote could or should have gone, or who you may have voted or wanted to vote for, this result will seriously affect the Brits living in Europe. Brexit is now more likely than ever, so what does this mean for us? Well luckily, there is someone who is somewhat of an expert on the matter, Professor Sébastien Platon, Professor in European Law at the University of Bordeaux and incidentally my husband! Over breakfast I asked him a few questions.

So, what now?
The British parliament must first pass the EU (Withdrawal Agreement) Bill, and then they have to agree on the Withdrawal Agreement itself. Given that the Conservatives now have a majority it is likely to be passed. Either later or at the same time, the European Parliament also has to agree on the withdrawal agreement. If all of this gets done by the 31st January, Brexit will happen as planned. If not, the UK will have to request ANOTHER extension which would have to be agreed by the other 27 member states.

During the transition period are all European rights maintained?
Apart from the right to vote and run as a candidate in EU elections and municipal elections, the right to participate in European citizens’ initiatives and the UK’s right to vote on EU laws, all rights, including the right to free movement, are maintained during the transition period.

Does a British citizen who has not yet settled in France still have the right to do so after 31st January?
Yes. Up until 31st December 2020 all British citizens can come and settle in the EU. After the transition period, those who have established residency in the EU and wish to bring their family members (spouses, partners, direct descendants under 21 or dependent, direct relatives in the ascending line) to live with them can still do so.

Can the transition period be extended?
Yes, if the UK and EU agree to extend the transition period. But, unlike the Brexit extensions, they cannot ask for an extension the night before the 31st December 2020. A decision has to be made before 1st July 2020 extending the transition period for up to 1 OR 2 years. British citizens would therefore have until the end of the transition period (or extended period) to settle in the EU.

What about healthcare?
During the transition period, the EU social security coordination rules will continue to apply. The British who reside in France (or any other member state) and are in the UK health system but not the French health system can continue to benefit from this health cover as normal. After the end of the transition period, these rules will continue to apply to:

• UK nationals subject to the legislation of a Member State at the end of the transition period,
• UK nationals who reside in a Member State while being subject to the legislation of the UK at the end of the transition period,
• UK nationals who pursue an activity as an employed or self-employed person in one or more Member States at the end of the transition period and who are subject to the legislation of the UK,
• Their family members and survivors
These persons will be covered as long as they continue, without interruption, to be in one of these situations involving both a Member State and the UK at the same time.

What about pensions?
For the persons I’ve just mentioned, the time worked in the UK will count towards an EU pension and inversely any time spent working in France would contribute towards entitlement for a UK pension should they wish to return to the UK when they retire.

Do we need to apply for cartes de séjour?
During the transition period you do not need them. After the transition period each member state has the right to require UK citizens to apply for a new residence status, the sole purpose of which is to verify whether the applicants meet the conditions set in the withdrawal agreement. If they do, they have a right to be granted the residence status and the document evidencing that status (which will NOT be a “carte de séjour”). The French administration cannot refuse this status if you meet the conditions. The deadline for submitting the application shall not be less than 6 months from the end of the transition period. The host State has to ensure that any administrative procedures for applications are “smooth, transparent and simple, and that any unnecessary burden are avoided” with applications being “short, simple, user friendly and adapted to the context of” the agreement. Only once the agreement has been ratified will we know if and how the French Government wants to proceed on the matter.

Whilst I do not agree with Brexit and wish things had happened differently, at least after four years of uncertainty there may now be some progress. The pound bounced back up on Friday and this election result is likely to have a positive impact on the markets and portfolios.

Political shock in the UK

By Gareth Horsfall
This article is published on: 13th December 2019

13.12.19

Dear Readers of my articles

I am writing you a very short email today after what appears to be somewhat of a political shock in the UK. I will refrain from further comment until I have had time to let things sink in and I can discuss possible financial consequences in a rational manner.

However, where one loses another gains, as the saying goes, and one of the fortunate consequences of this vote in the UK is that it will bring, I think, short termed optimism and bear favourably on pounds sterling. I doubt this will continue as the reality of leaving the EU strikes home once again, and let’s not forget that a NO Deal scenario is now a real possibility again.

My point is that as I write this GBP: EUR has bounced to 1:21. If you have money in GBP and you need to convert to EUR you might be staring at a very favourable rate. I am not making any assumptions on where it will go during the course of the day, weeks ahead or even months, but compared to the last few years the exchange rate is quite attractive for sterling conversion to euro.

It was predicted that this would happen after a Tory majority win, so take advantage where you can.

Enjoy the day ahead as news comes in and we start to find out what the future holds for UK politics.

Spanish Succession and Gift Tax boost for non-EU beneficiaries

By John Hayward
This article is published on: 6th December 2019

06.12.19

Imagine that it is Saturday 1st February 2020. Britain has calmly left the European Union with trade deals in place with Australia, Canada, South Africa, the USA, China, Cuba, Afghanistan, Iraq, Iran, and Columbia (I did say imagine). It is possible that you have children who live in one of these countries and you are resident in Spain. 2 years ago your children would not have benefited from the European Court of Justice ruling (2014) which stated that children who live in an EU/EEA country should benefit from local Spanish rules and allowances when calculating Spanish Succession and Gift Tax. Since the decision in 2018 in favour of a Canadian (Canada is not due to join the EU), the Spanish Supreme Court have ruled that “connected” non-EU beneficiaries will also benefit from the rules of each Autonomous Region in Spain. What this means is that, even if there was a hard Brexit, your child in London would be treated as fairly as one in Valencia, Havana, or Beijing.

It is possible to reclaim overpaid Succession and Gift Tax. Please get in contact if you know anybody who has been a beneficiary of an inheritance using the allowances under the old rules. The claim could amount to many thousands of Euros.

Contact me for more information

Gifting your Spanish property can save tax

Investing some time in estate planning now will help to make certain that your wealth is distributed the way you want it to be and not end up in the taxman´s pocket. One example is where we have helped parents in Spain gift their properties to their children, who live in the UK, whilst the parents continue to live in the property. This could save thousands in future inheritance tax.

Positioning investments in tax efficient structures can also help protect against inheritance tax. We have the solutions.

Le Tour de Finance – Autumn 2019

By Spectrum IFA
This article is published on: 5th December 2019

The latest event in the autumn leg of Le Tour De Finance, which was held on the 21st November at the magnificent Domaine du Seudre – 17240, was yet again a successful day with a broad range of subjects discussed by the international panel of financial experts.

Attendees, who were a mixture of existing clients of The Spectrum IFA Group and those wanting to hear more about the services and financial solutions available, had travelled both locally and from other regions nearby.

Brief introductory presentations were given by representatives from The Spectrum IFA Group, Prudential International, Tilney Asset Management and Currencies Direct. Discussion and an extensive Question and Answer segment then covered subjects including the recently introduced tax changes to Assurance Vie (the most tax efficient savings and investment vehicle available in France), the suitability of transferring UK pensions to HMRC recognised EU schemes, investment market performance and outlook, wills and estate planning and sterling to euro exchange rate direction (and the facilities available to help mitigate against exchange rate volatility).

Unsurprisingly, the ‘B’ word featured widely and although many answers are yet to be determined, attendees were left reassured that The Spectrum IFA Group and its partners were well informed on both the technical detail of Brexit and the practical implications for anyone living or working in France or indeed those thinking about making a permanent move to France.

Portability of financial products, such as Assurance Vie, for an expatriate returning to the UK, was another area of interest in the question and answer session and guests were provided with example scenarios regarding the flexibility that such investments offer.

The key message that came out of this event was the importance and benefit, even for the financially experienced, of seeking professional, independent advice. The audience was reminded, in these uncertain times, that it is critical to ensure that all aspects of our personal finances are properly structured, for both legitimacy within the French fiscal system and for maximum tax efficiency ahead of any potential changes in the months and years ahead.

Questions and discussions continued during an informal lunch, during which guests and speakers alike found no shortage of topical subjects for conversation. The day was wrapped up with our special guest speaker, Rusty Firmin, former SAS Special Forces training instructor and team leader at the 1980 Iranian embassy siege. Rusty spoke to our guests after lunch with a compelling first hand account of his experiences.

Feedback from the event has been very positive. One guest commented “I enjoyed the day thoroughly and found it both thought provoking and educational. The opportunity of being able to engage directly with the representative of those international companies was a valuable bonus.”

We are planning to hold further seminars in 2020 and will provide details on the Le Tour de Finance website. See www.ltdf.eu for further information.

DETRACTIONS FOR INCOME TAX PURPOSES IN ITALY

By Gareth Horsfall
This article is published on: 4th December 2019

I am often asked which expenses can be detracted from income in Italy. These serve to reduce your potential tax liabilities.

Unlike a lot of countries where allowances are offered on a certain amount of income each year (e.g. the UK and the first £12500), Italy does not offer any such allowance, but instead uses a complicated system of detractions and deductions of certain living expenses. That list covers a multitude of items, such as eco bonus for re-construction work to your home, funeral expenses and medical expenses.

A new criteria that has been imposed as of 2020 is that a number of these must now be paid only by traceable means of payment (bonifico, bancomat or credit card). If they are not paid with one of these methods then they are not deductible.

The following table, taken from an article in Sole24Ore is a good reference tool to see which expenses can be deducted, at what % of the total cost and whether they can be paid in cash or not.

I hope you find it useful. If you are not claiming for any that you might be eligible for then I would advise you have a conversation with your commercialista about them.

Sterling after Brexit

By Gareth Horsfall
This article is published on: 3rd December 2019

03.12.19

In this article I want to look at what has happened to sterling since Brexit and the outlook. In 2015, when the world seemed a lot more secure, GBP v EUR was trading over 1.40 and life seemed good. Anyone holding GBP based assets and incomes would find that their money went a long way. Today it is trading at 1.17.

With all this confusion it inevitably causes some uncertainty. This seed of uncertainty has shown itself nowhere better than in the continued daily swings of GBP v EUR.

It has been a while since my last E-zine. I am sure that it won’t go unnoticed that this E-zine is coinciding with the UK general election on December 12th. At the present time the Conservatives are polling for a small majority, but it would seem to be anyone’s guess as to the ultimate result.

A RECENT HISTORY OF STERLING
Around the start of 2016, after the Brexit fuse had been lit, sterling started to fall as the Leave campaign gained ground and the markets reacted nervously to a potential Leave outcome.

Immediately after the Referendum, June 24th 2016, when the result was announced, GBP fell the most against a world basket of currencies since the introduction of free floating currencies in 1970. On June 24th 2016 it had it’s largest ever one day fall of 13%. To put this into context, when George Soros famously ‘broke the Bank of England’, and made billions by betting against sterling in 1992, resulting in its subsequent ejection from the exchange rate mechanism, sterling only fell by 4.3%. In 2009 at the height of the financial crisis sterling lost 16% but over an 11 trading day period between 8-23 September 2009. The Brexit effect was huge.

I remember calling some currency brokers in the City of London early in the morning of June 24th 2016 and asking what was happening on the trading floor. The only responses I got were “fortunes have been made this morning!” and “it’s chaos over here”.

Roll on 2019 and as you will see from the charts below, since 2017, after the drop, sterling has traded within a range of values and has only experienced a ‘relative’ peak around the middle of this year.

STERLING CHART 2015 TO 2019

STERLING CHART 2017 TO 2019

WHAT DOES THE FUTURE HOLD FOR GBP V EUR?
In my travels around Italy to talk to clients this is the most asked question. Since the highs of 2015, there has been an approximate 20% loss in the value of your GBP assets and incomes. For anyone living on a fixed income, i.e. pensions or living from assets, this is starting to have an effect. In the past year the number of clients asking to top up their income from their assets has increased. This withdrawal effect represents a net reduction in your overall asset base, when that money might have been spent on future medical needs, inheritance for children, or just for future living costs.

Therefore, it is no surprise to me that I am asked frequently for my opinion on the matter, and additionally whether you should be thinking about converting assets into euro, to hedge against further falls.

MY RESPONSE
I have been speaking to asset managers in London and currency specialists over the last year about this subject to try and get a feel for the ‘word on the street’. I can tell you that the theme has always been the same and nearly all asset managers say the same thing. Sterling is desperately undervalued if we measure it against the fundamentals such as productivity of the economy, GDP v debt etc. Very simply, this means that when compared against all measures, sterling should be trading quite a bit higher against the Euro. The uncertainty surrounding Brexit is depressing the value more than anything else, rather than the actual event itself.

The rational thinking is that the currency markets, at this point in time: 3 years after the vote, are desperate for an outcome, whether that be a deal or remain (we cannot exclude no-deal, but for now it appears to have been put to rest). If we are to assume that the Conservatives win a majority (no matter how small) then there could be a bounce in sterling in anticipation that Boris Johnson’s deal is likely to be passed in parliament and provide the certainty that the financial markets are desperately searching for. The deal being passed ‘could’ create conditions for ‘another rimbalzo’ in the price of sterling. My guess is that it would bounce quickly after any decision was taken, although these are only educated guesses.

You may now be thinking, ‘how much would it likely rise?’. Well, if I knew that then I would be a very rich man indeed. In all honesty, no one can say for sure. I am not a betting man but I wouldn’t be looking to place any sizeable bets on it even if I were.

I remember that at The Spectrum IFA Group annual conference in January this year in Portugal, we had a speaker, David Coombes from Rathbones Asset Managers. He gave his outlook for sterling based on the 2 parameters he had set for the fund he manages. In the event of no deal he had GBP/EUR at 0.9 and in the event of a return to remain he placed GBP/EUR at 1.4. He went on to say that for any scenario in between you can pick your own point.

Going further in my own assessment of things, I personally think that if a deal is passed, or remain wins (in my dreams), then sterling is going to rise, but by how much I wouldn’t like to say. However, we must remember that ‘getting Brexit done’ is a illusion in itself. Passing a deal in parliament is only the start. The UK then has to formally leave the EU and start negotiating trade deals around the world. Some will likely fall in place very quickly, Canada, Australia, South Africa, maybe even the USA, but the deal with the EU and important future trade deals with India, China etc will likely take years and may not be as good as Brexiteers might hope for.

To give you an example of how difficult these trade deal negotiations might be, let’s take the example of Switzerland versus China and their trade deal which they struck in 2013. Everyone is aware of the rapid growth of the Chinese economy and how almost every nation in the world would like to strike a free trade deal with China to access the billions of growing middle class individuals and a rapidly growing consumerist economy. Switzerland is one of very few countries outside the Asia Pacific region to do so. However, Switzerland had to make some large sacrifices to get that deal, mainly that the Chinese negotiated FULL and free access to the Swiss economy for a period of 10 years during which time Switzerland would have only very LIMITED access to certain sections of the Chinese economy. The Swiss deemed this to be a good deal! It just goes to prove that deal making around the world is not going to be as easy as the Leave campaign would like us to believe.

Any protracted deal making phase may well be a negative effect for sterling and after any initial bounce on the back of some certainty, you might see sterling enter a volatile period once again, certainly as the unravelling from the EU also takes effect. I don’t buy into Project Fear and think that the UK will find its way in the world outside the EU, but like any divorce it will get messy for some time. The question is for how long and what impact will this have on the currency.

MY ADVICE
In summary, if you have money in sterling and ask me for advice, I will say that you should not convert it into euro right now. I will caveat that with the fact that neither I nor the best currency expert in the world can tell you what will happen, but it is a reasonable assumption that sterling will rise when the next steps of Brexit are resolved one way or the other. What happens after that is anyone’s guess. If you need to convert to euro then I would suggest doing so in tranches, or holding on until after Dec 12th to see what happens. Then pick your time, keep an eye on the rate and convert on the peaks.

(I am adding this note after having completed this E-zine. Our rep from Currencies Direct, our preferred currency exchange partner, called me about 5 minutes after completing this text and we had a chat about GBP expected movements in relation to the elections. She said that they are thinking that GBP v EUR could bounce to the mid 1.20’s if Boris Johnson wins the election with a majority. This is not a prediction, merely a hypothesis!)

One kind of hangover is enough………

By Chris Webb
This article is published on: 2nd December 2019

02.12.19

If you´re anything like me, you´ll be busy planning Christmas. Anything from where to see the best festive displays in Madrid, to trying to get your family EVERYTHING they want.

Christmas is an exciting time of the year for all of us. As a parent I still love that my children think Santa will make a personal appearance to our house and that he will be parking his sleigh right in the back garden (I have some doubts that they´re now just stringing me along, but I will continue to enjoy it while I can).

We´re all busy fitting in lots of social occasions, handing out gifts and cards and trying to squeeze in a party or two. However, there is also a serious side to the festive season: it’s very easy to overspend and overindulge and end up paying for it well into the new year.

Statistics show that most of us use credit cards to fund Christmas present purchases and to attend occasions we might not normally attend. Unfortunately, many people have problems paying back that debt after Christmas.

I have put together some tips to make sure you start 2020 on the right financial foot, and hopefully this will help you get through the festive season without a financial hangover.

1. Plan your shopping
Always write a list! My wife will laugh aloud at this as I am useless at writing lists BUT it is one of the most important things to do. Never just hit the shops; always write a list of who you want to buy for, an idea of what you want to buy and how much you want to spend. Without your list you´ll shop aimlessly and make purchases on a whim. You´ll lose track of your budget and spend unnecessarily.

Planning and making a list also means you can do some internet research to see what shops have the best sales, or if you could buy the gift online cheaper and save some money.
Research shows that people spend more than they can really afford on Christmas presents each year and end up with a credit card debt they didn’t anticipate after the ¨silly season¨ ends, so it is important to plan and make sure you know how much you can afford to spend.

2. Establish some ground rules
This is an important tip. Too many people get caught up gift giving. It’s nice to give and receive gifts, but it’s helpful to have ground rules. Have the conversation up front with family and friends to make sure everyone is on the same page. Agree on spending limits and who you will and won’t be buying for. This avoids offending anyone or any awkward moments at the Christmas table.

Being part of a big family, we decided to make it about the kids. If we didn’t it would mean buying a lot more presents and spending a whole lot more. When the whole family do get together for Christmas, which is rare due to the geographical situation of our family, then we do a Secret Santa for the adults where limits are set so everyone is on the same page.

3. Focus on personal value rather than financial value
All too often, people get caught up in spending money on gifts at Christmas and focusing on the financial value of those purchases. Instead, focus on the personal value.

From my own experience, I´ve had many a ¨nice¨ item bought for me, but the one present that means more to me than anything else is a framed picture where my kids used their hand prints to make a picture of two robins sitting in a tree (it has a very personal meaning). It has pride of place in my office and is appreciated far more than anything new, shiny or tech related.

Remember, it’s the thought that counts.

4. Avoid the financial hangover of festive season events
Festive season events can cause more than one hangover and let´s be honest, we don’t really enjoy any hangover.

Additional and sometimes unexpected events can really hurt the finances, as we never tend to factor them in to our regular spending habit´s but everyone thinks it’s ok to do it because it’s Christmas. Its amazing how these additional costs add up. Tickets to events, food & drinks, transport, new outfits…the list goes on and on.

If you are planning on being a social animal, think about the event before you go. Plan your whole evening and understand the whole cost of the event, not just the ticket price.

If your budget is a bit tight, be selective and choose the events you can afford to go to. You don’t have to go to everything. Don’t be pressured into attending something just because it’s Christmas. And remember, it’s ok to say no and you don’t need a new outfit for every event!

Finally, if you´re the host don’t be afraid to ask people to bring something to share. Whenever we plan an event, we always ask people to either bring a plate or bring a bottle. People are more than happy to help and generally aren’t expecting a free ride.

5. Make room for the new by getting rid of the old
This is probably more important when kids are involved. Why? Because they seem to have everything already and as they get older it becomes a struggle to know what to buy them. Generally, kids are going to get a lot of gifts. If you have children, you´ll know exactly what I mean. Don’t be afraid to ask them what they don’t play with anymore or what they don’t want anymore.

Look to see what you can dispose of. That’s a harder job before Christmas but can help financially if you can offload unused toys to offset new toys. I had this exact conversation with my daughter, Christmas 2018. All she wanted was a new iPhone, so after first agreeing with the wife to splash out on a new model, we then agreed that the old one was ours to do what we wanted with. A quick online sale gave us €200 which made the new purchase a lot less painful.

We also donate some items to charity; whilst that doesn’t help us financially, it makes a huge difference to others.

6. January sales
Post-Christmas sales can be a great opportunity to get a bargain, but they can also be a good opportunity to get sucked in and enhance the Christmas hangover. Do you really need to go out splurging cash just because there´s a sale? If so, then it’s important to go into the sales with a plan, just like in tip 1. Have a list of what you need so that when you go to the sales you go looking for specific things.

And remember, if you’re planning on hitting the shops with your credit card, you have already put pressure on that pre-Christmas.

7. Survive the school holidays with budget-friendly activities
This is important throughout the year but is still a big part of the silly season. Kids are about to start school holidays and it’s important to budget for entertaining them during that time.

There are so many free things to do with kids in and around Madrid. Most of this can be researched online and within our many local Facebook groups. You don’t need to spend a fortune. We´re lucky enough to have some fantastic parks nearby, some amazing countryside within a short drive and all at no cost.

Planning is crucial. If you plan the money you have available for the period it needs to last, you are less likely to feel the strain of not having enough money.

No Financial Hangover!

8. Plan now for 2020
Planning for 2020 and next Christmas is very important. Talk to your family early about the plan for next year and get the ball rolling straight away so you can be prepared well in advance. Plan birthday and Christmas presents so you can buy in advance and save spending more on less just because it was last minute.

The most important thing to take away from all our tips is to PLAN. Planning plays an important part in being in control of your finances and aware of what you can afford and how much you are spending.

I make no apologies for writing a sensible guide to avoiding the Christmas hangover. Most of us are too focused on the here and now, ensuring we have a great time, only looking at the implications of that good time when the bills start to roll in come January. I hope this will help you to enjoy the festive season, allow you to spend what is right and celebrate without any financial regrets.

Wishing you all a great Christmas and a prosperous New Year!

To book your personal financial review call me on 639118185 or drop me an email at chris.webb@spectrum-ifa.com

Arts Society de La Frontera event

By Charles Hutchinson
This article is published on: 27th November 2019

27.11.19

The Spectrum IFA Group again co-sponsored an excellent Arts Society de La Frontera lecture on 20th November at the San Roque Golf & Country Club on the Costa del Sol. We were represented by one of our local and long-serving Advisers, Charles Hutchinson, who attended along with our co-sponsors Prudential International in the form of George Forsythe.

The Arts Society is a leading global Arts charity which opens up the world of the arts through a network of local societies (such as in Spain) and national events throughout the world.

With inspiring monthly lectures given by some of the UK’s top experts, together with days of special interest, educational visits and cultural holidays, the Arts Society is a great way to learn, have fun and make new and lasting friendships.

At this event, over 120 attendees were entertained by a talk on Stolen Masterpieces: The Most Sensational Art Thefts in History by Shauna Isaacs who is one of the UK’s top experts in this field. She gave an excellent lecture revealing to us the history and reasons behind great art thefts. She is also a particular expert in the Nazi thefts of Art prior to and during the Second World War which she covered in a later Arts Society lecture that same day.

The talk was followed by a drinks reception which included free raffle for prizes including a CH supplied book on Stolen Masterpieces, Christmas crackers and mince pies. Prudential International donated a bottle of 12 year old whisky.

All in all, a great turnout and a very successful event at a wonderful venue, although we were in temporary accommodation as the main clubhouse is under renovation. The Spectrum IFA Group was very proud to be involved with such a fantastic organization during its current global expansion and we hope to have the opportunity to do so again.

Financial Planning Impact of the Spanish Election

By Barry Davys
This article is published on: 13th November 2019

13.11.19

The 10th November (10 N) General Election has, like in many other countries in Europe, resulted in no party gaining a majority of seats in parliament. The result is unsurprising, but what does it mean for our financial planning as individuals who are living in Barcelona and the Costa Brava?

With elections come many headlines, often contradictory. More and more we need to look beyond the headlines to find real data that helps with our planning. This is an example of why we need to look beyond the headline. The headline is ‘Ibex (Spanish Stock Market) rises 9.45% year to date’. Beyond the headline we find that profits of the companies that make up the IBEX index have fallen 20% to end of September 2019. How does this contradiction happen? The Ibex has no top weighting, unlike other indices, so can be highly affected by one company or a sector. The largest company on the IBEX 35 is Inditex (Zara etc) at 14% of the index. The banking sector represents 21% of the IBEX. This can lead to a distorted indication of the performance of a broader selection of Spanish companies. I have used the example of the IBEX because we live in Spain but it is similar for most indices around the World.

Below, I summarise points of the Spanish election that will impact our planning:

There is no sign that plans for post Brexit will be changed because of the election. This includes, for example, not changing the double taxation agreement between Spain and the UK.

It is unlikely that the change to a standardised method of Inheritance tax across Spain, as required by the EU, will be implemented as there is no majority government. Existing inheritance tax laws in Spain will remain the same.

The 10 N election was triggered because of the voting down of the budget proposed by the last government. The new government could well face a similar struggle to pass a budget. This means no changes to the tax rules and spending plans.

Still, borrowing by Spain will increase each year and this is similar across many European countries. Despite this, European government bonds have a very high price, many giving negative interest. Should you include these in your portfolio at this price?

The high prices in the stock market index and government bonds mean that headlines appear that suggest investing in commercial property as an alternative (there are lots of commercial property funds available). These headlines can include property growth rates from the last 10 years where property has enjoyed falling and very low interest rates. However, economic growth is slowing across the World and technology is changing our work, how we shop and play. Slowing economic growth and technological change mean that commercial property is not likely to do so well. A very careful approach to which property a fund manager buys will be especially important over the next 10 years. Without a majority government, we are unlikely to see Spain buck the World trend for lower economic growth.

We can take the following actions because of the elections:

Tax in Spain. We know the taxes and how to plan in a tax efficient manner because we have not had revisions since the last budget. Make your investments tax efficient.

Not all commercial property will do badly. Warehouses and logistically important points will do better than factories, for example. Warehouses are part of the Internet delivery system, which is becoming an increasingly large part of the shopping process for both companies and individuals. If we like commercial property we do not have to invest just in Spain. It is possible to invest in most of the developed markets.

When Barcelona city indicates that it will use driverless cars in the centre of the city, investment funds will buy car parks. It is estimated that the use of driverless cars will reduce the need for car parking in a city by as much as 70%. This could be a good opportunity as these car parks will be turned into other property types such as 3D printing manufacturing points, drone landing spots for internet deliveries and more. Admittedly, we may need to wait awhile before this happens.

Do not despair with shares. The major indices are used for headlines to give an indication of the relative price position of the market. Yet these indices are based on only a few companies e.g.

Spain Ibex – 35

France Cac – 40

Germany Dax – 30

UK FTSE – 100

There are many other companies to invest in these countries. We can also use funds which invest in companies doing business in and with India or China, for example.

There are some excellent opportunities in markets but it requires very careful and technical analysis to know which companies. Get help! See a previous article “5 mistakes the rich never make” which explains how the rich get help with their planning. I put this into practice in my own planning by using fund and investment managers to do the day-to-day management of my investments.

Good luck with your planning. If you would like to discuss help please feel welcome to contact me, especially if you own a business or are approaching retirement.

About the Author
Barry Davys is a partner with The Spectrum IFA Group. He lives in Barcelona and provides financial planning specifically for international people who live in Catalonia using his knowledge of Catalan, Spanish and UK tax. The advice is given in English. Business owners and people approaching retirement find his guidance particularly useful.

UK Pension transfer – most common questions asked

By Chris Burke
This article is published on: 8th November 2019

Without even mentioning the ‘Brexit’ word, if you have a private or company pension scheme in the UK but reside outside, it’s a good idea to understand what your options are in managing and having access to them. There are a handful of subjects I am regularly asked about regarding this:

UK pension currency
If you transfer your pension outside of the UK, it does NOT have to remain in sterling; all major currencies are usually available. It can also be changed at most times and be held in different currencies. Of course, at the moment this is an even more important thought process for your retirement savings.

Access to pensions
From age 55 you can have access to as much of your UK pension as you like, although bear in mind that in Spain pension money will be subject to personal income tax, after any allowances. Therefore, you might want to arrange this so as to not incur higher taxes (there are several ways to do this).

Pensions from a previous employer
These pensions are known as dormant or frozen, and at the very minimum you should know what you have, where they are and how they work. We help clients track these down, explain how they work, what your options are and start planning to make them either more ‘healthy’ or easier to access. Some pensions may have high charges, or the pension scheme could be financially in trouble. Having all this knowledge as well as the options available will help you make an informed decision.

Can I transfer any pensions I have myself?
In short, if you are abroad, no, since the process is complex and not easy to understand if you are not in the financial world. Also, HMRC won’t allow it unless you have received advice. We have clients with different levels of experience in finance and pensions, and we work alongside them all closely, giving them the knowledge to make their decisions and managing the process for them.

If they are UK pensions and you want to keep them in the UK, then yes, you can usually do this yourself depending on the value involved.

You cannot transfer a pension to another person, although there are ways you can pass it on effectively.

Pensions transfer charges
When overseas pension transfers were started many years ago, the costs were a lot higher than running a UK pension scheme, although the benefits were greater. Now, with increased competition from providers, the charges for moving and maintaining an overseas pension are a lot lower. However, this does depend on who you perform the transfer with and what advice you are given. I still come across clients where the charges are so high it is almost impossible for the pension to grow. There are ways of helping these people, but usually by then they have lost out on many years of growth, which is really frustrating as it didn’t need to be that way. It’s so important you work with a Financial Advisor who is working for you, at your pace and advising in your best interests, not theirs.

Selecting a Financial Advisor to work with when investigating moving a UK pension
There are several points/questions you should check when deciding whom to seek advice from. These are:

1) Recommendations, you cannot beat them. Does anyone you know work with a Financial Advisor and they are happy with them?
2) Does the Financial Advisor have the necessary qualifications to give you advice?
3) How are they remunerated? Ask them how much and when.
4) Do they have any long-standing clients you can speak to? If they do and you manage to speak to them, ask them specific questions so you know they are both genuine and how it worked for them.
5) Look into their eyes… meet them several times, get a feeling for them as a person, their morals and actions.
6) Research them on the internet, or ask around and see what’s said about them.

I do know clients who have done most of this and still not had a great experience. The only additional advice I can give is to look at the pensions and companies they are recommending. If you haven’t heard of them before or you don’t get the ‘spider sense’ that they purely have your best interests at heart, then look elsewhere. Remember, they are going to be looking after your retirement. For years I have helped people evaluate their pensions, and as well as looking to help new clients, the main reason I write these articles is to help people avoid potentially working with someone that doesn’t have their best interests at heart.