Will Spain be moved by Brussels?
By John Hayward
This article is published on: 28th December 2013
We are at the end of 2013 and after all the festivities some people have the less than happy task of making tax and asset declarations. From the 1st January 2014 to 31st March 2014, residents of Spain will be wondering if they need to complete the Modelo 720 Overseas Assets Declaration. In 2013 there was an immense amount of uncertainty for both those having to declare and also for the accountants who had to work out how to complete the Modelo 720. It seemed that each day a new “Frequently asked question” would appear on the Agencia Tributaria website. The deadline of 30th April 2013 was also part of the revisions having initially been set at 31st March. From 2014, the deadline is 31st March, unless this is revised again.
In the background there have been pressure groups attempting to persuade the European Parliament that this law is discriminatory and that the Kingdom of Spain is acting illegally. Full details of the complaint. The problem is that, as with other complaints made to the European Parliament, Commission, or Court of Human Rights, the speed of response, if any, is pedestrian. Take the Land Grab law. Spain and Valencia have been reprimanded but it seems nothing has actually changed. In my village, a new property development law was introduced in 2004 which would see 30 or so property owners having to pay for a new infrastructure and lose part of their land as well. This is still law although it is unknown when the development will be started. Not soon is the standard guess.
The fact is, as much as some might feel aggrieved about some laws in Spain, they are unlikely to go away. Some believe that Spain might be shooting itself in the foot if it thinks that charging people more is going to encourage people to stay. For example, inheritance tax, which was of little or no significance for residents of the Valencian Community due to a 99% reduction for those who qualified, was increased on 6th August 2013. Other autonomous regions will also be taking steps to balance the books. News of bad weather in the UK, The Netherlands, or Germany may not be sufficient to hold onto foreign residents.
How can The Spectrum IFA Group help you? We do not recommend money is invested in Spanish institutions other than small amounts on deposit for regular short term expenses and needs. Why? Firstly, because we do not have enough confidence in them and, secondly, because we have a wider selection of products at our disposal, especially for Spanish tax residents. Therefore, we can deal with overseas insurance companies and investment houses without your money being in Spain. At the same time, the investments are 100% tax compliant in Spain.
The main areas we look at are UK Pensions and the suitability of transferring these funds to a QROPS (Qualifying Recognised Overseas Pension Scheme). I hold the Chartered Insurance Institute Specialist Pension G60 qualification. Every company discussing pension planning and transfers should have this or its equivalent. In addition we help people to accumulate more from their money, allowing access to income in a tax friendly manner. We use Spanish Compliant Bonds for residents of Spain.
Under the Modelo 720 Overseas Asset Declaration, neither a QROPS, which can hold a Spanish Compliant Bond, or a Spanish Compliant Bonds held outside a QROPS, is declarable. In addition, we can arrange your investments so that there is a reduced, and possibly no, inheritance tax to pay by your dependants or beneficiaries.