Interesting how times have changed. It wasn’t that long ago when we were talking about the European Union’s resolve to amend the EU Savings Tax Directive which originally came into force in 2005 to ensure that member States collect data on the savings income of EU residents. A flawed Directive with significant gaps, including the exclusion of many financial instruments but the most glaring omission was the exclusion of offshore companies and trusts.
On 29th October 2014 all OECD and G20 countries, as well as most international financial centres, signed a multilateral agreement that will activate the automatic sharing of data for tax purposes. Tax authorities will now gather much more information on the assets their taxpayers hold abroad.
Fifty-eight “early adopters” have pledged to make the first exchange in 2017 and this includes Spain, the UK, most of the EU, Isle of Man, Jersey, Guernsey, Gibraltar, Cayman Islands and BVI. Others will start sharing information in 2018.
We find that too many foreign nationals living in Spain have resorted to highly dangerous practices to avoid tax. Some have established UK addresses pretending to be UK resident whilst others have registered their Spanish property in their children’s name and pretend not to live in Spain despite having formally exited the UK years ago.
Cross border tax planning has changed beyond all recognition in the last few years and moving forward expats have to accept that tax authorities will know exactly where your wealth is and what income and gain that wealth generates and then expect to pay the appropriate amount of tax due on that income and gain. In future it will not be possible to hold assets without the tax authorities being aware of their existence and there will be little sympathy for anyone who thinks that the old standards are still an accepted way of dealing with their finances.
Those who think that by not disclosing assets on Modelo 720 or by giving up their Spanish residency they resolve a problem are seriously misguided. The legal and financial consequences of non-disclosure are significant. And those who have been led to believe that a Malta trust provides anonymity are deluding themselves. Anyone who thinks that offshore companies and trusts are safe or that keeping assets in far-away lands is the answer should better think twice.
Telephone 951 319 727 for an initial consultation with one of our certified financial planners or email firstname.lastname@example.org. You can meet an adviser at our Marbella office which is situated in Melior Vasari, Urb La Alzambra, Local 3-1, 29600 Marbella.