The deadline for submitting your Form 720 may have passed but for many the pain and stress continues. Here we examine some of the tried and tested methods for pain relief and test their effectiveness.
1) Do nothing- The simple solution. Bury your head in the sand, pretend it doesn’t affect me and hope it will go away. Likely success rate is zero, penalties and fines for non-reporting will in some cases amount to more than the value of the undeclared asset.
2) Pretend to leave Spain-Telling the tax authorities you are no longer resident is fine if you intend to permanently move elsewhere. Living in Spain more than 183 days as a non resident is likely to lead to punitive action by the authorities, after all it is very simple for Hacienda to establish true patterns of residency.
3) Move to France, Italy, Portugal- Fine but be aware that HMRC have signed agreements with a number of EU countries to share information about income and investments held by UK nationals. Out of the frying pan into the fire?
4) Continue with an Offshore Company or Trust –HMRC are just concluding a new agreement with a number of offshore centres such as Cayman and BVI to ensure that information is fed back and then forwarded to their Spanish counterparts. Being a party to a company or trust is a reportable event under Form 720 and the penalties mentioned earlier in this article for non-reporting will apply. When a new EU Savings Directive is in force offshore vehicles will be included and will require reporting wherever you live.
5) Keep money in Channel Islands or Isle of Man or in another tax friendly jurisdiction- There are no longer any hiding places. The Channel Islands and the IOM have signed up to a new agreement with the UK authorities and exchange of information is the new standard. Even the Swiss have agreed to share information.
6) Invest in Spanish Banks- Hello! Did you read what happened in Cyprus? This could prove to be a costly mistake.
7) Continue to hold assets in UK products such as ISA’s and UK bonds- OK if you want a totally inefficient way of investing. These products no longer carry any tax advantages or benefits when you become Spanish fiscal resident, indeed the exact opposite applies, they can be taxed very heavily whether you draw income or not.
8) Compensate by investing in unregulated funds offering high “guaranteed” returns- Have you done your homework? Is the fund you are considering really safe and how accessible is your capital going to be?
9) Listen to the option recommended by the guy in the bar or an unregulated adviser- Really? Need I say more?
There is however one tried and tested method to relieve the pain. Talk through your problems with an adviser at Fiduciary Wealth who will work with you to explore proper tax mitigation strategies that take into account your own personal situation and specific requirements. Why not arrange a private consultation in your local area at one of our upcoming tax and wealth clinics, or make an appointment to visit us at one of our three locations on the Costa del Sol by emailing firstname.lastname@example.org or telephoning +34956796911. Alternatively if you need instant pain relief call our hotline on+34674632219 to make an urgent appointment to see an adviser.