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Bank or Bond – You need to choose carefully!

March 14, 2019

I am often asked by prospective clients if there is a better alternative than to keep investments tied up in a bank account either offshore or in Spain.

As you know bank deposits are reasonably secure and relatively simple, however the returns will not be good, hardly beating inflation in the short term and certainly not setting the world alight.

I expect you are aware that some banks have failed and although there is a deposit protection scheme in place to the tune of 100,000 Euros there is always risk when the bank can use your deposit monies to lend to other customers.

If you hold your funds offshore then you will need to report them on a Modelo 720 declaration which can be a pain to complete. Interest will be taxed whether withdrawn or not and beneficiaries will not be able to receive the proceeds until the asset has been disclosed for succession tax purposes.

I think for most people a straightforward alternative can be to invest in a Spanish Compliant Bond. These bonds are provided by insurance companies who work under totally different finance legislation. There is security in the fact that your money is ring-fenced for you and only you. Indeed the insurance company is required to hold an additional amount by way of a solvency margin and EU directives require the assets be used to repay policyholders in the event of a winding up order.

Let me give you a quick introduction to the Spanish Compliant Bond which we think can be thought of as the “Expat ISA”. You see growth is completely free of tax until a withdrawal is made and tax is only then paid on the growth proportion of the withdrawal. You can never defer tax in this way with a bank deposit. In my opinion this is a great way to build capital or put in place a regular income stream perhaps to supplement your pension income.

Not only is tax deferred, but any tax due is paid directly to Hacienda and even better as the bond is Spanish Compliant (be aware that not all bonds are) there is no Modelo 720 declaration required so very easy and simple to administer from your point of view. Perhaps one of the overriding factors is that the asset is not Spanish sited and for joint accounts there should be no liability to succession tax on first death.

How can we help you arrange a suitable investment that will give you all these tax benefits and succession tax protection?

We can start by offering you a FREE private consultation (worth £500) to assess your current financial position and explain how our Spanish tax reduction strategies can help. If you already have a clear understanding of your current situation we can offer a FREE tax planning assessment instead (worth £1,000). Just think you will be getting FREE advice on tax planning for Spanish residents as well as retirement, savings and wealth tax mitigation strategies.

We will even given you a DISCOUNT on the set up fees for your Bond which can be worth up to £10,000 if you invest £250,000 or more.

Interested? Speak to one of our qualified expat advisers on +34 951319727 or email