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Moving to Spain can seriously damage your wealth! (part 3)

It is impossible to cover all the issues you need to consider when it comes to arranging your finances, pensions and investments, in the most tax efficient way possible when it comes to your new life in Spain which is why we implore you to take professional advice from a firm of cross border specialists- it will be well worth it.

Moving a pension to QROPS will be the subject of separate articles, the aim of this is to point you in the right direction when it comes to savings and investments which if they are held outside of Spain will generally need to be disclosed on Modelo 720.

The main point we want to get across is that effective tax planning means having products that are appropriate and work from a tax perspective in your country of residence. Do you really think that Spanish Hacienda understands what an ISA is, or a VCT or a Premium Bond? Can you expect to maintain the same benefits that you might have enjoyed with your pensions and investments in a different tax regime? Would you be surprised to know that any tax free benefits from these types of product are not actually tax free in Spain?

What about your UK offshore bond, surely that must have the same benefit in Spain with a 5% annual withdrawal allowance free of tax, after all it is offshore? Wrong again we are afraid, UK investment bonds many of which are Isle of Man sited do not provide the same tax benefits for policy holders resident outside of the UK if they have no intention of returning.

You are probably thinking that the only alternative is to put your investments in a Spanish bank with the potential risk that entails. This is where the good news starts. There are tax efficient products for pensions and investments for Spanish residents such as a bond designed specifically for this market and this is where you need to be very brave.

You need to end the relationship you have had with your UK advisers (yes we know they may have looked after your interests for many years and you feel very comfortable in dealing with them) and work with a firm such as ourselves who can give you proper cross border advice. We know this can be difficult but unless your financial advisers can hand on heart say they understand the tax rules over here and have the necessary regulatory permissions and insurance protections to be able to give financial advice then you need to sever the relationship. Too often we have seen clients mis-sold UK products when they are Spanish tax resident and then someone else is left to pick up the pieces. Of course it would be just as big a mistake to work with a company that didn’t know anything about the financial advice products available back in the UK and the tax treatment of them and we can tell you there are plenty of those offering “advice” here in Spain.

Do you want expert cross border advice? Telephone 900 102 374 for an initial consultation or email