If moving to Spain has taught me anything, and I am sure the same applies to going to live in any other country it is the need to prepare properly and take as much professional advice as you can. Apart from the language difficulties (hablas un poquito espanol?) you will be moving to a new country where amongst many other things the tax rules are very different to those back at home. I know from personal experience how difficult it is to get to grips with QROPS, Compliant Bonds and Wealth and Succession taxes
Having taken some time to reflect I think the first thing you need to decide is what your residential status is going to be. Are you moving permanently or do you intend to be a swallow retaining your residential status in the UK but flying in to take advantage of warmer weather? There are strict residency rules in both the UK and Spain which actually stipulate how many days you can spend in each country without triggering residency and therefore a tax liability. In Spain it’s pretty easy, live here for more than 183 days a year and you are almost certainly tax resident. The UK rules are a bit more ambiguous and can depend on how many ties (property, dependents etc) you have to the UK and then the number of days you intend to spend back at home. If you fall into both camps then there will be a “tie break” to decide – imagine a penalty shoot out between Hacienda and HMRC to see which of them keeps your tax!
Why the big issue about tax residency? Well we all come here to live the dream and everything hinges on residency when it comes to making sure you plan your finances properly. Like me you probably had some savings back in the UK that with any luck you tried to organise as efficiently as possible so you minimised your tax (you probably used an adviser to help you with your ISA’s and Investment Bonds etc). Becoming tax resident in Spain means that this strategy needs revisiting because you wont get the same tax breaks as you did before –in fact holding these types of investments can make you worse off and that’s something you definitely don’t want to be.
There is one other little financial surprise you need to be aware of. Remember the big fuss about offshore investments around the time of the UK election? Governments are now paranoid about making sure we all pay our taxes in the right place so there has been a raft of legislation (FATCA, Exchange of Information Agreements, Common Reporting Standards) to make sure that moving forward we can’t hold savings and investments without their existence being notified to the tax authorities.
We are passionate about helping expats get the very best financial advice, so how can the experts at Fiduciary Wealth help your move to Spain be as financially positive as possible.
We would like to 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 have all come to Spain for a better life let us help you make sure the tax man doesn’t spoil that. Call now on +34 951319727 or email firstname.lastname@example.org.