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To be or not to be that is the question (Spanish resident that is)?

March 14, 2019

It’s amazing how many enquiries we still get from prospective clients and others asking this very question; as if there was a voluntary code of conduct and that allows individuals to choose what suits them best. For example, perhaps they would like to live in Spain permanently but would like to maintain the status quo as far their residential status is concerned, after all it all seems a bit too much effort to start changing things over from UK to Spain and having to fill in lots of forms and disclose all of your pension and investment accounts.

And then of course there are those that have done the maths and actually worked out that they would probably be better off if they just kept quiet and carried on paying their taxes back in the UK. They would prefer to keep their ISAs and Offshore Bonds with the tax privileges that these products have for UK residents and although they want the Spanish lifestyle they aren’t prepared to make a financial sacrifice, if that were necessary, to achieve it.

There is of course another category, financial nomad who actually doesn’t want to pay his taxes anywhere and wants to disappear under the radar so that they don’t appear as either Spanish or UK tax residents. They have vaguely left the UK, although not formally, and they believe that if they keep their heads down they can live more or less permanently in Spain and ignore all the tax rules and regulations that residency entails.

For anyone who needs reminding let us repeat that if you spend more than 183 days in a calendar year in Spain (don’t have to be consecutive) then you will more than likely be deemed to be Spanish tax resident which means that all your tax efficient UK or offshore investments may well be rendered next to useless and what’s more will need to be disclosed to the authorities on the annual Modelo 720 declaration that all tax residents potentially have to complete.

There may be a few exceptions to the 183 day rule where you might be able to retain your UK residency but these are few and far between. In fact it is probably more likely that you might fall into the Spanish residency regime even if you don’t spend 183 days here, perhaps if your centre of economic interests is in Spain or if you have a spouse or dependent children based here permanently.

Residency is crucial and failure to understand and accept your proper residential status can lead to significant financial problems and penalties. From a financial planning perspective matching your investments and retirement planning to your true residential status is fundamental.

To find out how you can make the transition from UK to Spanish tax resident in the most tax efficient way speak to one of our certified financial planners. They will be able to guide you through the residency process and help you make the most of your pensions and investments.

Call 900 102 374 for a meeting with a financial planning expert or email