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Important considerations to manage the financial Impact when moving to Spain. Blacktower Financial Management
For many years people from the UK have been coming to Spain to live full or part time and in many cases it has been easy to avoid any disruption to the way Finances are managed. Some people have chosen to become Spanish fiscal resident but others have chosen to keep their finances and taxes under the UK system.
Following Brexit and rules surrounding the amount of time you can legally stay in Spain and without the
freedom of movement – this is no longer an option. If you are now considering ‘biting the bullet’ and taking up full time residency in Spain, there are some very important considerations that you must take into account.
Do you own a property in UK?
Are you keeping it or selling it?
You may have owned your UK home many years and move to Spain without actually selling.
After you are a tax resident in Spain you may not benefit from the CGT (Capital Gains Tax) free allowance you get in the UK for your main residence. As your main residence will become Spanish and you sell your UK home in future years you may be subject to a huge Spanish CGT bill that could have been avoided with proper life planning.
Also there is no getting away with not telling Spain about your UK property as once you are resident in Spain each year you will have to complete an Overseas Asset declaration (Modelo 720) to include all the assets you own outside of Spain valued in excess €50,000, failure to do so can result in large fines.
Do you have Pension Funds?
Part of your financial planning in funding your move to Spain may be the use of your Pension Pots. This is where very major mistakes can happen. One example is the Tax Free element allowable as a UK resident. This is TAXABLE as a Spanish resident as earned income and can result in a Huge tax bill if not planned for properly.
Do you have an ISA?
These are great for saving if you live in the UK as they are completely tax free. Many people have built up substantial ISA funds and portfolios. If you move to Spain, you can keep your existing ISA but are not allowed to contribute any more into it. You will NOT retain the tax benefits though. If you do have an ISA it is very important to take advice and look at what alternatives could be tax efficient for you if saving tax is important, but more importantly make yourself aware of the tax implications to avoid an unexpected tax bill in your second year living in Spain.
Above are just 3 examples in which you can be caught out by easy to make financial mistakes that you may not have considered. If you are thinking of moving to Spain, please make sure you do not fall foul and speak to a Qualified Financial Adviser as well as a Tax Specialist because some of the above can be very easy to avoid and plan for. Make sure ALL your bases are covered.
If you want more information or wish to make an appointment to discuss your own situation then call 657684094 or email keith.littlewood@blacktowerfm.com
The local Blacktower office address is: 120 Avenida Dr. Artero Guirao 2C. San Pedro Del Pinatar, 30740, Murcia, Spain. Our office suite is easy to find on the main N332 through road of San Pedro del Pinatar with easy parking. Blacktower Insurance Agents & Advisors Ltd is authorised and regulated in Cyprus by the Insurance Companies Control Service and registered with the DGS in Spain.
The Blacktower group of companies operates across multiple jurisdictions, each authorized under its respective regulatory license. For further information, please refer to the relevant regulatory page.
Financial Advice Issues for Expats in Spain
I have been a Qualified Financial Adviser for almost 35 years now. 25 years in the UK for major institutions such as Natwest, RBS and Royal London. I have been in Spain giving expats financial advice now for 10 years and it is quite remarkable the different approaches as well as advice that is required for an expat now living in Spain. Blacktower is a company that has specialised in providing the best solutions for its clients living outside the UK for 30 years also.
The currency issue is always high on the agenda and a discussion for the long term future has to be taken onto account. Questions like What will happen if one partner dies? Will the other remain in Spain? What about other family members? What Inheritance tax provisions do you have in place? The list goes on and on.
Existing portfolio’s and investments that were the mainstay of portfolios in the UK may now be obsolete. An example of this is quite often tax efficient products in the UK like ISA’s and previously held TESSA’s PEP’s actually have low growth rates and provide no tax advantage to a Spanish fiscal resident.
Existing Pension holdings either paid by the state or private pensions built up through working lifetimes are topics that have to be covered. Many expats have lots of small pensions from many ex employers and can be confused by the communications and administration in dealing with them. At Blacktower we specialise in advising on how to consolidate and bring all these pensions together in one place.
Bank accounts and investments in Spain always bring up lots of questions too. Quite often the small print associated with financial products in Spain is in Spanish this can make it very difficult even if you have a good grasp of the language. Understanding Jargon in English is sometime difficult enough. I provide clear easy to understand letters and documents in English so that you fully understand any terms and conditions before making a decision.
Advice on tax efficiency is just as important and offering good returns. There are products available exclusively for Spanish expats that can provide invaluable benefits. Having a good base knowledge of the tax implications both now and in the future is an essential ingredient to making a sound decision.
I will complete a thorough factfind, ask you the right questions, establish your individual needs, attitude to risk and capacity for loss and desired returns before providing you with a full written report of advice and my recommendations in plain English. You will then have time to read and consider all the information before contacting me with how you wish to proceed.
Click for more information about Keith Littlewood.
The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity.
The Blacktower group of companies operates across multiple jurisdictions, each authorized under its respective regulatory license. For further information, please refer to the relevant regulatory page.
