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Becoming resident in Spain: what about taxes and finances?
Prior to Brexit, many people were trying get away with not declaring their taxes properly in Spain
By Keith Littlewood, Blacktower International Financial Advisor
The Hacienda tax authority can see you’re living in Spain by looking at your water and electricity consumption, your phone usage, cash withdrawals and card spending, not to mention the electronic passport controls now operating in the UK and Spain. This is a lot of hard work and is why in the past some people have managed to slip through the net and get away with not paying their taxes in Spain.
Since the beginning of this year the Hacienda has up-to-date data on every British expat who is living in Spain. This will be provided by HMRC who link it to your National Insurance number so slipping through the net is almost impossible. Add this to the Common Reporting Standards (CRS) which started 3 years ago and you could find yourself in very dicey territory if you do not get your tax affairs properly in order.
You might be in the position where your “hand has been forced” due to the Brexit situation. Many people have spent most of their time in Spain and done nothing about their tax affairs and only now must become resident officially. Remember getting your TIE/residency is only the first step. Make sure you get both tax advice from a qualified tax adviser and Financial Advice from a qualified Financial Adviser based in Spain – UK based accountants and Financial Advisers will not be in a position to help you as a Spanish resident.
The Hacienda Spanish tax office also has the power to go back four years and request tax payments and impose hefty penalties for non-payment of taxes.
You are generally a Spanish Tax Resident if:
- You are living in Spain for 183 days per year
- You have your ‘centre of vital interests’ in Spain (Home, spouse, children, main source of work etc.)
Some taxes are still due in the UK, e.g. if you decide to retain a UK property or you have a Public Service Pension Scheme (Civil Service, Armed Forces, etc). These fall into the Double Taxation Treaty so they will be taken account of when you complete your tax returns in Spain.
If you are becoming a Spanish Tax Resident talk to Blacktower asap, who will be able to give you some tips that will help you avoid making very costly mistakes.
What Blacktower does is help you to find an investment or pension product that is as tax- and cost-efficient as possible, one that allows your money to grow without annual taxes, and one in which the Spanish taxes are much lower on withdrawal than a non-Spanish compliant product.
In today’s financial climate it is essential you do everything you can to make sure your money is safe and secure and what you want to transpire in the future has the best chance of happening.
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.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
Disclaimer: This communication is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional regulated adviser before embarking on any financial planning activity.
Blacktower Financial Management (International) Limited is licensed by the Gibraltar Financial Services Commission. Licence 00805B. Blacktower Financial Management Limited is authorised and regulated by the Financial Conduct Authority in the UK and is registered with both the DGS and CNMV in Spain.
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Image 2: Blacktower Financial Management
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.
