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Expat tax resident investors in Spain get worthwhile tax breaks
| Published: | 30 Oct at 6 PM |
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The Spanish taxman has granted useful tax advantages on investment and savings plans to expats who’ve chosen tax residency in the country.
Tax advantages on savings and investments for tax resident expatriates in Spain also let them off the hook of Spain’s notorious negativity against non-compliant investments. UK expat tax residents won’t have to worry about onerous extra reporting requirements as well as the punitive tax rates and requirements on non-compliant savings and investments.
Conditions for the valuable exemptions include declaring overseas assets with a value of over €50,000. The valuation covers buy to let property or own home in the UK, onshore and offshore-based investment bonds, PEPs, ISAs, Premium Bonds, National Savings accounts, bank accounts both on- and offshore and protection policies.
Establishing tax residency in Spain is straightforward, unlike other bureaucracies in the country. If you’re living for over half of every year in Spain and have your ‘centre of vital interests’ in the country, you’re considered tax resident. The vital interests include children’s schools, your home, job, dog and so on.
Rules have now been tightened in order to include expats who deliberately avoid tax residency by spending less than 183 days living in Spain. As with all tax officials across the world, it’s difficult to fool them as they’re able to investigate everything from credit card bills through flight tickets to car hire.
Once you’ve established your tax residency, using tax-efficient Spanish compliant bonds especially tailored to expat needs are the way to go. A straightforward comparison between returns on compliant and non-compliant offshore investment bonds uses two investor examples.
The first investor puts €100,000 in a non-compliant offshore bond in April 2016 which, by April 2017, has grown by 10 per cent, with no withdrawals having been taken. The first €6,000 attracts 19 per cent tax, with the remainder being taxed at 21 per cent, bringing the total tax due to €1980.
Had this investor chosen a Spanish tax compliant offshore bond and taken no withdrawals, no tax would have been payable. Even should a withdrawal have been made, the tax due would be significantly reduced to €172.71 via a three stage procedure. A good selection of investments are available, are inheritance tax efficient, give no necessity for probate and can be had in multiple currencies and at various risk levels.
Tax advantages on savings and investments for tax resident expatriates in Spain also let them off the hook of Spain’s notorious negativity against non-compliant investments. UK expat tax residents won’t have to worry about onerous extra reporting requirements as well as the punitive tax rates and requirements on non-compliant savings and investments.
Conditions for the valuable exemptions include declaring overseas assets with a value of over €50,000. The valuation covers buy to let property or own home in the UK, onshore and offshore-based investment bonds, PEPs, ISAs, Premium Bonds, National Savings accounts, bank accounts both on- and offshore and protection policies.
Establishing tax residency in Spain is straightforward, unlike other bureaucracies in the country. If you’re living for over half of every year in Spain and have your ‘centre of vital interests’ in the country, you’re considered tax resident. The vital interests include children’s schools, your home, job, dog and so on.
Rules have now been tightened in order to include expats who deliberately avoid tax residency by spending less than 183 days living in Spain. As with all tax officials across the world, it’s difficult to fool them as they’re able to investigate everything from credit card bills through flight tickets to car hire.
Once you’ve established your tax residency, using tax-efficient Spanish compliant bonds especially tailored to expat needs are the way to go. A straightforward comparison between returns on compliant and non-compliant offshore investment bonds uses two investor examples.
The first investor puts €100,000 in a non-compliant offshore bond in April 2016 which, by April 2017, has grown by 10 per cent, with no withdrawals having been taken. The first €6,000 attracts 19 per cent tax, with the remainder being taxed at 21 per cent, bringing the total tax due to €1980.
Had this investor chosen a Spanish tax compliant offshore bond and taken no withdrawals, no tax would have been payable. Even should a withdrawal have been made, the tax due would be significantly reduced to €172.71 via a three stage procedure. A good selection of investments are available, are inheritance tax efficient, give no necessity for probate and can be had in multiple currencies and at various risk levels.
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