Do you have a considered, strategic tax and wealth management plan in place? If so, is it up to date with all the latest developments in Spain and internationally that affect you? Is it designed to preserve your wealth over the long-term and meet your objectives?
Do you have a considered, strategic tax and wealth management plan in place? If so, is it up to date with all the latest developments in Spain and internationally that affect you? If not, make a New Year resolution to review your tax planning, investments and pensions. Are they ready for what 2015 will bring? Are they designed to preserve your wealth over the long-term and meet your objectives?
Savings and investments
Many people have built up a portfolio of shares and funds bought over the years, without much consideration to how they work together or suit your aims. The chances are your portfolio is too risky for you and not best set up to meet your needs.
Consider the principles for successful investing below. If you do not have them in place it is time to make changes.
Your appetite for risk – The starting point is to obtain a clear and objective assessment of your appetite for risk, or your portfolio will not be suitable for you.
Matching your risk profile to the optimum portfolio – Every set of investments can be forecast to display a given amplitude of risk. Low amplitude, less risk but also lower likely returns. A higher amplitude of risk brings greater potential returns. The key is ensuring your investment portfolio matches your attitude to risk.
Diversification – It is critical to ensure your investments are suitably diversified, so you are not over-exposed to any given asset type, country, sector or stock. A 'multi-manager' approach provides further diversification.
Review – Review your portfolio around once a year to re-balance it. Your portfolio can shift away from the one designed to match your risk profile and objectives, and your personal circumstances may have changed.
You want to ensure that your investments and wealth are placed in the most suitable arrangement to limit your tax liabilities. Take advice from someone who is well-versed in the nuances of Spanish taxation, otherwise you could see your investment returns slashed by Spanish tax – levies that could have been avoided or mitigated.
The right tax efficient arrangement can keep most of your investments in one place and help you legitimately avoid paying too much tax.
Spanish income and savings tax rates are being reduced over 2015 and 2016. For example, the minimum income tax rate will reduce from 24.75% to 19% and the top rate from 52% to 45%. However, the main beneficiaries are those on low and medium incomes. Those with savings and investments still have need of specialist tax planning to protect their capital, income and assets from tax.
If your wealth exceeds €700,000 you also need to be aware of the effects of wealth tax, which is extended for another year.
It is important to ensure your tax planning is up-to-date and designed to take advantage of tax planning opportunities in Spain.
In Spain inheritances between spouses are taxable, and allowances can be very low under the state rules. You need to understand if the state or local regional succession tax rules apply to you. Following a court ruling by the European Court of Justice, from January 2015, if you are resident elsewhere in the EU, your Spanish resident beneficiaries have the right to apply the local regional rules. If you are resident here and your beneficiaries live elsewhere in the EU, they can apply the regional rules.
British expatriates also need to consider UK inheritance tax, and how it interacts with succession tax.
If you are a UK national, 2015 is a big year for pensions. You need to understand all the new rules and the options they provide you, and the tax implications in Spain, to establish the best way forward for your personal situation.
If 2015 is the year you leave Spain, it is important to take specialist advice in advance, to help you reduce tax liabilities in both countries. Consider when is the best time to sell assets, and the best time to buy new ones.
Spain has introduced a new an exit tax on stocks and shares in some circumstances from 2015, so you would need to see if this will affect you, and if so how to avoid it.
Blevins Franks has been providing tax planning and wealth management advice to expatriates in Spain for decades. We have in-depth knowledge of Spanish taxation and the approved tax planning opportunities. We take a holistic approach to tax planning, succession issues, investments, pensions and asset protection, and specialise in reducing tax on invested capital, pensions, wealth and inheritance.
15 December 2015
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.