Page 20 - Spanish Insight - August 2019

Planning a tax-efficient

move to Spain

By Kelman Chambers, Partner, Blevins Franks Tax residence Other wealth management for moving to
Tax residency in Spain is not just about day Spain
If you have been dreaming about living counting. You could be resident even if you
full time in Spain but haven’t yet, what is do not live in Spain but your spouse and/ While tax planning is a vital step to
stopping you? While many people need to or minor dependent children do, or if your protecting your wealth, it also important
wait until retirement, for others it may be the centre of economic interests is there. It is to review other aspects of your wealth
fear of foreign taxes, or just weighing up the important to be clear on your situation and management.
pros and cons of such a big life change. And, plan around it accordingly. The Spanish
of course, ongoing Brexit uncertainty has tax office has increased inspections on tax Your estate planning needs to take account of
muddied the waters for would-be expatriates. residency, with some wealthy people being both Spanish succession law and succession
caught out by the “centre of economic tax.
Interestingly, the current unsettled political interests” rule.
situation in the UK, triggered by Brexit Consider the various options for your
frustration, is the very reason some Britons You also need to know how the UK’s pensions, including transferring your funds
are considering leaving to become tax statutory residence test could continue to out of the UK into a QROPS, to establish
resident elsewhere. A new UK government, apply to you even after you have left. which would work best for your goals and
of any denomination, is likely to introduce life in Spain.
changes when taking over the nation’s purse Income tax
strings. There is speculation, for instance, In Andalucía income tax rates currently range Moving to Spain is also an opportune time
that higher earners or those holding valuable from 19.25% to 47.4%. to review your investment portfolio. It
assets could be hit with more punitive should be designed specifically around your
taxes following a general election. This Savings income benefits from lower rates of current circumstance (of course including
could be through higher income or capital 19%, 21% and 23%. the fact that you are now living in Spain and
gains taxes, pension reform, or tightening spending Euros), income needs, future goals,
of the inheritance tax regime to capture Wealth tax time horizon, current risk profile and estate
more revenue. Some are even touting the Spain currently imposes an annual wealth planning wishes.
possibility of a UK wealth tax. tax, which generally hits those with
worldwide assets worth over €1 million – Careful and early financial planning can
However, no-one can predict for sure what there is a personal allowance of €700,000 help you make the most of what Spain has
the future holds for taxation. Your tax burden plus up to €300,000 for a resident’s main to offer. Cross-border wealth management
can rise and fall at any given time. While home. is a complex area, so take specialist advice to
good financial planning can help protect your secure the best results. Blevins Franks has
wealth, wherever you are resident, if you are Rates start at 0.2% and rise to 2.5% for over 40 years’ experience advising British
considering moving to Spain, this may be the wealth over €10,695,996. There are some expatriates in Spain and can guide you
time to start putting an action plan in place. variations across regions. through the various aspects of your move,
providing holistic advice on tax mitigation,
Once you have made the decision to move, Succession and gift tax estate planning, investments and pensions.
it is sensible to start reviewing your financial Succession tax in Spain works quite www.blevinsfranks.com
planning. differently from UK inheritance tax. The
rates and allowances depend on who the The tax rates, scope and reliefs may change.
As a resident of Spain, you will be liable for beneficiary is, where the deceased and the Any statements concerning taxation are
Spanish income, capital gains and wealth beneficiary are resident, and where the assets based upon our understanding of current
taxes on your worldwide assets and subject are located. Rates, allowances and exemptions taxation laws and practices which are
to Spanish succession and gift tax rules – so can vary considerably depending on which subject to change. Tax information has been
make sure you are prepared. region you live in. summarised; an individual is advised to seek
personalised advice.
Establish how your wealth will be affected by Tax planning
these taxes and what mitigation opportunities You can often use compliant arrangements
are available. With early planning it is to lower taxes on investment income, assets, Keep up to date on the financial issues that
possible to time your change of residency pensions and estate. This is not an area for may affect you on the Blevins Franks news
to minimise tax liabilities – and maximise ‘do it yourself’ financial planning, you do page at www.blevinsfranks.com
opportunities – in both countries. need specialist guidance.

20 Spanish Insight August 2019