Expat tax efficiency after a move to Spain

If you’ve recently relocated to Spain or are still planning to make the move, investigating the country’s tax-efficient opportunities could save you money.

The most important part of your move to Spain as regards tax-efficiency is to establish the exact date you became resident for tax purposes. Your liabilities will include tax on your worldwide income, wealth and capital gains, and you’ll need to make sure you don’t contravene UK tax residence rules or you’ll be taxed as a resident in both countries!

Income tax rates in Spain on general income range between 19 and 47.5 per cent, with income from savings taxed at 19, 21 or 23 per cent, dependent on your annual income from such sources. If your worldwide assets total more than €1 million a wealth tax will apply. Professional advice is essential as benefits can vary, and Spain-compliant investment products can reduce taxation. In addition, assuming Spain is similar to the UK a regards tax efficiency is a bad mistake, as UK-centric investment vehicles including ISAs have no tax benefits in Spain.

Many expats prefer to keep their savings in pounds sterling, leaving them vulnerable to currency fluctuation in these Brexit-troubled times. The best idea is to look for flexible structures allowing diversification as regards holding investments in several different currencies. Timing your house purchase as part of a tax-efficient strategy requires factoring in the exact date of your assuming Spanish residence, with professional help recommended. At the present time, it’s impossible to say whether or not you’ll have problems accessing your pension receipts post-Brexit or whether annuity payments will still be withheld. When, if ever, the situation becomes clearer, taking advice is again recommended, but making sure your chosen advisor is properly qualified, experienced and regulated within Spain is crucial.