Wednesday, 20 April 2011

Professional Connections

For UK and Irish Nationals with property or living in Spain

You would be surprised how many times I hear the expression ‘I was told that…….’. What usually follows is either wrong or some local popular myth.

Whether it’s QROPS, QNUPS, tax in Spain, property regulations, residency and many more, myths and inaccurate information abounds.

I believe that a professional opinion is one that should be sought, in most circumstances. Of course, this may cost, but in the long term it’s usually cheaper than many of the mistakes I come across.

Please also remember that if I refer you there are;

  • No up front fees
  • Only qualified advice
  • Opinions and services that have been fully tested

Also remember that I have regularly promoted the idea of a ‘second opinion’, as my earlier blog demonstrates.

If you need a second opinion, please email me

British and Irish citizens, living in Spain or Spanish property owners often say that they prefer to deal with English speaking professionals. As long as they have the right knowledge and expertise of the rules, regulations and laws of Spain, that is totally acceptable.

Financial Advisers

This is my own area of expertise and I have many connections that have the appropriate qualifications and are correctly authorised and regulated. If you need professional advice or want to ask me a question, please email me.

Each of the advisers, that I would refer you to will be regulated by one or more than one, of the following bodies;

Comision Nacional del Mercado del Valores is the principal financial services regulator in Spain and responsible for authorising investment products.

Direccion General de Seguros y Fondos de Pensions is the Spanish regulator for insurance products which can be marketed in Spain.

The Financial Services Authority – the UK’s financial services regulator


There is, of course, a requirement that Gestors or Abogados in Spain have the necessary qualifications for advising you on filing your annual tax return and other accounting issues. However, it is also possible to secure the services of a Chartered Accountant in Spain who is fully qualified and is regulated by the Institute of Chartered Accountants (ICAEW) in England and Wales.

This does not mean seeing an Accountant in UK but a properly authorised individual or firm, based in Spain.

To be referred to an ICAEW accountant in Spain, please email me


In this respect I am principally referring to property related issues.

In a similar way to the Accountants situation mentioned above. The Law Society in the UK does have regulatory power over Solicitors and many of them choose to work in Spain. The best ones will also employ specialist local Spanish lawyers.

Please email me for any of these connections.

I also have one connection who is London based. There is a firm of Law Society regulated lawyers that I know who have a Spanish department. That department is headed by a Spanish national who has all of the necessary qualifications.

Company Formation

It is possible for property in Spain to be owned by a UK company and for the owners to become shareholders and directors. This gives UK and Irish nationals the opportunity to control the ownership of the property, within a family, for instance. This can also be excellent for investors with numbers of properties.

This arrangement is particularly beneficial on the death of an owner, who is in fact a shareholder. The company remains in existence and the deceased’s shares are bequeathed to his beneficiaries. In terms of Spanish Inheritance Tax (ISD) the owner, the company, lives on.

The section of my blog on the right hand side headed ‘Check your Spanish Inheritance Tax liability’ gives access to the scheme.

This scheme is set up and running and recently won a major service award. It is a complex process, including the involvement of UK solicitors, technical translators and the Spanish Notary. But the process is set up and running. The company’s Head Office is in the UK but they also have a Spanish Office serviced by Spanish lawyers. You can email me or even better click the link and see for yourself.

Chartered Surveyors

Property ownership in Spain has been tarnished with a series of problems in recent years. Whether it is Land Grab, Town Hall corruption on land deals or unlicensed building, many people have been wary of these property related issues. There is also the question of Spanish construction techniques.

If you have any concerns about building issues, want a second opinion or the ‘comfort’ of a UK Chartered Surveyor, I can put you in touch. Email me and I will pass your details to a UK company working in Spain.

Property sales and purchase

This tends to be a very local service and is not therefore ideal to provide contacts to Estate Agents. However, continuing my theme of using professionals, I suggest that you should contact members of the Association of International Property Professionals (AIPP). Their website is

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This covers some of the key areas of financial life in Spain and there may be others that you want to raise. If you have any questions, comments or feedback please email me, in the first instance.

Friday, 15 April 2011

QNUPS – Tax efficient International Pension Planning

Qualifying Non-UK Pension Schemes brings us the acronym QNUPS

Day Five – ‘Tax Planning in Spain’ Week

QNUPS is a very important component to ‘Tax Planning in Spain’ Week. It is important for retirement planning, mitigating Inheritance Tax and especially pertinent is the opportunity for ‘in-specie’ transfers. In fact the IHT planning element was brought about as a result of lobbying over the original QROPS rules.

  • Get authorised and regulated advice

  • Remember that QNUPS is a Pension Scheme

  • Ideal for In-Specie Transfers

Late last year,I read an article by a leading International Financial Adviser (that’s their description not mine) which contained inaccurate information. That reminded me that with QNUPS, as with all investments, you need advice from the right source. I can provide you access to a professional adviser, if you email me.

 I think the technical description is necessary. The Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010 [S1 2010/0511] have introduced this acronym ‘QNUPS’. Weblink gets you to the precise Statutory Instrument (SI).

In short, just over 12 months ago HMRC confirmed that contributions to a Qualifying Non-UK Pension Scheme, would be exempt from UK IHT. What this means is that as long as the pension walks and talks like a pension, then the assets held in it will be protected from UK IHT.

This is not meant to be an exhaustive list, but I believe there are six categories of individuals who will most benefit from or should consider a QNUPS;

  • Any UK resident who from 6th April 2010 became restricted on their UK pension contributions to basic rate tax relief.

  • UK domiciled persons (that includes many UK citizens who have become Spanish residents), and UK residents who want to make pension contributions beyond the UK maximum limits.

  • UK non-residents, including Spanish residents who already have a QROPS but want to add to their pension funds. A classic transfer would be UK savings receiving very little interest, including PEPs and ISA’s

  • Individuals who want to build an IHT friendly investment, intended as part of retirement planning but not related to their income or employment situation

  • Anyone looking for a way of consolidating their lifetime savings or investments without the restrictive rules of conventional pension planning.

  • Any UK resident or domiciled individual who wishes to build up a pension fund in excess of the current lifetime limit

QNUPS provides an excellent opportunity for in-specie transfers. Investments you have built up, properties you own and other revenue producing assets can just as easily be a pension contribution. The investment does not have to be cash but cash is not excluded. Indeed the investments that can be held in a QNUPS are much less prescribed by HMRC than traditional pensions. Remember, however, that the QNUPS has to be a Pension Scheme but it is also a plan to defend assets from Inheritance Tax (IHT).

If any adviser suggests selling your assets and buying another financial structure beware. In-Specie Transfers offer a much more cost effective route, normally, and also selling assets can lead to an encashment charge or even a tax bill (eg Capital Gains Tax). To avoid this pitfall please speak to a recommended adviser. Please email me for details. Remember In-Specie Transfers.

Also Remember the Regulators! I will only recommend an adviser who is authorised by one or more of the following;

Comision Nacional del Mercado del Valores is the principal financial services regulator in Spain and responsible for authorising investment products. A CNMV adviser can be recommended, please click here

Direccion General de Seguros y Fondos de Pensions is the Spanish regulator for insurance products which can be marketed in Spain. Email me to be referred to an authorised adviser.

The Financial Services Authority is the UK's financial services regulator. Many British clients prefer a UK adviser and have dealt with FSA regulated advisers in years gone by. For an introduction to recommended adviser, with experience in Spain, please click here .

If you have your own question, I’d be delighted to answer it. Those of you who live in Spain or intend to live in Spain should be very careful when choosing an adviser.

You can write to me with your personal experiences or to be put in touch with my recommended adviser by sending me an email

Thursday, 14 April 2011

Offshore Financial Planning

Day Four – ‘Tax Planning in Spain’ Week

Offshore financial planning is much more open than used to be the case but still has many advantages. This is especially true with the use of Trusts.

·         Not for tax evasion!

·         Lost faith in British & Irish Banks or Insurance Companies

·         Strategic financial planning

The term “offshore” originally comes from financial institutions located offshore from UK in the Channel Islands and Isle of Man, but is now used figuratively to refer to banks in many regions, particularly Bermuda, the Cayman Islands, Bahamas and politically neutral European jurisdictions such as Switzerland. In recent times, New Zealand has a growing reputation for flexible trusts and liberal investment rules.

Individuals or organisations (including companies and businesses) may be interested in placing assets offshore for a variety of legitimate reasons, including:

1.      The existence of a sophisticated infrastructure of financial institutions and professional service providers (lawyers, accountants, corporate services, etc). This is particularly true of Jersey and Guernsey where most of the financial services professionals will have trained in the UK

2.      Tighter government regulation in the region in which the financial institution is domiciled. This may allow for a relatively favourable investment environment as compared to onshore.

3.      Access to politically and economically stable jurisdictions. This may be an advantage for individuals who lack faith in the financial institutions in their ‘home’ country. After experiences of the last few years many British and Irish people might have lost faith in Banks.

4.      Tax neutral.  Having no added local tax burden is a useful advantage for individuals who are not obligated to pay tax on worldwide income, or who may be able to defer taxation.  It also allows individuals to structure their assets without having to worry about local tax complications.

5.      As part of estate and/or asset protection planning.

6.      Broader "global" view than often found with onshore institutions.

7.      Strong privacy and confidentiality laws to help protect depositor's privacy.

8.      Trustees in the UK are often large companies, sometimes owned by insurance companies and seen to be impersonal. It is more likely that the services of a Trust Company in Jersey or Guernsey will be much more personal, though possibly also more expensive, but the expertise level is very high.

Before deciding on any offshore investments you should carefully consider you objectives and decide what you are trying to achieve. The expertise in giving you advice needs to be at a high level. I can recommend advisers with the expertise, if you email me.

Tax Evasion Warning
Individuals with non-legitimate intentions may also seek to do business offshore, just as they do onshore, incorrectly assuming that their activities may be more likely to be overlooked or found acceptable. This of course is tax evasion and is illegal. The only advice I can offer such individuals is to make themselves legal and legitimate! Use an authorised and regulated adviser that I will be happy to recommend if you email me

There are scores of tax efficient, legal opportunities available, without the risk of tax evasion penalties.

You can write to me with your personal experiences or to be put in touch with my recommended adviser by sending me an email

Wednesday, 13 April 2011

Spanish Inheritance Tax (ISD)

Day Three – ‘Tax Planning in Spain’ Week
This complex issue is often ‘swept under the carpet’ but eventually everyone is affected. In particular, the prospect of a widow(er) paying inheritance tax on the death of their spouse can come as an enormous shock.

This subject will continue to remain high on my Agenda, as the vast majority of expats in Spain are affected. Non-resident property owners may not think they are affected – unfortunately they are!

·         There are State rules and variations by the Autonomous Communities (AC)
·         State rules always apply to non-residents
·         Autonomous Region rules will apply ONLY to Spanish residents
·         There is no Double Taxation Agreement on inheritance Tax between Spain and the UK

Impuesto sobre Sucesiones y Donaciones (ISD) is also called Succession Tax or Inheritance Tax and is a tax on inheritance and gifts, paid by the recipient of the inheritance or gift. It is due only if the recipient is resident in Spain or the asset being inherited or gifted is an asset located in Spain such as real estate or moveable property situated in Spain. If the property is owned by a UK company ISD is not payable on the death of a shareholder of the company.

Allowances are available depending on the relationship with the deceased or donor. In the first instance the Spanish State rules apply but these can be varied by the different Autonomous Communities (ACs) providing conditions set by the relevant AC are met. The State rules always apply to non-residents owning assets in Spain.

There is currently no blanket exemption between a husband and wife under the State rules. Where a married couple are both residents in Spain and one spouse dies, the surviving spouse can be fully liable on the worldwide assets inherited from the deceased spouse, subject to the allowances and reliefs available.

The worldwide estate of British expatriates who are UK domiciles on death will also be liable to UK inheritance tax, as well as to Spanish succession tax on chargeable Spanish assets. Any succession tax paid in Spain can be deducted from any UK inheritance tax liability on the same asset. There is such a fundamental difference between the inheritance tax in the two countries that no double taxation agreement exists on this issue. Please email if you need referral to a professional advisor.
State Rules
Beneficiaries are divided into the following four groups depending on the closeness of relationship to the donor or the deceased:
  • Group 1: Natural and adopted children and other descendants (such as grandchildren, great-grandchildren) under 21
  • Group 2: Natural and adopted children and other descendants aged 21 and over; parents and other ascendants (such as grandparents, great-grandparents), and spouses
  • Group 3: In-laws and their ascendants/descendants, step-children, brothers and sisters, cousins, nieces and nephews, aunts and uncles
  • Group 4: All others including friends or unmarried partners
State Allowances
There are tax-free State allowances on inheritances (not life-time gifts) for members of the different groups as follows:
  • Groups 1 and 2: €15,957
  • Group 3: €7, 993
  • Group 4: nil
Group 1 inheritors under the age of 21 can have an additional deduction of about €4,000 for each year they are under 21, restricted in total to €47,858 per recipient.
There are further reductions where the recipient is physically or mentally disabled depending on the recognised degree of disability.

Relief for main home

There is a 95% allowance against the inherited value of the main home of the deceased up to €122,600 per inheritor, provided that the beneficiary belongs to Group 1 or 2 or is a remoter relative over the age of 65 who lived with the deceased during the two years prior to their death. The property must be retained by the beneficiary for 10 years following the death, but it does not need to be the beneficiary's main home.

Succession tax rates vary from 7.65% to 34%. The tax liability is subject to multipliers based on the pre-existing wealth of the recipient, which can take the highest effective rate of tax to about 80%.


Gifts made by the same donor to the same person within a period of three years, taken from the date each gift is made and on the value at the time it was made, are aggregated and treated as one transaction for gifts tax. To determine the tax rate applicable, the value of all previous gifts made to the same person within the last three years plus the current gift are added together. The average rate of tax on the theoretical total is then calculated and applied to the latest gift.
Autonomous Communities (AC)
The Autonomous Communities (ACs) can vary the State rules in the taxpayer's favour. The State allowances and reductions apply in the first instance provided that the relevant conditions have been fulfilled. Any enhancement to the State allowances and reductions granted by the AC will then replace the State deductions, again providing any additional conditions imposed by the AC are fulfilled.

Please note, however, In the case of real estate in Spain owned by a non-Spanish resident, the State rules will always apply on the death of the non-resident owner. The beneficial exceptions from the various Communities (AC), do not apply to Spanish non-residents.

In some ACs, spouses and children can receive a 99% reduction in the inheritance tax payable on death. This reduction currently applies in the Canary Islands, Balearics, Murcia Region, Madrid, and Valencia Community.

In AndalucĂ­a, spouses and children are exempt from inheritance tax where the taxable value of the inheritance received is no more than €175,000, and the wealth of the recipient does not exceed €402,678.

In Cataluña, personal allowances increase significantly from 1 July 2011.
In many ACs, unmarried couples registered as a pareja de hecho are recognised as spouses.
It is important to look closely at the rules relating to a specific AC’s to obtain full details of the range of allowances and exemptions available. I can put you in contact with professional advisors in most regions, if you email

Succession tax is paid under the AC's rules if the deceased was habitually resident there, in the case of an inheritance; or, in the case of a gift of real estate, if the real estate is located in that AC; or, in the case of a gift of any other assets, in the AC where the recipient is habitually resident.

To be habitually resident in a particular AC, you must have been resident there for five continuous tax years. So, the deceased or donee (as the case may be) must have been continuously resident in an AC for the past five years for that particular AC's rules to apply, otherwise the State rules will apply.


These complex rules and arrangements indicate that careful planning is required. You can get an indication of how this affects you by clicking on the link on the right of the page ‘Check your Spanish Inheritance Tax liability’. Seeking the information does not constitute any commitment on your part.

You can feel free to email me on any of these issues.

This complex issue has been researched using information available on web pages, consulting contacts and the writers own knowledge. It cannot constitute advice and professional guidance maybe required.

Tuesday, 12 April 2011

UK Pension, 100% Cash

Day Two – ‘Tax Planning in Spain’ Week

QROPS and QNUPS are relatively new having come from Statutory Instruments (SI) from 2006 and 2010 respectively. The idea I am bringing here is based on the Income and Corporation Taxes Act (ICTA) 1988. In other words it’s tried and trusted.

  • UK approval by HMRC

  • Benefits can be 100% cash

  • Residency, Domicile and Nationality are not relevant

First of all the Technical point;

An International Pension Scheme can be arranged pursuant to Section 615(6) of the Income and Corporation Taxes Act 1988. This has been accepted by HMRC. The Section applicable is this weblink

For this article I shall be referring to this scheme as ‘Section 615’.

I telephoned a number of UK Financial Advisers, operating in Spain, and asked them if they could advise me about a Section 615. Not one of them could tell me! If as a result of this post, you want to talk to an adviser who does know and has advised others, please email me.

There are a number of categories of people who can benefit from Section 615.

  • Employees of UK companies whose duties are conducted wholly outside UK. So you could be resident in another country (such as Spain) but employed, or become employed, by a UK company
  • Employees of multi-national employers where an overseas parent company has a UK presence
  • Employees of UK companies, who are UK resident, but who undertake duties inside and outside the UK

Whilst these categories relate to ‘employees’, there is no reason why a self employed person or a partnership could not establish a company in the UK for the purposes of becoming employees and benefitting from these schemes. For advice please email me.

The Benefits

For the employer

  • Contributions are allowable against corporation tax in the UK
  • There is no UK National Insurance to pay on the contribution
  • No minimum contribution
  • Employee benefit at reasonable cost. I can take employer enquiries

For the employee

  • There is no tax liability on the contributions
  • Benefits are tax free in the UK
  • Death benefits can be paid to nominated beneficiaries
  • Inheritance Tax efficient
  • All of the fund can be paid as cash on leaving the service of the company or deferred to normal retirement age
  • There is no local tax on these contributions as there is no income
  • Even though employed by a UK company there is no National Insurance cost
  • Member directives on investment are allowed

A wide range of permitted investments, which include;

  • Insurance policies
  • Cash and money funds
  • Equities
  • Fixed interest securities and gilts
  • Property or property shares

This is only an outline of Section 615 but each time I think about it, more groups of people seem to be potential beneficiaries of the Scheme. If you think you might benefit, or just want more information, please email me.

Many UK citizens working abroad can benefit from this arrangement, yet it is not widely offered or available.

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You can write to me with your personal experiences or to be put in touch with my recommended adviser by sending me an email

Any personal information that you give me will be treated with the utmost confidentiality and care. Your details will only be passed to a third party with your written authority.

Monday, 11 April 2011

Furnished Holiday Let – UK Tax Saving

Day One – ‘Tax Planning in Spain’ Week

Good news for some property owners – and I haven’t said that for sometime!

  Good News – Update

Mr S from Kent owns a beautiful apartment on a complex between Marbella and Estapona. The Tax allowances identified by this scheme amount to £67,500 and Mr S can claim back tax at his highest rate of 40%

He now awaits a £27,000 rebate from Her Majesty’s Customs and Revenue (HMRC)

This article is for the benefit of UK Taxpayers with furnished holiday let property anywhere in the EU including Spain. Most cases, to date, have been in Spain.

In summary, to benefit you need to answer ‘yes’ to the following four criteria;

  • Is the owner a UK taxpayer?
  • Was the purchase price in excess of £150,000?
  • Is the property a furnished holiday let in the UK or any part of the EU?
  • Is the property let out for more than 70 days a year and available for letting more than 140 days per annum?

Anyone who can answer ‘yes’ to all of these questions may be able to save thousands of pounds in future tax or rebate. Start the ‘ball rolling’ by sending me brief details by email

The Tax Office (HMRC) of course does not advertise that the entitlement is available but every person who qualifies will almost certainly have overpaid tax. It has been estimated that under 2% of UK taxpayers who own furnished holiday let property have made a claim. So, Holiday let owners, 98% of you have a claim to make! But it has to be a very detailed, pre-determined report in the form of a survey.

This benefit is given as either a tax rebate or often a reduction in future tax payable.

Whilst accountants will do everything possible to claim benefits for their clients, this is a specialist field. The promoters, who provide access to this entitlement, must conduct a very rigorous survey of the property, to standards set by HMRC and presented in a specified format. As the work involved is so detailed and time consuming, you must not just answer the questions above as ‘yes’, there is another filter where the company will discuss by phone or in person, the finest detail to ensure compliance.

Because of this diligence and expertise the company has a 100% success record on cases submitted to HMRC. If you feel you meet the criteria, please email details to me, which will be in total confidence.

The following step by step guide shows how the scheme works and where you fit into it.

There are five steps;

  1. There is a telephone or face to face meeting with the scheme provider to establish that a claim would be valid. So much detail at this step can save lots of time in the process.
  2. The property is surveyed, in great detail, taking lots of photographs (the record number is 400) as these form part of the HMRC method and standards required.
  3. The claim will include hundreds of items within the ‘intrinsic fabric’ of the property, for everything, including the kitchen sink!
  4. The norm is to find capital allowances equivalent to 25% of the property value which can then form part of the claim
  5. When the allowances are calculated and identified in the HMRC format, a Report is completed within a two week time-frame. This is sent to the UK taxpaying property owner for approval before the claim is made to HMRC.

My apologies, there is one step I have forgotten. Before step 1. above please send me details of your circumstances and potential claim.  This means that I can put you in touch with the company promoting the scheme, without delay. Send your details to me by email .

Friday, 8 April 2011

Tax Planning in Spain Week

Week commencing Monday 11th April is Tax Planning Week, here on ‘Financial Pages in Spain’. The key issues will be;

  • QNUPS – Qualifying Non-UK Pension Schemes
  • Why invest offshore?
  • Spanish Inheritance Tax (ISD)
  • Furnished Holiday Let – UK tax saving
  • UK Pension, 100% cash

These issues have all been covered individually, but I thought bringing them together for a Special Week would enhance their importance. This was certainly the case when previously we had ‘QROPS Week’ and ‘Special Pensions’ Week. Email me for more information.

One of these subjects will be covered each day, starting on Monday 11th April. In the meantime, you might like to visit my website This is a comprehensive site of all financial aspects of life in Spain. The article which has received universal acclaim is

In one place you can find a comprehensive list of financial and legal terms in Spain, arranged alphabetically with the appropriate English translation given. Many readers told me they have saved the list whilst I know others have passed on the link to family and friends.