Friday, 7 November 2014

Spain – The Sun still Shines and Lifestyle is Healthy

Spain is great  for holidays, working, living & retirement

The beaches are clean, the Mediterranean is still blue, the food is fresh, lots of cheap flights, great deals on hotels and apartments but forget all that the headlines are bad! UK Press always give SPAIN a hard time

Personal Experience 
We bought our first house in Spain on 7th June 2002; it was memorable for another reason. It was the World Cup in Japan and South Korea, England played Argentina and won 1 – 0 thanks to a penalty by David Beckham.

I thought I’d write down a few reasons why we bought and let you, the reader, decide whether some, all or none of the factors still apply. This is random in no particular order;

  • The climate is great and the sun shines all year round
  • It’s two and half hours from home
  • The flights are cheap if your dates are flexible
  • We love the lifestyle, street markets, restaurants, entertainment, the beach and I could go on
  • House prices are cheap compared with the UK
  • A second home is for the long term, especially retirement
  • The exchange rate is more favourable than it has been
  • We needed and easily got a 50% mortgage
  • We found someone reliable to look after the place when we are not there, giving peace of mind
  • The family think it’s a great idea

I could go on but I think those 10 reasons cover most of why we bought in Spain.

The fundamentals haven’t changed and there are bargains to bought. There is now also plenty of evidence that people like the concept of Rent before you Buy.

So here are three ideas

Viva Espana

David Goodall
Financial Pages in Spain

From the ‘Guardian’ in 2013

Spanish have the HIGHEST healthy life expectancy in Europe

Friday, 18 July 2014

UK International Pension Scheme

set up for overseas workers, in a range of scenarios

Popular name ‘Section 615’

  • UK approval of each scheme 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 and each Scheme is individually approved by them.

The idea here is based on the Income and Corporation Taxes Act (ICTA) 1988. In other words it’s tried and trusted. For this article I shall be referring to this scheme by its popular name ‘Section 615’.

There are a number of categories of people who I believe 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

Self Employed 
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 benefiting 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.

For the employee

  • There is no tax liability on the contributions
  • 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.

Important point to note: Section 615 (6) of the Income & Corporations Tax 1988 is completely non-contentious. Each scheme will be individually approved by the UK tax authorities (HMRC)

* * * * * * *

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 authority.

David Goodall
Financial Pages in Spain

If you make bank transfers, check out La Torre Fx – Foreign Exchange. This beats the banks and gives you the bonus!

Thursday, 17 July 2014

FATCA – An American nightmare?

Not a typical post from Financial Pages in Spain but it’s for English-speaking expats and there are lots of US citizens in Spain, as well as the UK and most of Europe!

What is FATCA?
A piece of US legislation called Foreign Account Tax Compliance Act which the Americans hope will crack down on tax avoidance, using offshore accounts, implemented throughout the world. It came into force on 1st July 2014.

How does it affect US expats?
US citizens abroad must report their overseas earnings and investment profits, annually to the Internal Revenue Service (IRS) which generates an annual tax bill. To be fair, many face only a small tax charge or even nil, but the cost of complying can be very high. However the cost of non-compliance will be even higher!

Most declarations do generate a large tax bill as most Americans living and working abroad earn large salaries and many have large investments.

Perhaps the most important factor, and the individuals who are affected will already know, is that the majority of Americans abroad make no declaration at all. FATCA is coming to get you.

How will FATCA work?
In preparation for FATCA, the US Government has signed, around the world a series of InterGovernmental Agreements (IGA’s) with the IRS which offered special arrangements, relaxed deadlines and simplified reporting. ALL European Governments have signed IGA’s with the US, including Switzerland who finally ‘surrendered’ to the pressure!

With immediate effect, all Foreign (looking from an American perspective) Financial Institutions (FFI’s) will need to disclose all US related information for both new and existing clients. Failure to report to the IRS will lead to a 30% withholding tax.

Who will be affected?
I have seen an estimate that, currently, around 7.3 million Americans live and work abroad, yet only 565,000 comply with IRS reporting requirements. The US Government and IRS are targeting those who don’t report and don’t pay US Taxes.

Many of those who don’t comply will be directly affected by the disclosure requirements placed upon FFI’s by the IGA’s!

Is there a cost effective solution?
You could renounce your American citizenship! That, of course, would be the ultimate and for the vast majority, an unacceptable step.

I am aware of one structure which has all the elements necessary to comply with FATCA, minimise tax charges and simplify IRS reporting requirements. This arrangement is not a one-size-fits-all plan and will not suit everyone but I have tried to simplify who might benefit.

  1. Do you earn $100,000 or more each year?

It sounds a high figure to Europeans (about €75,000) or British (circa £60,000) but if you are American working abroad it possibly includes you.

If you earn less than $100,000 you may seek exemption to the retrospective element of FATCA using a voluntary arrangement allowed by the IRS. This is called OVDP (Overseas Voluntary Disclosure Program) which allows amendment to previous returns without penalty.

  1. Do you have non-US investments?

Without correct advice there is potentially a ‘double-whammy’

·       Many FFI’s will stop taking investments from US citizens to avoid the disclosure requirements
·       If you haven’t reported investments in the past, your FFI will start reporting them now.

You can bring them together in one IRS compliant structure but only if your circumstances allow.

  1. Are you currently Non-Compliant with IRS tax reporting requirements?

This structure is probably the one you need as long as you fit
    1. and / or 2. above

Even if you currently are compliant the structure may be suitable as it is FATCA compliant.

Next Step
Please register your interest in the arrangement, without any obligation. Please email with an outline of your circumstances. It would also be helpful if you could give your contact number and a best time to call.

David Goodall
Financial Pages in Spain

Thursday, 8 May 2014

Explaining terms and expressions - Mortgages

Explaining terms & expressions is important but nothing beats Regulated and Qualified Financial Advice

·       Cut through the jargon
·       Check Further Reading
·       Beware: Unauthorised ‘advisers’ about!

A recommendation about the most suitable mortgage for you made by an adviser. Remember that mortgage advice is regulated in the UK but not regulated in Spain. To receive a recommended adviser click here. Always be wary of advisers who want a large up front fee.

Annual statement
A statement from your mortgage lender, sent every year, showing among other things, the repayments made and the outstanding balance owed.

Approval in principle
A certificate which some lenders will give you that shows the amount they will probably be prepared to lend you. This is not a guarantee, but can be helpful when signing up with estate agents. Since the advent of the credit crunch, these are much more difficult to obtain.

Buy-to-let mortgage
A loan taken out to buy a property which is intended to rent to tenants.

The amount available to borrow, or borrowed, to help buy the property.

Capped mortgage
A mortgage that has a maximum limit on the interest rate to be paid during a special deal period.

Cashback mortgage
A mortgage that comes with a cash sum (often a percentage of the amount being borrowed).

The amount of money being put into buying a property (not including the mortgage money being borrowed).

Discounted mortgage
This has a discounted variable rate of interest for a set period, after which the rate will increase.

Early repayment charge
A charge payable if the mortgage deal is settled ahead of time.

Fixed rate
An interest rate that is fixed (i.e. it doesn't move up or down) for a set period of time.

Income multiples
The factor by which earnings are multiplied to find out how much can be borrowed.

The charge made by lenders to borrow the money.

Interest rate
The figure that determines how much interest is paid. 

Interest-only mortgage
A mortgage where you only pay the interest charges of the loan each month. This means you are not reducing the loan amount (or capital) itself, and this will need to be repaid in some other way.

The percentage of money you want to borrow compared to the cost or value of the property.

A loan which is secured against the property.

Mortgage broker
A mortgage broker helps clients to understand the various mortgage types and deals available. To receive the recommendation of an excellent Mortgage Broker please email me.

The process of changing your mortgage for a different one, without moving home. In the right circumstances this might be done to find a more competitive arrangement.

Repayment mortgages
A mortgage that pays off both the home loan and the interest at the same time.

Standard variable rate mortgage
A loan at the lender's normal mortgage rate – i.e. without any discounts or deals.

Secured Loan
A mortgage is a secured loan. This means that if you fail to repay it, your lender may be able to sell your home to get its money back.

A report on the condition of the property being purchased.

Tracker mortgages
A mortgage with an interest rate that is usually linked to a particular rate that is set independently from the lender and moves up or down with it. The most common tracker mortgages in Spain are Euribor linked. Euribor is the wholesale money market for Euros.

The length of the mortgage.

A brief inspection, for the benefit of the lender, of the home being purchased. This is to make sure they are not lending more than the property is worth and that the property is suitable security for the mortgage. It also checks that the property exists!

Please remember that in Spain, unlike the UK, mortgages are NOT regulated products. This means that that you must be careful who advises you. If your first instinct is to use a bank then you will not get advice, merely a product sale. Maybe a comparison from a recommended adviser. Please email me for a contact.

Explaining terms and expressions - Investments

Explaining terms & expressions is important but nothing beats Regulated and Qualified Financial Advice

·       Cut through the jargon
·       Check Further Reading
·       Beware: Unauthorised ‘advisers’ about!

Asset allocation
This is the spread of investments across the asset classes.

Asset classes 
The underlying investments – for example, shares, bonds, property and cash deposits.

Bonds These are loans made to a company (often called Corporate Bonds) or the Government (often called Gilts).

The money you invest.

Capital growth
Any increase to your original investment after costs, charges and depreciation have been taken into account.

Collective investment scheme
A way of pooling contributions from lots of people into a single investment fund.

Contracts for Difference (CFD)
An agreement between two people to settle at the close of their contract the difference between the opening and closing price of a company's share price.

Cooling off period
A cooling off period is defined as the period of time you're allowed, after signing an agreement, to cancel it without incurring a financial penalty. This does not normally apply in Spain.

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

A bond's fixed rate of interest as a percentage of its nominal value.

Debt securities
Another name for a bond.

Derivatives A right or an obligation to buy or sell another type of asset – such as a share or a bond – to someone else at a specific date and time in the future.

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.

Spreading your investments across different asset classes, or different types of investments within an asset class

This is another name for shares in companies.

Friendly Societies These are similar to mutual life assurance companies but with different tax rules.

The Financial Conduct Authority - the UK's financial services regulator.  For a recommended adviser click here
Gearing The use of borrowing potentially to increase the amount you get back, but can also increase the risk.

These are bonds issued by the Government.

Before tax has been deducted (as opposed to 'net', which is after tax has been deducted).

High-yield bond funds
The same as bond funds but investing in higher-risk bonds that offer a higher interest rate.

Investment or Insurance Bonds
These are pooled investments or lump-sum life-assurance investments. They can also be called Life Assurance Bonds and With-Profits Bonds.

Investment Trusts
A pooled investment. The investor is buying shares in a company that invests in other investments. The Investment Trust has shares and is quoted on the stock exchange. It is a closed-ended fund as there are a set number of shares available

Individual Savings Account is a UK tax-efficient way of saving or investing, with limits on how much you can pay in each tax year. These are not available to UK non-residents.

Life assurance investment
A pooled investment offered by a life assurance company.

Markets in Financial Instruments Directive is the EU legislation which covers investment intermediaries and their activities. It also enables, for example FCA approved advisers to be' passported' into other EU countries such as Spain

Net asset value (NAV)
An expression used with investment trusts to mean the value of the fund's underlying assets.

Nominal value
Sometimes called the face value; this is the cost of the bond when it is issued and the amount you get back at the end of the term.

Open-Ended Investment Company, this is a type of open-ended investment fund.

Personal equity plan – a wrapper for investments. No longer available as all PEPs have now automatically became stocks and shares ISAs.

Pooled investments
A way of putting various levels of contributions from lots of people into a single investment fund. There are different types and they work in different ways.

Rate of return
This is the change in the value of your investment taking into account both income and growth.

This is a formal opinion of an organisation's investment quality and credit risk.

Redemption date
Usually associated with gilts or bonds, it is the date (set in advance) when the gilt or bond will be repaid by the issuing government or company and you will receive the nominal value of the bond.

These are the stake or share in a company.

These are often linked directly to Shares, but have the same meaning.

Tax year
In the UK, the tax year is from the 6thApril in one year to the 5th April in the next year. In Spain the fiscal year is the same as the calendar year

Unit trusts
A pooled investment, which is an open-ended investment that gets bigger as more people invest and smaller when they take money out.
With-profits funds
A type of fund available within a life assurance investment. The investor shares the return from these investments and the profits and losses of the company (if it's a mutual) or the with-profits business fund (if it's a plc).

Most Investment Advisers, including the ones that I recommend, will be happy to cut through the jargon. Email me for a recommendation.

David Goodall
Financial Pages in Spain

Friday, 11 April 2014

Offshore Financial Planning

Protecting your pensions, investments & savings

Offshore Financial Planning is now more 'mainstream' than used to be the case. No longer the preserve of the rich and famous. Protect yourself but do it through legitimate planning!

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

·       An international view irrespective of nationality

·       Lost faith in British & other European Banks Pension or Insurance Companies

·       Strategic financial planning

·       Remember that Investments INCLUDE your pension funds

Not for tax evasion!

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.

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. I can put you in contact with an authorised & regulated adviser, just email me.

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. I’ve even done this myself!

Offshore Financial Planning should be a part of a comprehensive review

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

David Goodall
Financial Pages in Spain

Wednesday, 19 March 2014

The UK Government wants the Elderly to Emigrate!

There are clear indications that they do. Changes to ISA’s & Pension Annuities will be welcome in the UK, to working people and the retired but overall it suits the Government if the elderly emigrate

I realise that it sounds unlikely but there are reasons behind my view. Spain has many lifestyle advantages and those retired or near retirement might be encouraged to emigrate for the following reasons;

·       QROPS

Qualifying Recognised Overseas Pension Schemes are for the BENEFIT of people emigrating or planning to emigrate from the UK.

After the recent reviews it was thought that the Government was discouraging transfers of pensions out of the UK. In reality, the changes announced in the last two Budgets are a warning shot to those who would seek to ‘misuse’ UK pension funds.

Whilst the new rules which, effectively, abolishes annuities will be welcome in the UK, QROPS which follow UK rules will also provide a benefit to UK expats too!

There is nothing which discourages retiring abroad. Please email me for more personal information

·       QNUPS

Qualifying Non-UK Pension Schemes benefit those who emigrate but would otherwise have a UK Inheritance Tax liability. It is necessary because UK IHT is based on ‘Domicile’ not ‘Residency’. Domicile is much more difficult to shake off!

This is a classic case of ENCOURAGING emigration. For more details please email me.

·       Taxation policy

I was somewhat shocked by George Osborne’s statement in Budget 2012 that there would be a review of age-related tax allowances. In reality the budget made the following two changes which negatively affect the over-65’s

1.     Those already in receipt of the Over 65 Age Allowance will see this ‘frozen’ for the following 3 years. In the past this allowance has been index-linked to counter the effects of inflation

2.     From 6th April 2013, for people reaching the age of 65, the age allowance is scrapped! This means that anyone born after 5th April 1948, will NOT receive the Age Allowance

Taking away age-related tax allowances might just be the ‘final straw’ for some people!

Readers should also be aware that this policy contrasts greatly with Spanish taxation policy. It’s too complex to explain here but individuals and couples can get professional advice by sending me an email and I can put you in touch with the right person. However, the Spanish system assumes that part of the retirement income is ‘capital’ which is untaxed and the minority is ‘interest’ which is taxed. This means the effective tax rate in Spain is MUCH LOWER than the UK when income is based on a pension or annuity.

  • National Health Service (NHS)

The cost of treating elderly people is MUCH higher than that of younger citizens. That has been clear for many years but as the population lives longer, the cost will grow substantially. I cannot verify this but I was told that the cost of Healthcare for the over 60’s is TEN TIMES HIGHER than the under 60’s.

  • Net Migration

The UK Government made pledges that it would reduce net migration, that is the difference between people leaving and immigrants.

This is important to the Conservatives under pressure from UKIP.

It suits the Governments statistics if more people emigrate.

It is very important that anyone contemplating moving to Spain should seek professional advice. I can give this guarantee that any professional that I refer you to WILL NOT charge an upfront fee.

Professional advice will have a cost but no advice could cost you everything

You might like also to read these posts from my Blog;

Please enjoy Spain and remember if you are in the UK and elderly, your Government wants you to emigrate!

David Goodall
Financial Pages in Spain

Sunday, 9 March 2014

Rent Before You Buy in Spain

It makes sense and gives you access to greater opportunities

There is a movement towards 'Rent before you Buy', in the Spanish housing market, not just for caution but also to ‘live the dream’ and find the best location and home. You should also get to know local practices and start to learn the language! I would be happy to send you any information on financial information if you email me.

· Sample the lifestyle

· Reduce the risk

· Find the most suitable property

This is a list of essential things you must do but it is not meant to be exhaustive.

1. Check that the landlord is the owner

To avoid dispute, you could consult the archives of the Land Registry. However,the owner can do this simply by showing the ‘Nota Simple’ which is a Land Registry certificate confirming the owner. 

2. Clarify fees and charges

Often, the letting of a property is done through an Agent. It is important to ensure with the owner of the property who bears the agent's cost. Establish clearly if the rent is paid directly to the owner or to the agent.

3. Negotiate

The rental market has changed in recent years and many homeowners who can’t sell their second home choose to rent it. Sometimes they prefer to receive a price somewhat lower than keeping it empty, but in general want a tenant to give them some security.
If the applicant meets the profile of a careful owner, there is often room to negotiate a fair rent.

4. Don’t make a verbal contract

The law allows verbal contracts but from the point of view of both owner and tenant, it’s a dangerous scenario. Memories change, relationships get strained and problems can arise.

5. Read the contract

It is one of the errors most frequently committed is to assume that the terms included are those which have been agreed beforehand or that they are ‘standard in Spain’. Always seek clarification and make sure you understand the terms

6. Sign all the sheets

Lawyers and real estate experts recommend signatures on each of the pages and schedules listed in the contract and not just in the first or last. This will prevent changes being made ‘post-contract’

7. Check the house for damage/faults

Sometimes the property you are going to rent is not in the very best condition but has cracks, damage or faults that can be ‘lived with’. These should be reflected in the lease, the landlord may refuse to make the arrangement once the tenant is already in the house. What's worse, some time later, is later conflict over the responsibility.

8. Inventory check

Likewise it is necessary to record the condition of the property, the contract should include clear, in an annex, the furniture, appliances, fixtures and fittings and their physical condition.
Make clear if the house is furnished, semi-furnished or unfurnished. This prevents the tenant after being blamed for having broken a device that was no longer in optimum condition and the owner is covered if there is something missing.

9.  Don’t leave anything to chance

The contracts should not leave anything to chance and everything should be reflected. It is worth anticipating all reasonable circumstances and ensure these are covered in the contract

10. Check everything that’s included or excluded

This is particularly pertinent to payment for services. The contract should cover all of the following, if pertinent;

Water, Electricity & Gas                 
Community or other Local charges
Taxes, but notably, IBI (Real Estate Tax) and IRPF (income Tax)

11. Avoid high deposits

Normally, one months deposit and rent paid monthly in advance should be seen as acceptable to both parties. There may be some concern when owners ask for high deposit.

12. Rent

Once the rent has been negotiated and agreed, it is important that the contract confirms the exact payment terms.

  • The day of the month that payment is made
  • The method of payment, preferably by bank transfer
  • The agreed currency. I know this seems odd, but if landlord and tenant are both British an arrangement could be made in sterling though clearly in Spain the payment should be in euros.

I also recommend that you have a copy of my post ‘Comprehensive List of terms and expressions translated Spanish to English’ which can be obtained from;

David Goodall
Financial Pages in Spain