Time is running out for Brits moving to Spain!

Sam Kelly DipPFS, EFA, BA (Hons) Managing Partner, Chorus Financial.
Sam Kelly.

By Sam Kelly,
Managing Partner,
Chorus Financial

It seems that more and more of you are now willing to take the ultimate step and commit to a full-time move to Spain. Such a move will inevitably include consideration of your financial affairs and how best to structure elements like your savings, investments and pensions for life in Spain.

Easily the biggest factor that has prevented many of you becoming full-time residents is your fear that elements like income tax, Spanish Wealth Tax and inheritance tax will be such a big burden that the move simply isn’t worth it.

From my experience of around 1,000 financial planning meetings with Brits here in Spain, one thing that does stand out, is that more often than not, with some robust and high quality financial planning, most of the immediate tax concerns can be addressed. Even more complex areas like Wealth and Inheritance Tax can be resolved to the point that clients are comfortable enough to make the full-time move.

So, what are the key considerations for Brits moving to Spain?

  • 183 days rule and the tax year. If you are in Spain for 183 or more days during the calendar year, then you are liable to tax on all worldwide income and capital gains for the ENTIRE year – ie January 1st to December 31st. This means that if you anticipate being resident in 2021, you need to deal with all your financial matters NOW, so they are fully resolved in 2020, and you are not bringing potential taxable events into Spain next year.
  • Your tax bill may not be so bad. With a well-structured financial plan, you may find that a permanent move to Spain is nowhere near as bad as you thought from a taxation point of view. Please, don’t get your tax and financial advice from Google or the guy down the pub! An initial meeting with a Chorus adviser is free, can be face-to-face, by phone or video-call, and can dramatically increase your understanding of how financial matters work here in Spain.
  • Wealth Tax. This is probably the most misunderstood and off-putting area of Spanish taxation! Again, there are ways to structure your finances to help reduce or entirely mitigate against wealth tax. One area of caution is when such advice makes use of trusts or ‘annuity style’ payments. Chorus have warned many clients about the potential illegalities of such arrangements. Please always speak to a Chorus adviser before considering a proposal that may be too good to be true!
  • UK Products & Investments. It is VITAL to have any UK arrangements reviewed before the end of 2020 if you intend to become tax resident in 2021. Often keeping hold of an investment that was arranged for you when you were a UK resident can have serious tax implications come January 1st

If you are one of those many Brits considering committing to Spain in 2021, then please do get in touch for a free financial consultation. You can contact me direct on 0034 664 398 702, [email protected] or visit www.chorusfinancial.es for more information.


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