Spain has its own unique version of an offshore bond with only the growth element of the bond being subject to tax when a full or partial withdrawal is made and then only at CGT rate of 19% on the first €6,000 and 21% on the balance.
Why should you consider a Spanish tax wrapper? Well with this type of arrangement you can defer all taxation on your savings until you make a withdrawal and then only pay tax at capital gains rate on the growth element of your investment. In practice this could mean a tax rate in single digits on your savings as the following example shows:
Value after 5 years 450,000
capital = 40,000
(no tax) Tax on 6,000 @ 19% plus additional tax @21% on 14,000
Effective tax rate on funds withdrawn
Tax is paid directly to Hacienda by your provider ensuring that you do not have any problems with the local tax authorities and there are a broad range of fund options available to suit every risk appetite. In addition this type of arrangement is currently outside of the scope of the EU savings directive which applies to all types of income producing investments including bank deposits and your plan may potentially be structured in a way to mitigate Spanish succession taxes.
How does this compare with your present arrangements?
Whatever your circumstances, doesn’t it make sense to review your current investments to ensure that these are not only tax efficient based on your current residential status but that they also meet your current and future investment objectives? Knowing that you or your client’s have a fully compliant investment makes it a lot easier to sleep at night!
For an initial discussion speak to one of our financial planners Spain on +350 200 50982 or email wealth@ fiduciarywealth.eu or visit our website www.fiduciarywealth.eu