Client Details

Belgian client planning on moving to Spain and wanting current investments and cash to be as tax efficient as possible in Spain. Existing investments were in funds and ETF’s (all held with the clients bank in Belgium) and fixed deposits. Some of the exisiting investments the client wanted to hold on to and some of them dispose of but wanted full advice and recommendations on this. Ultimately this investment would fund him and his wife once they retired. He wanted the keep things as simple as possible with reporting etc. in Spain and have the portfolio managed for them.

A Spanish Collective Investment Bond which is a Spanish tax compliant policy was set up for the client. This allowed for in-specie transfers to be made into the policy as well as cash deposits.

Benefits of this:

• Any growth in the policy value is not taxable until the policy is surrendered or when a withdrawal takes place. It is not until money is taken from the policy and a gain is realised that income tax is due. When the client does start to take an income from the policy (regarded as a part surrender) this is taxed as a proportion of the policy gain. The Spanish tax system (for compliant policies) regards a part surrender as the policyholder taking back some of their original premium as well as some of the gain from the policy. This is effect means that the income tax payable each year is much lower than it normally would be.
• As the policy is tax compliant it simplifies the tax reporting requirements in Spain because it does not need to be disclosed as an overseas asset under the Modelo 720 declaration. This is because the insurer reports the value in the Modelo 189 each year that the client is Spanish resident.
• A portfolio was set up, including the holdings that the client specifically wanted to keep (this was discussed as there were some better alternatives) aligned to the clients requirements and risk preference.