Offshore Investment Accounts In Spain

If you've recently moved to Spain, or plan on retiring in Spain, what to do with your cash and existing investments can be complicated. Along with a potential language and literacy barrier, there are also new tax rules and legislation to consider.

The Wealth Genesis is an independent and regulated financial adviser servicing expatriates all over Spain with their financial strategies and tax planning. In this guide, we cover the investment options available to Spanish residents, as well as the taxation treatment.

Offshore Investing For Expats In Spain

When it comes to investing as a Spanish resident, there are 3 key features to assess.

  1. The first is the underlying investments - your funds will only grow if they are invested in the correct areas (whether that's bonds, equities or alternatives). Make sure you understand the risks involved when investing in Spain and consider consulting with a regulated expat financial adviser if you are not an investment professional.

  2. The tax-efficiency of the account, or investment wrapper. When investing, obviously growth and gains are important, but equally as important is the tax treatment of the investment funds. High or punitive tax rates will eat into any investment growth, so make sure your money is in a home where it can grow free of excessive taxation in Spain. Offshore investment accounts are typically taxed at the capital gains tax rate in Spain, and have to be declared on an annual basis to the Hacienda.

  3. The cost of the account. High initial and ongoing costs will act as a guaranteed drag on your portfolio, and can equate to huge differences in the long term. Make sure any investment in Spain is streamlined as much as physically possible, and consult with different international financial advisers to get an idea on pricing and what is competitive or well priced.

Tax Efficient Investing In Spain British Expats

Spain is known for its fairly high taxes, as well as the notorious wealth tax which can vary depending on your region. Typically speaking, investment accounts (whether they are offshore or in the UK), are taxed at the applicable tax rate on the gain element. Note, if you hold non-European assets (such as investments that are domiciled in the UK), there may be additional reporting requirements and declarations you have to make on an annual basis to the Hacienda.

An offshore investment account is usually based in Jersey, Guernsey, the Isle of Man or Gibraltar. These types of accounts are known for their flexibility and portability. They can allow you to access whole of market investment funds from major providers such as Blackrock and Vanguard at a very low cost. They also facilitate multi-currency investments, so you can invest for your future in Euros if so desired.

These offshore accounts in Spain will be taxed at capital gains tax rates and need to be declared on your tax returns.

Whilst these may be beneficial for more short term investments (less than 5-8 years), as well as providing great flexibility, there are more tax-efficient alternatives available as a British expat in Spain.

The Spanish Bond Spanish Compliant Investment Bond (SCIB)

The Spanish compliant investment bond is purpose built to exist within the Spanish tax system, and can offer far more attractive tax benefits to international investors in Spain.

It essentially offers as a Life Assurance product with underlying investments. By having the life assured attached to the investment account, it is classed under a different tax regime offering enhanced benefits for those who with to invest for the longer term and intend on remaining or retiring in Spain. The key benefits include gross-roll up within the account, with no capital gains tax due on growth as long as the funds stay within the Spanish bond wrapper. For a full and comprehensive breakdown of how the Spanish Compliant Investment Bond can be used in your overall financial strategy, see our Spanish Bond page below:

The Spanish Compliant Investment Bond

Investment Advice For Expats In Spain

The Wealth Genesis and our team of expert international financial advisers have years of experience in servicing British expats in Spain and the wider European region.

Our fiduciary status means we only act in the best interests of our clients, and we do not sell any products or investments. We provide regulated, independent, and fee-based financial advice to Spanish residents. Following an initial discovery meeting, our advisers will work with you to implement a bespoke strategy to maximise your finances as you navigate life in Spain.

To understand how we can help, book an initial consultation using the diary below.

FAQs

  • Investments in Spain are treated under your local tax regime and the applicable capital gains tax regime. In theory, if gains are not held in a compliant bond, they need to be declared each year to the Hacienda

  • Through the use of the Spanish compliant investment bond, you can benefit from gross-roll up, meaning funds are allowed to compound year on year without tax due.

  • This depends on how much you invest. Typically accounts start at 0.50% and fall to as low as 0.10% for larger values.

  • Again, this depends on which financial adviser you work with in Spain. Most advisers work off a commission basis. Others work on a fee basis, and will charge between 1% and 5% of the total investment value. At The Wealth Genesis, we charge all our clients the same one-off flat fee of £3,000, regardless of the investment value.