UK expats still attracted to Europe despite Brexit
By Robbie Lawther, 4 Jul 19
Financial adviser network Blevins Franks discusses the three countries that keep Brits interested with their attractive lower costs of living, tax breaks, insurance bonds and non-resident tax schemes.
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Spain
Around one million Brits are estimated to be living in Spain, with UK expatriates making up the largest group of European foreign nationals.
There are potential tax planning advantages in moving to the country, like asset disposals, Porter said.
He added: “One of the best tax-planning opportunities is to keep investments within a life assurance bond ‘wrapper’ which can hold a variety of different investments similar to unit trusts, open-ended investment companies and the like.”
Income from a ‘Spanish approved’ life assurance bonds is taxed very favourably in Spain, because:
- There is no Spanish income tax or capital gains tax if the income and gains are accumulated within the policy and no withdrawals are made;
- Where a withdrawal is made, only the ‘growth’ element of the amount withdrawn is taxable in Spain. If the whole portfolio of assets within the policy has grown by, say, 10%, only 10% of the withdrawal is taxable; 90% of the withdrawal is tax-free. If there is no gain, there is no tax;
- Additionally, the growth element of the withdrawal is not subject to the general rates of Spanish personal income tax, which are normally between 19% and 45% for the fiscal year 2019. Instead, only the Spanish savings income tax rates apply;
- The life assurance contract can potentially reduce any wealth tax liability in the country, due to the fact that the wealth tax bill plus the income tax bill cannot exceed 60% of the total taxable income. As the policy reduces your total taxable income, it also has the potential to help reduce any wealth tax liability payable.
“Be aware too, that all purchases and sales within the policy are normally transacted at no cost. Investment changes and switches within the policy are also tax-free.” Porter added.
Tags: Blevins Franks | Expat | France | Portugal | Spain
