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25 | Focus on Spain
network, individuals are deemed resident for tax payments; however in many cases they might circle6% fee to/from an international account
purposes if they spend 183 or more days in Spain actually be missing out on a sizable tax rebate.
during the Spanish Tax Year. A person will also circle6
otherwise
Does the account offer any additional services
be treated as resident for Spanish Inheritance Tax Finances
if 183 days have elapsed since they first took up Good budgeting and knowing what to expect circle6
that might be of interest to expatriates
residence. Plus, unless a person is able to prove could help make the difference between a circle6
Fees for cheques
their tax residence in a country with a Double successful relocation and a disastrous one. circle6
Monthly account fees
Tax Treaty with Spain, temporary absences from Before making the decision to emigrate, it’s circle6
Annual maintenance charge fees
Annual standing order and Direct Debit
Spain are not counted to reduce the tally for the essential to ensure your finances are properly
183 days rule. planned and that realistic budgets are in place. circle6
charges
Cost of using ATM's
It’s worth pointing out that as a Spanish Eye on Spain (www.eyeonspain.com) has a
resident you will be taxed on all of your very helpful banking forum that provides
worldwide income, gains and assets - unlike in Local banking valuable insight into the pertinent issues
other jurisdictions, which might affect those Resident and non-resident bank accounts are the surrounding Spanish personal banking. It
looking to optimise their tax. To obtain more two types of bank account available to provides recommendations by expats of good
information on tax and your domicile status, foreigners. The former (Resident) has cheaper local accounts and will also enable you to post
contact the Inland Revenue and request an IR20 fees and requires a Fiscal Identification Number any more specific questions you have.
document. known as an NIE card (NIE – numero de If finding a local bank still seems a little
On the other hand, recent fiscal changes in the identificacion de extranjeros). Depending on daunting, Banco Halifax Hispania
UK which set a new top rate of income tax at what the bank offers, this will allow you to open (www.halifax.es), the Spanish arm of Halifax,
50% for those earning over £150,000, made an account in euros or in a foreign currency. If could be a way of alleviating this by providing an
Spain an instantly more attractive proposition to you don’t have an NIE card however and come English speaking service and a reassuring link to
high earners owing to its 43% ceiling rate for from another country, you will need to open a home through its Resident and Non-resident
those earning in excess of ?53,407. non-resident account. Again, non-residents can accounts:
For those of you thinking about retiring to hold bank accounts in Euros or in a foreign www.halifax.es/halifaxing/acc/curracc.asp?sec=
Spain, seek independent tax advice regarding the currency. To open an account as a non-resident, acc
benefits of offshore banking. Visit Halifax you must have a valid passport or the ID www.halifax.es/halifaxing/acc/xtra.asp?sec=acc
International’s offshore savings pages number of your country of residence. You must To remain known in the UK by financial
(http://www.halifax-international.com) for also justify your non resident status within 15 institutions and retain a credit limit, many
simple and easy ways to save offshore. days of opening the account; this is because as a people opt to leave their UK bank accounts open,
Notifying the Inland Revenue and National non-resident account, the bank does not especially if they will have a requirement to make
Insurance Contributions Service about your withhold a percentage of the interest earned. regular payments such as transferring UK
impending move is essential. The latter will also The bank will generally get in touch with you pensions or rental returns from a UK property.
be able to inform you of whether your pension is every six months to clarify your status. Should An offshore savings account or offshore bank
payable abroad and whether your NI you aquire resident status at any point after account may also be beneficial for long-term
contributions should continue. People often opening it you must notify the bank and provide savings and for tax planning. Offshore savings
believe that by leaving the UK they can avoid tax them with your NIE. can be held in various worldwide currencies.
The good news is that the Spanish banking
Retirees
system is well established and modern with all Cost of Living
Obtain and complete form BR19 from the
banking activity controlled by the Bank of Spain Spain’s “reduced cost of living” mantra has been
Retirement Pension Forecasting and
(Banco de Espana), it’s also got one of the at the centre of the Costa Del Sol’s advertising
Advice Unit (RPFA) on 0044(0) 191 218
highest ratios of bank branches per capita in campaigns for many years, and is undoubtedly a
7585 and ask for a state pension forecast
Europe. However, not all of these will offer an key reason why it has won the hearts of so many
to work out your retirement income. If you
English-language service. Banks in resort areas expats. However as global economies continue to
have already moved, and are paying local
and in large cities will usually have at least one feel the impact of the downturn, it’s not
Spanish social security payments, this
English speaking employee, although you surprising that this is less true than it has been in
forecast will not include your local
shouldn't expect this. Banks in more rural areas previous years.
contributions.
generally won’t have any. In fact, a decision to move to Spain based on
Write to The UK Pensions Service
In comparison to the UK, Spanish bank the low cost of living alone would be naïve in
informing them that you are moving to
charges are generally higher; there may also be today’s climate. There’s plenty of evidence to
Spain and give them your new address.
annual fees, fees per debit card, even fees for show that the gap has narrowed between the UK
Their address is International Pension
sending mail out to you. Be careful especially and Spain, especially in the Costas where
Centre, Tyne View Park, Newcastle-upon-
when using ATMs to make a transaction, whilst cosmopolitan living has created prices not
Tyne NE98 1BA Telephone: +44 (0) 191 218
they will inform you if and what charges are markedly different to Northern Europe. Like the
7777; Fax: +44 (0) 191 218 3836.
payable, paying ?4.80 is not unheard of. UK, depending on where you live and type of
For an insight into your Spanish pension
Consequently, when looking into opening a local lifestyle you lead, the cost of living can vary
rights, take a look at
Spanish account, comparing the following fees significantly.
www.ukinspain.com/english/, a UK
will help you identify the most cost effective Whether you intend to work or are retiring
government website dedicated to providing
a
circle6
ccount: also makes a difference. With a job secured in
information for those relocating
% fee to/from a national non-local bank Spain, you’ll be paid in Euros and are less likely
To obtain your UK State pension in Spain
circle6
account to be affected. But British pensioners, and those
you will need to complete a claim form
% fee to/from an international account? In who receive a UK income are more likely to feel
from the Pensions Service.
the same currency? And how does this apply the pinch owing to the pound’s reduced buying
to small amounts of money power.
November 2009 Investment International www.investmentinternational.com
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