By Chris Burke - Topics: Retire in Spain, Spain, Tax in Spain
This article is published on: 1st September 2021
Hi everyone, I hope you are enjoying some well needed freedom and a good summer. This month’s TT covers the following Hot Topics:
UK passports
The first news out this year, importantly for those travelling to and from Europe, was that you must have 6 months left on your UK passport to enter the country now that the UK has left the EU; this applies even if you are a resident. Those travelling may have noticed that as well as joining the ‘Non-EU passport queue’, your passport will more than likely have been stamped. The UK has issued a statement saying that if you present your TIE resident card at passport control, they will not need to stamp your passport. In my experience this is not the case so far, even though I have given them my TIE as well. This might be an issue for those people who travel regularly, as once your passport stamp pages are full a passport is not usable. You would then need to apply for a new passport on the basis of ‘exhaustion of pages’. What’s more is that some countries will not allow entry without two blank passport stamp pages. If you are renewing your passport, it might be worth requesting the larger version with more pages to cover for this eventuality. Which leads me nicely onto my next topic.
UK red passport expiry date
Those who have not renewed their UK passport in the last year probably will have the old red colour passport. An important announcement was made recently in respect of these and is as such: these passports are ONLY valid for 10 years exactly. What this means is, if when you last renewed your passport and had months added that were still valid from the previous passport, these do not count anymore. Thus, these passports are only valid from 10 years from their date of ISSUE.
This will not affect everyone, but for example, if your current red passport was issued in January 2012, but expires in May 2022, because there were 4 months remaining on the previous passport which were added to the new one, you will be affected. In this instance, Europe/Spain will have this passport expiring in January 2022 and to enter you must have 6 months remaining to this date.
It’s good to have things like this to worry about, because there just isn’t enough in life is there?!
UK tax rebate for those moving abroad
Anyone who has left the UK in the last four tax years is allowed to apply for a UK tax rebate. There is no way to trigger an automatic tax refund; the HMRC needs you to submit an official claim before they can refund your tax overspend.
UK tax is calculated on your projected annual income, so if you don’t complete a full UK tax year this could be wrong, and in many cases very much so.
The main reasons you should look at this are:
The process to find out if you are due any monies is fairly straightforward:
Complete form P85, sending parts 2 & 3 of your P45 that you should have received from your employer, or a self assesment form if you were self employed.
You can read about how to do this on the official government website here:
www.gov.uk/tax-right-retire-abroad-return-to-uk
New part time working/retirement rules in Spain
Until recently in Spain, you either had to be working or retired from a Spanish state pension perspective. That is to say, you could not work and receive your state pension. I know, I know, it just doesn’t incentivise people who arguably have the most experience in life to contribute to the economy, as if they continue working in any capacity they cannot receive their hard worked for state pension. However, recently this has changed.
You can now receive 50% of your Spanish state pension, pay a reduced autonomo payment (self-employed monthly payment) and continue to work. As a reminder, to receive a Spanish state pension you must have contributed for 15 years and two of those years must have been within the 15 years preceding actually retiring.
If you would like more information regarding any of the above, or to talk through your situation initially and receive expert, factual advice, don’t hesitate to get in touch with Chris.
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By Chris Burke - Topics: Pensions, Retire in Spain, Spain
This article is published on: 1st January 2021
Approximately 45% of people living in Spain contribute to a private pension. For someone who is from another Western, perhaps non-Latin country, this would seem remarkably low. Many years ago, in the UK pensions were almost guaranteed as part of an employer package, and a while back it became compulsory for anyone working in a company aged over 22 and earning more than £10,00 a year to contribute to one. But that figure of 45% in Spain could be about to get even lower…..why?
Spain has decided to lower the amount of private pension contributions you will receive tax relief on, from a low €8,000 per year (the UK has an amount you can contribute annually to of £40,000) to a measly €2,000 from 2021 onwards.
I have an open-minded view about pensions; I do not see them as essential, which may seem strange coming from a Financial Adviser. For me, a retirement plan does not need to include or solely be a pension, as long as there is planning in place. The only things I see as good value for the saver with a pension is that employees may contribute into this for you, and the potential tax savings received. I say potential tax savings here, because yes, you may receive tax relief when adding to these pensions, however, more often than not, unless you can mitigate your tax situation, will pay taxes when taking the money out, so more commonly they are a tax deferral system (which is still some kind of potential benefit).
So, if you take away employer contributions, for me private pensions, certainly as an international person living and working away from your country of residence, doesn’t seem all that attractive. If you ever leave that country the pension stays there, under that
country’s rules, and you cannot access this money until age 67 (in Spain) and invariably, in my opinion but seen through clients and performance charts, Spanish private pensions are generally not that good. Look at most Spanish banks’ pension funds and you will find high commissions, too much investment in the Spanish market, and not enough advice.
What should a retirement/pension plan look like? Well, it’s about having a plan/strategy, regularly reviewing and understanding it doesn’t have to be a ‘pension’. It can be property; indeed, one of the reasons private pension contributions are so low in Spain is because culturally they are property lovers, often not just one, but several. These are usually structured within a Spanish company and passed down through the generations, and can be a very attractive investment and also tax efficient. Buying property in Spain is expensive, approximately 13% in Catalunya for example, however if you rent this out as a long-term rental, up to 60% of that annual income is tax exempt.
What this doesn’t give you though is liquidity, so, if there is a property slow down, you could be stuck with that investment unless you want to take a loss on it, or you may have to leave it behind if you move on. It can also be a big hassle, with Okupas (a common problem in Spain of people unlawfully living in your property, and who are very difficult to get rid of, indeed sometimes it can take years to do so and cost a lot of money). Many people working now are almost in a ‘golden generation’ to think about their pension planning. Many of their parents have assets/properties that have grown very well, and will more often than not leave them a considerable amount of money (see my article on inheritance planning for a potential tax problems there!) They seem less worried about their retirement, than perhaps their parents were. Therefore, they don’t necessarily see the benefit of saving money into a pension when they might not need one, with the money being blocked until then and it restricting their current lifestyle.
A more popular and arguably better strategy for someone, perhaps like me for example, living away from my country of birth, is to make my money work by having it invested in a medium term strategy, say 5-10 years, but have more flexibility should I need it, say for school fees, or, in a few years time, buying a property, or anything else my plan entails (maybe even early retirement).
So, build your strategy on a mixture of property, investments and emergency funds where possible, and always review regularly to see which type of these suits you best at any given moment. Some people really don’t want the hassle of having property, so a well managed investment portfolio could be better for you.
I can help with all of this: the planning, helping set up a property investment structure, and organising savings that will be invested and work for you. Alongside this, we can set it up with access to the money should you need it, making sure you have a clear strategy and advice along your journey.
By Cedric Privat - Topics: Barcelona, Financial Planning, Pensions, Retire in Spain, Retirement, Spain
This article is published on: 30th September 2020
Qui n’a pas rêvé un jour de pouvoir arrêter de travailler avant l’âge légal de la retraite? 50, 40, 30 ans? Et si ce rêve était réalisable?
La question peut faire sourire, surtout si vous résidez comme moi en Espagne à Barcelone, avec un prix de l’immobilier exorbitant et des salaires souvent moins élevés qu’en France.
Pourtant, de plus en plus de personnes y arrivent, alors pourquoi pas vous?
Le Frugalisme :
Le mouvement FIRE (Financial Independance, Retire Early), né aux Etats-Unis dans les années 2000, défend le principe de vivre simplement et de faire fructifier son argent pour pouvoir vivre de ses rentes.
Il s’inscrit dans un mouvement économiste du Frugalisme “Qui se nourrit de peu, qui vit d’une manière simple.” (Larousse)
Pourquoi ne pas s’en inspirer?
Comment?
• Économiser : s’acquitter de toute dette (surtout celle de votre bien immobilier), réduire son train de vie, éliminer les frais superflus, supprimer certains loisirs, épargner davantage dès le 1er du mois.
• Définir un budget : il sera indispensable de bien calculer vos besoins mensuels afin de définir votre patrimoine retraite et ainsi fixer votre objectif.
• Investir : en plus de votre résidence principale vous devrez investir judicieusement l’argent épargné dans des placements financiers, des actions ou de l’immobilier.
Les frugalistes suivent une « règle d’or » dite des 4% : disposer d’un patrimoine au moins 25 fois supérieurs au montant de ses dépenses annuelles. Si elles s’élèvent à 2.000 euros par mois, il faudra par exemple un patrimoine de 600.000 euros, permettant de vivre des 4% de rendement généré.
Quand commencer?
Bien évidemment, le plus tôt possible. Une retraite anticipée deviendra vite un rêve oublié si on débute trop tard, mais tout dépendra également de votre implication à la cause.
Les nouvelles générations se soucient de plus en plus tôt de leur retraite et pour cause; les prévisions des pensions publiques de retraite sont à la baisse et l’âge légal de départ à la retraite ne fait qu’augmenter.
Le frugalisme demandera une forte réduction de vos dépenses, il est souvent accompagné par une conscience écologique afin de se tourner vers un mode de vie décent et responsable.
Nos sociétés capitalistes amènent de plus en plus les individus à se poser des questions sur le rapport qu’ils ont à l’argent et au travail.
Qui peut appliquer cette méthode ?
Bien évidemment, toute retraite anticipée sera plus facilement accessible aux classes moyennes et supérieures. Pour beaucoup, il est déjà suffisamment compliqué de mettre un peu d’argent de côté.
Une recherche Google rapide vous permettra de lire les expériences de nombreux “jeunes retraités” à travers le globe.
Les méthodes divergent, mais la discipline est de rigueur. Certains retournent vivre chez leurs parents quelques années et économisent 70 % de leur salaire, d’autres travaillent pendant 10 ou 15 ans à un rythme à la limite du soutenable, certains vont compter des années chaque centime possible et enfin les plus privilégiés qui reçoivent un salaire confortable vont tout simplement faire plus attention, s’organiser et investir malin.
Cette méthode vous intéresse mais vous vous posez des questions ?
N’hésitez pas à prendre conseil auprès de professionnels à votre écoute.
Le groupe Spectrum à Barcelone vous propose d’effectuer un audit sans frais ni engagement afin de mieux vous organiser dans la préparation de votre retraite, anticipée ou non.
Nous vous aiderons ensuite à comparer et choisir le placement financier le mieux adapté à votre situation et préférence.
By Barry Davys - Topics: Investment Risk, Investments, Moving to Spain, Retire in Spain, Retirement, Spain
This article is published on: 14th June 2020
The point of having money is personal to you. Looking after your money should always start with your requirements. Your life has its own twists and turns. Your hopes and dreams are just that; YOUR hopes and dreams. How you feel about money is personal to you.
In this article I give you a framework for why you may want money. Once you have the framework, you can colour in the detail in a way that suits your requirements.
Knowing your answer to the question, ‘What’s the point of having money?’ is the starting point. Money, savings, investments, whichever you wish to call it, provides you with choice. The reason for having money is that it gives you one of three things; security, freedom or opportunity. Which choice you choose is up to you. The answer may be correct for you but different for your neighbour, even if you live next door in the same size house.
Security
Security means that you have enough money to be able to settle your debts, pay nursing fees if required, pay for medical treatment and perhaps be able to help the children to buy a house. People who want security often have a home free of mortgage; their little piece of heaven that they own.
To settle on having security means you need capital. Often people choose not to take risk with their money because they want to be certain it is there if they need it. A fall in the stockmarket will not damage the security blanket of money in the bank. Your savings are just one big emergency fund. In these times of extremely low interest rates there are only a few places to get a little investment return for this option.
More and more, I see that this form of planning is undermined by long life expectancy and inflation. Hoarding the capital without making it work can lead to the erosion of the buying power of these savings. Sadly, insecurity comes after years in retirement when people realise that what they thought was enough money, is not.
Freedom
Freedom is gained when your savings are invested to provide you with sufficient income to live on, whether or not you continue to work.
To achieve this position depends on what lifestyle you have. The more flamboyant the lifestyle, the harder your money will need to work.
To achieve a feeling of freedom, money is required, and it needs to work hard. You yourself should feel in a “life is good” state of mind. Your money must be making money and it must later be able to provide you with income if you want or need it. Making money means that you need to invest in shares, bonds and perhaps some property (in addition to the home where you live). If you do not have the inclination or skill to do this yourself, you should work with a professional adviser or use funds. Some investments can provide you income now and others with capital growth. The growth parts will protect against inflation and can mean you can increase your income later.
Opportunity
Do you want your life to be full of opportunities? To be a space tourist? To ride a Harley Davidson to Lapland from Denmark like Steve Forbes (Forbes magazine) did, just to see the Northern Lights? Or both? What an opportunity that would be seeing the Northern Lights from earth AND then see them from space. Or to be one of the first investors in the company that makes the software for all the driverless cars in the world? As your world is a world of opportunity there are many, many more things that you can do with your life; most people will never ever get the opportunities you do.
To build this life takes more money. You may have sold a business, for example. Or received an inheritance. And this money will have to work hard for you. You may have some core holdings to give you a diversified portfolio, but you will also have to take some risks to make your money work hard enough to provide you with a life full of opportunities. Take more risk with your investments, but be able to withstand an investment that doesn’t perform well. In addition to the investments used by someone looking for freedom, you may also invest in a new business, for example. This takes skill to analyse the potential of investments and you will benefit by taking advice from qualified and experienced people.
Whether you need help with deciding on your choice or you wish to discuss how to execute your plan, please contact me for assistance. An understanding of your concerns when discussing your aims and choices together with the expertise to execute the plan for your benefit can make for a strong and trusting professional relationship.
