A New Year and a New Start in Spain
January 3rd, 2008
If 2008 is the year you plan to make that move to Spain then early preparation will help to make sure that there are no unpleasant surprises in the relocation process. Indeed, many of you who intend moving to Spain at some point will have already researched the process and know what sort of things to expect in making a new life in Spain.
There will be a number of things to focus on whilst you are settling in and so I thought this would be a good opportunity to let you have a checklist of some of the main points to cover initially, and to remind you of some of the changes that came into force last year in case you missed them.
Financial and tax planning
Many retirees in the 21st Century can expect to live for anywhere between twenty and thirty years in retirement. That’s a third of your life without income from employment and you need to look carefully at your financial and tax planning to be as sure as you can that your money is working well for you and will provide for your future short- and long-term needs.
Most retirees have a pension income that will often only cater for their day-to-day living expenses. Your investments will usually therefore need not only to provide for wealth preservation for the future for you and your loved ones, but also be able to boost your pension income if required.
Some investments that are very suitable for UK residents are simply not appropriate for Spanish residents. And there is tax to consider. The less tax you have to pay the more there will be available for your enjoyment and there are some very good legitimate tax efficient vehicles available for Spanish residents. My advice is to discuss these issues with a financial adviser qualified in both Spanish and UK investment and tax law – and preferably before you leave the UK.
Número de Identificación de Extranjero (NIE)
If you have already bought property in Spain you are very likely to have an NIE, a Spanish tax number that identifies you to the Spanish tax authorities and is used when paying taxes, as well as in conducting transactions of any significance. It used to be possible to apply for an NIE whilst buying a property or even afterwards, but the law has changed and potential buyers now need an NIE before purchasing property. An NIE is also required to set up your utilities.
As from January last year it is necessary to have a new-style NIE, as the old blue and yellow type was rendered invalid. You can ask your fiscal representative to apply for an NIE on your behalf or you can get one from your nearest National Police Station with a Foreigners’ Department. It can take up to six weeks for your NIE to be processed so make sure you apply in plenty of time.
Residencias
Once you have lived in Spain for three months and intend to stay you will have to register. EU and EEA nationals used to have to apply for a residence permit (tarjeta de residente) but new rules brought in last year means that all you have to do now is to be entered in the Register of Foreigners (Registro Central de Extranjeros). This can also be done at the nearest National Police Station with a Foreigners’ Department or the local provincial Foreigners Office (Oficina de Extranjeros). You have to personally present yourself with your passport and a certificate will be issued immediately.
Succession tax planning
If you haven’t already decided on an area to settle in it is worth considering moving to a Region where you can reduce your future Spanish succession tax (SST) – i.e. inheritance tax – liability. Spain as a whole does not have automatic inheritance exemption between spouses like the UK although the rules are gradually being relaxed in various Regions (‘Autonomous Communities’).
Last year the Valencian Community comprising Valencia, Alicante and Castellon provinces slashed inheritance tax to less than 1% between resident spouses and direct line relatives.
It is important to remember that this concession only applies where the beneficiaries are your spouse or direct line descendants (or ascendants) and where both they and the deceased have been habitually resident in the Community and for at least five years.
The Balearic Islands, Andalucia, Madrid and Murcia also have favourable SST rules which overrule the State Rules if certain conditions are met. Inheritance tax and law is complex and professional advice should be sought before deciding which Region to make your home.
Full story from blevinsfranksinternational.com
