Savings in Spain

If you are an expat Spanish resident and you have savings you possibly have them in one of the Spanish banks (or a bank of any other country for that matter). If that is the case I'm sure you won't be getting a very good interest rate (not particular to Spain of course). Add to that the rather precarious position these institutions find themselves in and you wouldn't be blamed for looking elsewhere to invest your hard earned cash. In fact the situation has recently taken a turn for the worse with the Bank of Spain recommending to the other Spanish banks that they cap their interest rate on savings at 1.75%. Furthermore, whatever interest you are making will automatically be taxed by the Hacienda (Spain's Inland Revenue) at source. That doesn't seem to make much sense whatever you're saving for.
We offer an alternative that is not only tax efficient but offers the potential for much better growth.

What is a Spanish Compliant Portfolio Bond?
Put simply, a portfolio bond is a unit linked whole of life assurance policy used as an investment vehicle for your cash and other assets (stocks, shares, bonds, etc). The bond is administered by an international life institution such as SEB Life International in Ireland or Old Mutual International. Because they are not banks the Spanish tax authorities treat the assets they hold differently - particularly as each portfolio has a life assurance element to it as well. The bond is held within a 'wrapper', ring fencing it from Spanish tax whilst the assets in the bond remain within the wrapper. Your cash is then invested in different compliant funds according to your attitude to risk. The income from the investments is also kept within the wrapper system so as not to create any 'taxable events'.
Furthermore, should you decide to take out a lump sum at a future date the tax situation is very favourable due to the aggregate method the authorities apply to the bond.
Here's an example of how it works;
You invest €100,000 and after 5 years the pot is worth €150,000 therefore the capital is two thirds of the growth. You decide to withdraw €30,000 cash as income. Instead of all this sum being taxed at approximately 21% only one third is (as per the investment growth) i.e.€10,000. The tax payable would then be 21% X €10,000 which is €2,100 - the equivalent of 7% on your withdrawal overall.

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patrick.macdonald@blacktowerfm.comMinitienda 15, Centro Comercial Plaza, Nueva Andalucia, Marbella 29660, Malaga, Spain