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What are Spanish Compliant Bonds?

Spanish compliant bonds are tax efficient investment policies for expat residents of Spain. As the bond allows deferral of tax on capital gains the compound growth effect is more efficient. Sometimes referred to as the Spanish ISA, it is a life assurance based 'wrapper' offering key family inheritance planning.

What are the tax benefits?

  • The first benefit is tax deferral. As there is no annual tax on the growth of your portfolio, the 'compounding' effect helps your investment to grow quicker.
  • The second benefit is called 'Proportional tax relief'. When you come to take withdrawals from your policy the authority in Spain will only tax the growth element of that withdrawal. For example - You invest £500,000. After some years it grows to £750,000 (two thirds original capital, one third growth). You then withdraw £100,000. Only one third of this taxable so only £33,333 subject to tax.

What rates of tax are payable?

    These investment policies are only taxed on the growth element using the following rates:
  • 19% for the first EUR 6,000
  • 21% for the following EUR 6,000 to EUR 50,000
  • 23% for the following EUR 50,000 to EUR 200,000
  • 27% for the following EUR 200,000 to EUR 300,000
  • 28% for any amounts over EUR 300,000

Inheritance planning benefits

These products are excellent for inheritance planning. The contract can be arranged with multiple policy holders and beneficiaries. For example there could be spouses as joint policy holders with children named as beneficiaries. On the death of the first policy holder, 100% of the bond ownership passes to the surviving policy holder without exposure to Spanish tax or probate. Then, upon the death of the last policy holder, the bond is closed and the proceeds passed on to the beneficiaries.

Are Spanish Compliant Bonds safe for investors?

The bonds are a safe way to invest due to key legal protection components. Firstly, life assurance companies cannot hold their client's assets on their balance sheet - therefore if the company were to fail - your money is ring fenced and cannot be used to pay creditors. Furthermore, under EU law, authorised life assurance companies must adhere to 'Solvency Capital Requirement' rules. Meaning the bond provider must hold assets of their own - in excess of 100% of all their customers assets - to protect themselves against insolvency and ensure they can meet their obligations to their policy holders at all times.

What makes these products tax compliant in Spain?

There are a number of elements to Spanish compliant investment bonds that make them looked upon favourably by the Spanish tax authority. The main aspect is reporting. The bond provider will have fiscal representation in Spain reporting annually to Hacienda. Furthermore, when withdrawals are made, any tax payable is calculated by the provider and paid direct to the tax authority on your behalf. These points also mean the bonds do not needing listing on the Modelo 720 overseas asset declaration. Also of importance are the assets held within the bond. These have to be EU regulated (UCITS) funds and/or ETFs. Finally the providers of this type of investment structure are located inside the EU and can therefore make use of freedom of services rules to provide their product to Spanish residents. They are only available via regulated financial advisers.


image of Spanish Compliant Investment Bonds


Who are the best Spanish Compliant Bond Providers?

  1. Utmost (Quilter) International Spanish bond

  2. Prudential International Spanish bond

  3. One Life International

Please contact us for further information by filling out the form below or calling me direct on
+34 951 390 201

Patrick Macdonald Financial Adviser
Patrick Macdonald ASCI
International Financial Adviser
Living and advising in Spain for 14 years

  Personal Financial Planning
  Wealth Management, Investing and Pensions
  Tax planning as a resident of Spain


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