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Nowhere to Hide: Modelo 720 and Common Reporting Standards

The implications of these two pieces of legislation on the financial planning of expatriates cannot be ignored. In short, it means that the concept of ‘offshore’ with regards to banking and asset holding is now a thing of the past.

The CRS, which was created by the Organisation for Economic Cooperation and Development (OECD), relates to the automatic exchange of information from Reportable Accounts between the jurisdictions that have signed up to the scheme. In regards to what is considered a Reportable Account, the OECD hasn’t outlined specific criteria and instead have left it up to each jurisdiction to determine what qualifies as a Reportable Account.

The CRS was implemented within the EU on the 1st January 2016, and ultimately created with the intention of eliminating any and all places for those attempting to avoid their tax obligations, thereby forcing them to become compliant with the necessary tax regulations sooner rather than later. The information to be exchanged with the CRS, therefore, would be anything which could be of interest to a tax authority keen to identify whether or not a person is committing tax evasion.

The CRS is of particular interest to any expats living in Spain and that have failed to submit a Modelo 720 (the foreign asset declaration). The old justification for not submitting a Modelo 720 – because Hacienda were unlikely to find out about assets held outside of Spain – can no longer be said to hold much truth anymore, mainly because Hacienda should now already be automatically informed of that information.

With all of this being the case, it has never been more important to seek professional financial advice. The consequences of not complying with the latest tax legislation could be dire. Ensuring that your financial affairs are all set up in a tax efficient manner and, more importantly, in a legally compliant manner, could not only save you a huge headache, but also save you from a potentially crippling tax bill.

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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Term Life Insurance, a Priority for the Expat in Germany

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Yet, once you overcome your unfamiliarity, and get your head around the innumerable syllables of all the various “komposita” involved, you may be able to take advantage of the system so that it works in your best interests. Finding an expat wealth management specialist who has familiarity with the system and the products on offer is likely to be part of the solution to finding the cover that is best suited to your needs.

For example, finding risikolebensversicherung (term life insurance) is about securing cover for all of life’s eventualities so that your family and other dependents are properly looked after in the event you die before they do.

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Successful Wealth Management in 2019

Stocks, bonds, mutual funds and commoditiesTo make the most of the rest of the year, one important wealth management question you should be asking yourself now is how diversified do you need your investment portfolio to be.

You could follow this with more questions: are you invested in a single country or region? What about industry sectors? And how is the mix of your asset types looking?

These questions, and your answers to them, can help you review and build your investing strategy so that you can provide for your retirement objectives. Having an understanding of some of the theory behind a good strategy is a good place to start.

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