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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.

Other News

Suitability Key to Expat Retirement Transfers

YesExpat retirement transfers have the potential to play a critical, and beneficial, part of an expat’s financial planning. However, this is only if the process is undertaken in a considered fashion with reliable, regulated and trustworthy advice that investigates all of the options, including the possibility of a QROPS or SIPPs transfer.

The Financial Conduct Authority (FCA) knows this better than anybody and has recently flagged its concern that too many firms are providing unsuitable pension transfer advice. This followed the publishing of a report in which the FCA found less than half of all pension transfer advice was fit for purpose.

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Keeping the NHR Tax Regime Could Be Good for Portugal in 2018

Cave on beach in PortugalIn September 2017, it was announced that the Portuguese Government, following pressure from Sweden and a number of other European countries, was looking to water down the country’s non-habitual residency (NHR) tax regime, potentially bringing to an end a programme that has worked in the interests of expats since 2009. The uncertainty this proposed move provoked certainly threatened to put a dampener on the financial plans of quite a number of expats and would-be expats as they moved into 2018.

However, the budget proposal presented by the Portuguese government in November seemed to allay these fears. There was not a single mention of the scheme, which would have seen the introduction of a flat rate of tax of either 5% or 10% on income drawn from the pensions of NHRs.

In all probability any such move would have seen the pensions of existing expat NHRs unaffected; however, it would have presented a significant stumbling block to the retirement plans of many looking to move both their wealth and their residence status to the country.

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