News & Insights

Readers may remember the pension freedoms announced by George Osborne in 2014.  These became effective on April the 6th this year. The fanfare accompanying the announcement and indeed subsequently is often set against the backdrop of pensioners sat in Daimlers or on Yachts having drawn all their money out and lavished it on some frivolous purchase.

The reforms promised that over 55’s would have access to their pension cash as they pleased whether it was the full amount or in small payments. Or indeed it could be left invested. The choices on offer appeared staggering, always bearing in mind that there are tax implications for taking large sums.

VACANCY - Senior Compliance Officer

Blacktower Financial Management (International) Limited is one of Europe’s leading providers of Financial Advice and Wealth Management. We continue to increase our footprint across Europe and further afield.

As a result of this we have created an additional role within our Head Office in Gibraltar. We are looking for an individual who is seeking to work in an interactive environment, both within the organisation and when interacting with key stakeholders around the business.

One of the most important parts of financial planning is the use of tax allowances. I would say at least equal to, potentially more than sound investment advice.  There are several ways to consider your tax bills both annually and in retirement…. Pay today, pay in the future, transfer to other people or reduce future tax bills today, using legal financial advice.

A common misconception is that people reduce their tax bills by using complicated, unethical tax schemes using multi jurisdictional allowances, without looking into the use of completely legitimate and simple planning. In the UK that is available for everyone.

A couple of years ago my Bank was taken over by La Caixa.  To be honest, this was one of the easiest changes I have had to deal with in Spain and therefore, in this regard I was lucky.  Especially as the previous bank took 6 months to assess a loan application I had made, to finally arrive at a negative answer. By the time I'd got that answer I'd already made 5 repayments to an obliging bank.  'Opeless.

We have seen many banks be swallowed up here in Spain since the crisis and I will remind you, the Spanish banking industry was seen as a fine example at the beginning of the crisis in 2008, because its purposeful structure should have prevented contagion (spreading or transfer of problems of a systemic nature).  Instead, individual institutions took the risk rather than having it spread throughout the industry and that is why some 7 years later we are still seeing takeovers of failed banking businesses. Time has dictated that maybe it wasn't such a shining light.

Have you restructured your international investments?

On the 1st of January 2015, the Portuguese Tax Authorities brought about sweeping changes to its Personal Income Tax Legislation, specifically aimed at but not limited to, previously sheltered international investment structures. Six months into the 2015 fiscal tax year, there seems to be a wait and see attitude to the impending punitive tax burden that will be levied on investments held by both Portuguese nationals and Expat Tax Residents in Portugal. 

One thing I do know and that is many international and national people still live in the past, thinking Portugal is a laissez-faire country unable to, with efficacy, diligently collect its taxes. 

The offices of the taxman are not usually credited with efficiency and success. But there is one aspect of HM Revenue & Customs which is terrifyingly efficient, and that is its powerful computer program which is accessing and trawling databases of personal financial information on an unprecedented scale. 

Many clients have sensibly opted to invest in Assurance Vie (Investment Bonds) type arrangements in France for the huge income tax and inheritance advantages offered though these products for French residents. A large selection of clients have also taken the option of using the Fond en Euros or Sterling funds preferring the guaranteed rates of return offered and the invested capital's security.

Indeed so used are the Fond en Euros funds within Assurance vie “wrappers” that often clients believe that they are one and the same. The Fond en Euros main principles are that your capital's value is guaranteed and you are given an annual rate of interest. The assurance vie ensures your funds grow free of French taxation due to the code of law relating to Life Insurance products. This combination has been so used in France and so much money tied up in these arrangements that the Government want to bring in a statute to limit the percentage invested into Fond en Euros per investor portfolio as they see this type of fund as stagnating the French economy and restricting investment into industry via the purchase of “actions” or shares. 

Many of our clients will have beside their property and / or bank accounts here in Spain still assets abroad.  This could be a property in the “home” country, a share portfolio in Luxembourg, an offshore bank account etc.

Most would have a Will covering these assets in their home country and without specific mention of the asset will have laid out their wishes in the form of for example “spouse to spouse on first death and on second death to the children” which would apply to all their assets.  

Should the person have not bothered taking on a Spanish Will then the heirs would have to go through the extra work and costs involved in relying on a UK or foreign will for the disposal of the Spanish assets.  The Will would have to be translated and apostiled adding delays and extra costs at a difficult time for the heirs.