Blacktower FM - Issue 18 - 2026 Magazine - Flipbook - Page 45
L EDGUABCAYI E D I T I O N
LIFESTYLE
system doesn’t recognise this and would poten琀椀ally apply
income tax.
As part of your 昀椀nancial plan you should also be aware of
the Modelo (of ‘form’) 720. This is the requirement for all
residents to declare their overseas assets with a value in
excess of €50,000 (including property, bank accounts, pensions (if accessible) and investments. It’s a ‘dip sample’ of
those assets as at December 31st in the year you become
tax resident – reportable by March 31st the following year.
However, if you manage to arrive in the second 6 months
of the calendar year, you e昀昀ec琀椀vely delay your requirement to complete the modelo 720 un琀椀l December of the
following year.
Another important point to remember is to make a Spanish
Will. Although you may have Wills in other countries, for
Spanish based assets there is the poten琀椀al for exposure to
forced heirship rules upon your death. This can be overcome
by sta琀椀ng in your Spanish Will that you wish for your assets
to be treated as they would be in your country of birth.
Now, what about investment por琀昀olios?
Firstly, one must consider what type of holding structure
should be used as a resident of Spain.
Whilst you could use a straight forward investment pla琀昀orm,
there will be issues with this in terms of unfavourable tax
treatment and complex repor琀椀ng requirements – especially
if the provider is in a jurisdic琀椀on the Spanish view as a
‘tax haven’ such as the Isle of Man or the Channel Islands.
However, there is a solu琀椀on which streamlines and simpli昀椀es
repor琀椀ng whilst o昀昀ering a mul琀椀 layered, tax e昀케cient
structure. Introducing the Spanish Compliant Investment
Bond (or SCIB for short). This is a unit-linked life assurance
based investment policy o昀昀ering mul琀椀ple advantages over
standard pla琀昀orms.
A SCIB has the bene昀椀t of capital gains tax deferral so there
is no exposure on growth whilst assets remain in the bond.
This allows full compounding of year on year growth - which
can be signi昀椀cant over 琀椀me. Further tax e昀케ciency is provided
when taking income or withdrawals as Hacienda will only
tax the ‘gain element’ of each payment.
probate procedures. Upon the death of the last policy holder
the assets are encashed and paid to bene昀椀ciaries who, if
not Spanish resident themselves, will also have no Spanish
IHT exposure.
So what is the ‘repor琀椀ng streamlining’?
The providers of SCIBs are insurance companies typically
located in Ireland or Luxembourg. Each must have ‘昀椀scal
representa琀椀on’ in Spain (a tax and accountancy 昀椀rm for
example) whose job it is to report their schedule of policy
holders and policy values each year to the tax authority. This
is good for the investor as it negates the requirement for
repor琀椀ng underlying assets on the aforemen琀椀oned modelo
720 as well removing the need for complex and expensive
individual accountancy work. Furthermore, when withdrawals
are made, if there is a tax liability, it is calculated and paid
directly to the tax authority on your behalf.
What about investor protec琀椀on?
The bonds o昀昀er key legal protec琀椀on components. Firstly,
life assurance companies in Ireland and Luxembourg 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 obliga琀椀ons to
their policy holders at all 琀椀mes.
So in conclusion, if you are thinking of reloca琀椀ng to Spain, a
Spanish Compliant Bond should be a key considera琀椀on for
your investments – be they Mutual Funds, ETFs or a por琀昀olio
run by a discre琀椀onary fund manager. It’s also a good idea to
have everything set up before you make the move and we at
Blacktower are in the ideal situa琀椀on to help as we have the
requisite advice licences in both the DIFC, Dubai as well as
the whole of the EU including of course Spain. Please feel
free to get in touch for an ini琀椀al, con昀椀den琀椀al consulta琀椀on.
Another point to keep in mind is that inheritance tax between
spouses is wri琀琀en into the na琀椀onal law of Spain. Although
the autonomous regions have the authority not to impose
this – the decision is typically determined by the poli琀椀cal
persuasion of the local party in power at any given 琀椀me.
Thus, if a more le昀琀 wing local government is in place the
more likely IHT between all family members will apply. This is
obviously a 昀氀uid situa琀椀on which requires mi琀椀ga琀椀ng against.
A SCIB is the perfect solu琀椀on as it can be set up in joint
names (spouses for example) so that, upon the death of the
昀椀rst policy holder 100% of the ownership rights pass to the
surviving policy holder without exposure to Spanish IHT or
45
