Category Archives: Invest In Spain

Buying Property in Spain

Buying property in Spain is quite straight forward. There are basically 4 different stages which we have listed below for your information.
1. Reservation Deposit
2. Exchange of the private purchase contract
3. Before Completion
4. Completion

1. Reservation Deposit

Once you’ve found your ideal home you simply reserve the property with a Reservation Deposit. A deposit between 3000 – 6000 Euros is usually sufficient. The deposit is refundable if the vendors change their mind but is not refundable if you cancel. Paying the reservation deposit guarantees that the property is taken off the market and is reserved for you at the agreed fixed price. If you haven’t previously appointed a local lawyer, we will be happy to arrange one for you. They will explain the procedures for buying in Spain and all the associated costs. From now on, up to, and even after completion of the purchase, our support staff and your lawyer will take full responsibility for the entire transaction, advising you, and keeping you up to date every step of the way. Choosing the right lawyer is your guarantee that Spanish Legal requirements are met, that the property is genuinely registered in the vendor’s name and is free from any mortgage, charges or restrictions. Your lawyer will negotiate and discuss the purchase terms with the vendor’s lawyer and as well as the agreed price will include all your other requirements such as fixtures and fittings, the completion date and your preferred method of payment.

2. Exchange of the Private Purchase Contract

Once you’ve paid the reservation deposit you then have a period of up to 30 days to exchange the private purchase contract with the vendor. You can arrange for your lawyer to handle both this stage and the completion on your behalf if you are unable to attend. Before your lawyer exchanges contracts he will have completed the detailed searches and investigations at the Land Registry in respect of the property.

3. Before Completion

With a new property, before you instruct your lawyer to complete the purchase, we inspect the property and detail anything that might need putting right. Once everything is corrected and you are satisfied, the title deeds can be signed.

4. Completion

Finally, on the day set for completion you will go to the Notary Public with your lawyer to sign the Title Deed, making the final payment to the vendor who simultaneously passes you possession of the property and hands you the keys. In this way the Notary and Land Registry are acting jointly to protect and guarantee your interests.

The Best Way To Buying Property In Spain

The best way to buying property in Spain is to use a professional real estate company. There are many good companies in Spain selling property, but you have to make sure you have a really good one, as many people want to grab a piece of the action in this hot market.

the best way to buying property in spain

the best way to buying property in spain

Buying Property In Spain :There are 3.8 million second homes in Spain (almost two million belonging to foreigners). In the next five years, between 800,000 and 1,700,000 European families are expected to settle their second home in Spain, according to WTO. (world tourism org)

A short guide to the best way to buying property in Spain :

as stated first get yourself a good real estate agent.

All reputable agents are licensed which means they should have a current API or GIPE number, although from year 2001 this is not necessary. All properties should be registered in the Registro de Propiedad, here you can obtain full details of the owner, debts or judgements against the property, mortgages and the exact size and description of the property. Unless notarised power of attorney has been given to a third party, only the person(s) named on the Escritura (deeds) has the right to sell the property).

The second step in the best way to buying property in Spain is to get yourself a good lawyer, who will check for any encumbrances, debts, mortgages, etc. He or she should inform you of their fees. Customary is 1% of the purchase price of the property. Do not try to do this yourself, as it will only lead to disappointment or even worse: financial disaster.

When you have found the property you want, a contract will be drawn up by your agent and you should pay a 10% deposit. The contract then needs to be signed by both parties. There should be a completion date on this contract and on this date the final payment should be made in front of a Spanish Notary. The property is now yours and the title deed (Escritura Publica) needs to be registered in the Land Registry Office.

the best way to buying property in Spain : Choosing a Property in Spain

Firstly, think about the reasons that made you decide buying a property in Spain. It could be that you are a keen investor and you look upon Spain real estate as the ideal investment opportunity, gaining momentum and value as time goes by whilst in the mean time earning you some rental income.

Or you could be Buying Property In Spain looking for that dream house in the sun to live in now or to retire in later on in life. Or is it a hideaway you are looking for away from the daily hassles and the demanding and stressful way of life you have been torturing yourself with lately…?

Decide how much you want to spend on your buying property in Spain: write your wish list!

Do you want to be Buying Property In Spain near a golf course, overlooking the sea, within walking distance of a busy town or would you prefer to live in one of the pretty inland villages? Do you need a swimming pool? Will it have to be private or can you settle for an communal swimming pool in an urbanisation?

In fact, golf is considered the best appeal for foreign home seekers and implies a bigger added value. For instance, Costa del Sol has more than seventy golf courses, almost twice as much as the second region in number of golf courses (Catalonia). 

It is also a perfect complement for “sun and beach tourism” since demand for playing golf is higher during the periods from February to May and from September to November. So consider this when Buying Property In Spain

But as always: look before you leap.

Seek and take professional advice.

If Buying Property In Spain for your own occupation, ask yourself whether you’d be comfortable in the area. A remote farmhouse might sound idyllic, but is it in reality?

If Buying Property In Spain for an investment, that is, to let out to holidaymakers, make sure the property is in a place where people want to stay. If you want easy access fro your guests, best to choose a resort near one of the Spanish airports, served by the “low cost” airlines, such as Alicante, Malaga, Palma De Mallorca.

If you are not going to be there, who will manage the property, that is, take care of the changeovers, keys, that sort of thing? Thus research the property management side of things too.

the best way to buying property in Spain : Financing Your Purchase

Mortgages

New Spanish homes often come with a mortgage and up to 50% of the purchase price can be raised in this way. Basically, the mortgage will be secured on the Spanish property; your income will be taken into account and you need a P60 or if self employed, your certified accounts.

Both Interest-Only and Repayment mortgages are available in Spain although the majority of Spanish mortgages offer a variable as opposed to fixed interest rate.

With some Spanish Lenders offering products with very low interest rates , there are some excellent deals available and many banks will now lend up to 70% of the purchase price. Which makes Buying Property In Spain a real good opportunity.

A variety of lenders will lend on Spanish properties, both new and resales; up to 70% LTV (Loan to Value) is possible. If buying for holiday letting, some lenders will take into account the projected net rental income.

It’s quite possible to re-mortgage your existing property at home, providing enough equity available and you meet lenders requirements. If you do this, then the charge is against your home property and not the Spanish home; effectively you then become a cash buyer.

Equity Release

For older people, perhaps consider releasing some equity from your home, in this case there would be no monthly payments to make, but you need to consider the interest and charges as well as the outcome.

Paying in full in cash is another option but not one that’s readily available to everyone! If you are planning to make a part or full cash payment for your Buying Property In Spain then do not delay when arranging the necessary transfer of monies.

Daily fluctuations in the exchange rate can have a dramatic impact on the price of your property. For example a property purchased in January 2003 for 150,000 Euros would have equated to £97,000 Stirling but the same property would have cost £109,000 Stirling five months later as the Euro had strengthened against the British pound.

The same is true for the Euro-Dollar exchange rates.

Do consider using the services of specialist currency dealers when transferring any substantial funds overseas for your Buying Property In Spain. They should not charge for their service plus they are likely to offer a more favourable exchange rate than a bank.

If you plan to make a series of staged payments over subsequent months, you can agree a fixed exchange rate thereby making it easier to budget for future payments.

THE INFORMATION GIVEN HERE IS NOT A SUBSTITUTE FOR TAKING PROFESSIONAL ADVICE. PLEASE CONSULT YOUR FINANCIAL ADVISOR.

the best way to buying property in Spain : Safe Property Transfers

If you are buying property in Spain, you may not be aware that your only foolproof title is the final registration in the official Spanish Property Registry, and that all taxes must be paid in order to obtain this.

If your seller does not hold such a title, an escritura pública, something may be wrong with your purchase. It is the first thing you ask to see. You can also check this public title deed at the Spanish Property Registry to make sure that no mortgages are outstanding.

A mortgage or a legal lien against the property is inscribed as marginal notes against the title.

Too many property purchasers have discovered too late that a mortgage was outstanding against their new property or that a Spanish court had placed a lien against it for some other unpaid debt. That could turn your Buying Property In Spain dream into a nightmare

An unscrupulous seller can fail to mention an unpaid mortgage or a lien, and then disappear with the full purchase price. As the mortgage attaches to the property itself, this can leave the buyer facing the payments under threat of losing the property.

When you are buying property in Spain, you also want to see the latest paid-up receipt for the seller’s annual property tax, the IBI receipt.

As of 1999, the seller must also present a certificate showing that his fees are paid up at the Community of Property Owners, or listing the exact amount of his debt. You should read the Statutes, the regulations, of the Community where you are purchasing.

And you should use a Spanish lawyer when you buy in Spain. A lawyer should charge you around one per cent of the price for advising in any Spanish real estate transaction.

the best way to buying property in Spain : Costs Of Buying

On top of the purchase price you should allow another 10% on top for transfer fees. These charges should be divided between buyer and vendor as follows:

Buyer Pays:  Transfer Tax or IVA (VAT) 6% on resale and 7% on new property Registration fees to change the deed to your name € 120,-to € 300,- Notary charges for the first and any further copies of the title deed, which is on a sliding scale. Average on a property of € 360.000,- is € 360,-.

If there is a mortgage on the property, you will need an extra deed and this will incur an extra charge.

Vendor Pays:  Plus Valia Tax – A municipal tax based on the official increase in the value of the property since the last transfer. The town hall will assess the value.

Agent Fees Annual Costs  Make sure you receive copies of all the bills, as they should have been paid up to date. The Real estate tax or IBI (Impuesto Sobre Bienes Inmuebles), Rubbish Collection (Basura), Community charges, etc should be checked by your lawyer, as any debts are attached to the property rather than the person.

As a non resident you are liable for 2 annual property taxes, but this is a very complex issue and therefore we recommend you to use a fiscal adviser.

the best way to buying property in Spain : Fees and Taxes

With regards to the additional fees and taxes payable, the simplest way to budget for these is to assume that the combined total of these costs will be approximately 10% of the purchase price.

Once you find your dream Spanish property, you need to pay a Reservation Fee to secure it at the agreed price and remove it from the market.

Typically this will be around 3,000 Euros and you can pay with a credit card. For properties situated within a “Community”, each owner is required to pay a “community fee” – this is your contribution to the upkeep of the communal pool(s), lift(s), landscaped gardens, 24 hours security, lighting system, etc.

This figure will vary in accordance with property size and location and obviously only becomes payable once the development has been finished and you have finally completed on your purchase.

Normally, you will be expected to pay 30% of the purchase price within the following 4 to 6 weeks. You then enter into what is commonly referred to as a “Personal Private Contract”.

This document clarifies all details of the sale including the allocation of costs for fees / taxes payable by the buyer and seller. It represents a preliminary and binding commitment on the part of both parties.

If you buy a “re-sale” property, i.e. one which is currently / previously owned by another, you do not pay IVA or Stamp Duty. Instead you pay a Property Transfer Tax (ITP), currently set at 7% in Andalusia.

Lawyer’s fees are around 1% of the purchase price plus they are entitled to levy small additional charges, e.g. should you wish them to act as your Power of Attorney at the signing of the Title Deeds (the “Escritura”) before the Notary at the time of Completion.

Your Lawyer will take care of any complicated legal and fiscal issues, will carry out a full search on your property to make sure there are no claims or debts lodged against it, will liaise with your Seller, receive and transfer each payment, ensure documents are properly drawn up and executed plus he will organise your NIE (tax identification number).

Once the Escritura has been signed, it must be registered with the Spanish Property Registry whereupon it is stamped, formally recognised as a public document and the original returned to the Notary. Again, your lawyer will take care of this for you. Once this is done and finished your Buying Property In Spain dream will have become a reality !

Invest in Spanish property

Investment Pointers

Is the Costa del Sol a good place to invest in property? The answer has to be a resounding Yes!

The massive upgrading in facilities, services, infrastructure and aesthetic appeal of the area has had a positive effect on property values. Since December 1995 the average price of a Spanish home on the Costa del Sol has risen by a yearly accrued rate of just over 17%.

Invest in Spain

Invest in Spain

 

Extensive research completed over the past few months has found that a new property now sells at a price over 5 times higher than figures achieved in 1995. Why invest in Spanish property?

A recent report released by the Spanish Press Agency stated that  property prices rose by over 23% in Andalusia. Why invest in Spanish property ?

Yes – you should have bought four or five years ago but hindsight is a wonderful thing! Reports demonstrating how (some) properties increased in value by over 35% per annum are reliable however do not fear, you haven’t missed the boat since property prices continue to rise albeit at a more sensible, controlled rate.

It is still safe to assume an annual growth pattern of at least 15% on well presented properties in popular locations. Why invest in Spanish property ?

A shortage of available building land between the sea and the mountains means that land prices on the Costa del Sol must rise with further population growth an invest in Spanish property is still a valid option. The introduction of the Euro has enhanced Spain’s position as the number one choice for overseas property purchasers, through ease of payments. In fact, the introduction of the Euro further highlighted the “strong value” of Spanish properties when compared to properties for sale in other European countries.

The Costa del Sol boasts the fastest growing population in Europe. Currently standing at 2.5 million, this figure is expected to rise to 6.5 million quickly.

Do you need even more reasons to invest in Spanish property ? Well here goes:

over 50% of purchasers are Investors of some kind with many seeking “buy to let” properties. In addition to seasonal tourists or holidaymakers, Spain currently occupies the second position globally for residential tourism after the United States.

The huge choice of championship golf courses is another major advantage for those owners who want the luxury of knowing they can choose to successfully let their Spanish property.

A staggering 2.5 million golfers visit the Costa del Sol each year; enthusiasts pay several hundred pounds a week in the “quieter” winter months to rent a well furnished and equipped property, one with easy access to golf courses and local facilities.

Unlike most other places, the Costa del Sol does not close down and go to sleep for the winter! Invest in Spanish property and you will get year round returns.

With the general trend towards quality in all aspects of consumer purchasing, the Costa del Sol really does satisfy and in many cases, exceed customer expectations.

It is worlds apart from those dreary, high rise, concrete jungles or pure “package holiday only” resort areas

Investing in Spanish Property

Whilst many still have useful disposable income, recent reports highlighting the risks associated with over reliance on pension plans, the volatility of the stock market and other traditional savings schemes have encouraged people to consider alternative methods of realising returns on investment including longer term financial planning initiatives.

Investing in “traditional bricks and mortar” has always been and will continue to be a safe and popular option. Indeed property purchase has been referred to as the “new pension plan.” This is especially true if you invest in Spanish property.

Investment in overseas property has become increasingly popular over the last decade. It is no longer considered a novel, high risk, logistical nightmare.

Also the benefits associated with owning a property overseas have multiplied. Traditionally a property abroad was viewed as a quaint little luxury only enjoyed by the select few.

Today, investing in an overseas property is considered a real opportunity for realising useful, ongoing income, significant capital gain and the chance to enjoy regular, inexpensive, relaxing breaks without having to take lengthy time off work.

An increasing number of Europeans are taking early retirement and relocating permanently to Spain, particularly the Costa del Sol.

Indeed several Developers, having recognised this upward trend in foreign nationals seeking the perfect retirement home, now proudly promote the alterations they have made to the design of their new properties and “urbanisations” to satisfy the demands of the “early retiree”.

So, you finally achieve your dream and buy your Spanish property – now what do you do?

Well, the great thing about the Costa del Sol is the choices are endless. You are now the proud owner of an asset that should increase in value over the coming years.

Depending on your personal circumstances, you may decide to live in it for a few weeks or months each year or perhaps it’s the perfect base for entertaining friends and family.

Once you discover how much rent can be achieved, especially during the busy summer months, you may find 2 or 3 months rental income more than covers a significant chunk of your annual expenditure.

Or you may decide to let it to golfers in the quieter winter months. Perhaps you just want to sit back and watch it grow in value. Some Investors cash in and re-invest their profits in a larger property or a second investment opportunity.

The “Buy to Let” Overseas Investment

What makes a good Investment Property? Location, Location, Location!…………. Yes, that now familiar expression also applies abroad!

Buying “off plan” is likely to afford an excellent return on investment since, by the time construction has finished, perhaps two years later; your asset could have increased in value by 30% or more.

Ideally you should reserve your property as soon as the building plans are released; buying in the early phase of pre-construction will allow you to secure a property that will increase in value each time another phase of the Project is released for sale.

Be prepared to make a decision, act fast and you could snare a real bargain!

If you’re looking for a property that is ready to let immediately then you could purchase a “re-sale”. Sometimes you can find one which includes all the fixtures and furnishings.

Re-sales will be more expensive however, unlike new build, the seller may often negotiate on the price for a quick sale.   

Your Money in Spain

Money Matters

Your money in Spain: the most important message here is that yes, you can take out all the money you have brought into Spain and more, if you have made money by selling a property or by investing.
There are forms to fill out, taxes to pay and delays, but you can do it. If you invest in the Spanish stock-market as a non-resident, you will not even be taxed on your profits in Spain.

When you sell your property you can change the Euros to the currency you want and sent it to your home account without any restrictions. You will have to pay 35% capital gain tax.

If you want to buy property and obtain a loan from abroad, you can do this without any restrictions up to € 1.500.000,-. The only condition is that the lender is not based in a tax-haven according to the Spanish government list.

Transactions through banks are completely free up to € 600,-. Anything above this amount must be declared by filling in a form at the bank. This only takes a minute.

Both residents and non-residents may open accounts at Spanish banks. They are distinguished from each other as different regulations apply to transfers for the resident and the non-resident.

If you are a resident, 25% of your interest earnings are withheld and paid to the Spanish taxman in your name, just the same as for the Spaniards. The interest on your account is only 0,1% of the average balance and the bank charges are one of the highest in Europe.

It is recommended to check what the charges are, so as not to get any surprises. When you get your pension send to your Spanish account, make sure they do not charge you exchange commission for this as this is against European Union Banking regulations.

The easiest way to invest your money in Spain, is by putting it on deposit with your bank. The interest paid depends on the amount invested and the time the deposit is held by the bank.

There are more intricate systems of investing money, for example by opening an offshore company and buying properties through that company. For this it is recommended to seek expert advise.

Taxes in Spain

Tax Implications

Your taxes in Spain: Spain has made a major design change in its income tax system to take the country into the new millennium. A lot of the rates have dropped, especially for low incomes.

taxes in spain

taxes in spain

The Spanish tax ministry, which is known as the Agencia Estatal de Administración Tributaria, but still called “Hacienda” by many, has been making the tax-payer’s burden a lot easier, as it is now a lot more user-friendly, but this does not mean that Big Brother is not watching you.

Let’s take a look at your possible tax obligations in Spain. When you stay in Spain for 183 days or more in one calendar year, you become legally liable for Spanish income tax, whether you are a formal resident or not.

When you take out a residency, you become liable on your total world wide earnings, although regulations provide relief on double taxations. (Pensioners who have paid tax on their income in their home country do not have to pay again in Spain)

Even if you are not a resident of Spain and spend less than 183 days in the country, you are still liable for income tax on any Spanish income you might have, such as letting out your flat.

You can read all about these principles in a Spanish Ministry of the Treasury booklet, called Taxation Regulations for Foreigners. (Publication F-9) If your world-wide income is more than € 7.225,- per year you will have to make a tax declaration.

It is best to consult a tax adviser, either a asesor fiscal or a gestor. They will charge you a fee from € 60,- up, depending on the complexity of your tax return. If you are a resident and you have two homes in Spain you will have to pay the property owners imputed income tax, where 2% of the value of your 2nd home is added to your income.

You will then have to pay income tax on the total. If you are not a resident you will have to pay this tax on your 1st home. On top of this there is the patrimonio tax, which is the wealth tax.

Residents and non-resident property owners are liable for this. Up to € 161.380,-, this is only 0,2 % of the value of the property. When you sell your property and you are a non-resident, you will have to pay 35% on the capital gains from the sale of the property.

As a resident you are liable for this tax as well, but there are a couple of breaks. If you reinvest the money in another property as your principal residence, you will get relief from this tax up to the amount reinvested.

The remainder of the profit will be taxed as an incremento de patrimonio, a capital gain, as part of your income. The maximum percentage, however, can not exceed 20%. In order to make sure that the non-resident property seller actually pays his capital gains tax, instead of taking the money and run, Spain has put into force a requirement that 5% of the declared purchase price must be deposited with Hacienda when property is sold by a non-resident. As a last note: Use expert advise at all times, as to avoid disappointment and fines by the government.

Spanish Taxes

Even Spaniards use tax consultants to minimize their liabilities, and so should foreigners who live in Spain, whether they are working or retired.

Persons who are retired and living in Spain can draw their pensions directly in Spain. With very few exceptions, these people will then be subject to paying Spanish income tax instead of income tax at home.

For those who live in Scandinavian countries, it comes as a relief to pay Spanish income tax instead of their own. Most Europeans find, however, that Spanish rates are just about the same.

Property owners, even if they are not resident in Spain, find that they are subject to some annual Spanish taxes on their property.

These include the non-resident property owner’s imputed income tax, for example, under which two cent of the value of your property is treated as imaginary income to you.

The non-resident is taxed at 25 per cent of this two per cent. He must also pay Spanish capital assets tax, or “wealth” tax, on the value of the property.

 

Your Business in Spain

Business Matters

Your Business in Spain: if you are a EU citizen, you can work and start a business in Spain under the same conditions as the Spaniards, since January 1, 1992. You still need to get the tarjeta comunitaria, the “community card”, which is a work and residence document.

The fees for this card range from € 150,- to € 300,- and it is € 180,- for starting your own business. When you are a EU worker, Spain cannot refuse a residence or work permit to any of your family members, even if they are non-EU.

All of these rights are specified in EU Regulation 1612/68. Employees require a work permit called cuenta ajena, which means “on another person’s account”. Those starting on a self-employed basis need another sort of permit, called autonomo, or cuenta propia, “on your own account”.

It is best to use a gestoría or a lawyer to do all the paperwork. This will cost you some more money, but it is worth it, especially when you are starting a business.

If your Spanish is reasonable, you can do it yourself. Obtain the forms from your local police station or Delegación de Trabajo, fill them out and wait to see what happens.

All in all the costs are quite high, as you have to pay your first month to the social security, the tax and the IAE, (Impuesto de Actividades Economicas) or business license.

When you employ other people you will have to put them into the social security system and pay them at least the minimum wages (salario mínimo interprofesional). The law also stipulates a 40-hour working week.

There are a lot of rules in regards to contracts, time off, extra payments, etc. It is best to ask your accountant to look into all these matters prior to employing somebody, as you could get fined by he government, or taken to court by a former employee, because he has been working under a indefinite contract. Do remember that the employee is extremely well protected in Spain.

Business Starts

Too many foreigners who want to start businesses on Spain’s booming Costas find they fall into traps which could easily be avoided with professional advice.

For example, they sometimes pay large sums for leaseholds which turn out to be simply rentals, to which they have no further rights.

A simple consultation and vetting of contracts can save money and problems. The maze of permits and documentation necessary to open a business on the Costa del Sol drives even Spaniards crazy and very few of them attempt to obtain their Opening Licence on their own.

Most of them use professionals who know when to go to which window in order to get the right paper at the right time.

Offshore Banking

This feature is not going to be clever or fancy. It is simply going to explain what offshore bankingis, why thousands of people around the world do it legitimately, legally, and without being tax-dodging, immoral scoundrels.

Offshore Banking

Offshore Banking

It is meant to cover the bases; to explain the world of offshore financial services and to tighten up readers’ understanding of the central issues involved. First and foremost, a lot of people have the wrong impression of offshore banking, believing it something louche and illegal.

Yes, if you want to abuse the system, it can be both those things, but the truth is that the vast majority of offshore banking in the world’s more reputable finance centers is entirely legal, entirely legitimate in source, and an eminently sensible thing to do.

As Mark Trasler from HSBC International says, many people are patently missing attractive opportunities by not availing themselves of offshore banking products.

“The mystery is why relatively few expats – less than one in three at the latest count – take advantage of this special ‘expat’ status to manage, protect and grow their finances.”

Why and how

So let’s start at the very beginning of the beginning: why and how do people end up with offshore bank accounts?

Most commonly, people leaving their home countries are (effectively) transferred to offshore banks by the banks’ parent companies, which recognise the practical and fiscal advantages for expatriates basing their assets offshore.

At the moment – and this may well change in the future – the majority of offshore banks pay interest tax-free to their clients. This is unlike the UK and unlike many domestic banks, which levy a tax on savings on behalf of their governments.

If you decide to set up an offshore account then you need to establish, to your own complete certainty and satisfaction, your tax situation and status. An article for expats from hundreds of countries, living in hundreds of countries cannot do this for you, but we can offer some practical pointers for anyone.

First, many offshore banks have guides written for customers by large accountancy practices. These guides explain all the basics of leaving one’s home country.

For example, Bank of Scotland International offers a report written by KPMG for British expatriates. Wherever you come from, wherever you’re going, this sort of thing should be available to you.

Many banks will also have a referrals service – either formal or informal – pointing customers to international tax specialists. But using experts can be expensive.

If you are unsure about your tax position, then try to obtain the appropriate information from the appropriate tax authorities. For the United Kingdom, the Inland Revenue has an entire section of its website devoted to tax issues for non-residents (www.inlandrevenue.gov.uk/menus/non-residents.htm).

Malcolm Corrigan says tax authorities should be told before changing country, not after people have moved away already. “Talk to the [Inland] Revenue well before you go away.

Don’t leave it to the last minute, and don’t wait until you’ve arrived in your foreign country. Once you’ve dealt with the Inland Revenue, you need to take advice in the country to which you are going – talk to a local accountant or an IFA.

Even an IFA based in the UK should be able to help you to a degree.” Of course, this is only part of the equation. Some other countries’ tax authorities may have information for incoming foreigners or ‘inpats’.

Unfortunately, many countries’ tax authorities will not be so helpful, and it may be necessary to pay for an overview of your chosen country’s tax situation using a reputable firm of specialists.

A bank may be able to source such an expert. Alternatively, if you are going to be a non-resident because you are leaving your home country on assignment, there is every chance that your employer will either have the knowledge – or access to the knowledge – to help you sort out your tax situation.

However, once you’ve jumped through these hoops, the gains can be considerable. Trasler, of HSBC International, says: “There are the huge tax advantages and opportunities that come from being able to manage your finances outside your home territory.”

Offshore accounts are typically paying up to 0.75 per cent extra. Not much, you may think, but it amounts to a tidy sum over the years, and can save you administrative hassle as we have tried to explain.

Does tax matter?

Do you need to bother with such trifling ‘details’ like tax? Absolutely, utterly, completely, yes. Isn’t the whole point of moving offshore that one simply doesn’t declare one’s offshore assets? Absolutely not.

This is a very dangerous approach that is likely to end costing money and heartache in the future, not just for you, but potentially for your heirs who may have to ‘come clean’ about undeclared assets when your estate is transferred.

Furthermore, there are many information-exchange programmes in place (or planned) between offshore and domestic tax collectors, and you should structure your assets in such a way that you can present them to any investigating tax authority without fear of having acted illegally.

That said, tax is only one (albeit attractive) reason for using offshore banks. The fact is that offshore banks should be able to provide you with specialist staff who speak your own language.

Joanna Lawrence, marketing manager at Alliance & Leicester International, says: “Offshore banks such as ALIL can provide a concentration of specialist knowledge.

For example, we have considerable expertise in making international payments and expediting foreign-currency exchange – we can also send funds in any currency, anywhere in the world.”

Of course, you may wonder about placing your assets into a domestic bank in your new country. That may be a fair point and will be the practical solution for many people.

But some expatriates could face a language barrier that is compounded when they need to do something complex. Another common drawback for expatriates is that domestic banks may well not offer multi-currency services, which can be a nuisance for anyone who wishes to keep their savings in one or more currency and exchange them for particular transactions.

As Malcolm Corrigan of Abbey National Offshore notes, many expatriated customers have bank accounts and debit card facilities in more than one currency.

“With our gold tracker accounts, customers who live in Spain often have them in two currencies. For example, they might want one for their big long-term liabilities and another for smaller liabilities such as utility bills and so on.”

There can also, explains Joanna Lawrence of ALIL, be an issue of charging. “Many foreign banks charge to make both withdrawals and deposits – this is very common in Spain, for example, and it can considerably increase the cost of running an account.”

That said, offshore banks do make charges for specific services that they have to pay for such as electronic transfers. In the end, though, expats are split down the middle.

Half of them will use offshore banking services exclusively, while an equally large number use offshore accounts for their main money management, and transfer sums over for day-to-day expenses.

Leave it at home

Another common question we are asked is why people leaving a country shouldn’t simply leave their assets at home and draw upon them as required.

Well, as Lawrence of ALIL has explained, offshore banks are more expert when it comes to fulfilling specific needs involving international transactions such as asset transfers. But there is more to it than that. Because offshore banks pay interest gross, it should be much more straightforward for you to arrange your tax affairs.

For example, you might be able to reclaim taxes if you are paid income into a UK account. But it probably makes more sense to reduce the amounts you have in your UK account by placing the money offshore, and subsequently only having to declare income and pay the taxes domestically once – and not having to reclaim.

In short, offshore banking should be a staple diet of many expatriate and international investors’ lives, not something to be looked upon as peripheral or specialist.

Wayne Riches, client relationship manager at Britannia International, says: “The perception with offshore banking is that it is elitist. People feel they need volumes of money, but they can open an account with us for 750 Eur (920 $) upwards.”

“The fact is that most of the people who benefit from offshore banking have simply moved abroad permanently, have retired abroad, or they’ve moved with a high-profile job.”

And all finance centers – big and small – are being affected. Most have promised to start willingly and actively shopping tax dodgers from between 2004 and 2010 (so long as there is a ‘level playing field’ which is virtually impossible to achieve).

There are a tiny handful of jurisdictions that are resisting some of these initiatives because they believe they are wrong and too expensive to implement. One such is The Republic of Vanuatu which is fast growing as an international offshore center  with the financial and banking sector burgeoning a midst the totally tropical environment.

Vanuatu is situated 1,750km north-east of Australia and has been an independent island for 23 years after 74 years of Franco-Anglo rule. The country is made up of 83 islands and although there are 100 languages among the indigenous Ni-Vanuatu people, the main languages are English and French. The legal system is based on English common and civil law.

It has been cautious in its development to ensure that the economy is not rushed, says the Vanuatu Investment Promotion Authority. The country is increasingly aware of what investment and tourism can bring to the island after years of reliance on still-strong fishing and agricultural sectors.

Although 11 hours ahead of GMT, the country boasts good telecommunication services and air links and is attracting investments from all over the world, with a particular interest from Asian countries.

The country is increasingly being used by Australians as well, and giant banking groups Westpac and ANZ have been stationed on the volcanic islands for a good while. The National Bank of Vanuatu also offers services and then there are a wealth of offshore banks alongside these main three.

Accounts can be opened, but interest rates are piffling. ANZ offers rates of 0.375 per cent for investments above $50,000 and 1 per cent for deposits of £50,000.

Privacy has been a key issue addressed by the island and investors are protected under the Foreign Investment Act, meaning that only – and strictly only – in criminal cases will the island divulge information about investors.

The government is keen to attract more investment and changes in its personnel will not affect the overall outlook of protecting confidentiality. The VIPA has stated that it will fully comply with OECD recommendations where it thinks it will benefit the country.

It feels that the OECD leans favourably on member jurisdictions and reports have sometimes given a misleading representation of the island. Vanuatu is a member of the International Trade and Investment Organisation, which has spoken out against the OECD for offering preferential treatment to certain offshore centers that have not favoured smaller states.

The VIPA believes that as a small nation it is more vulnerable to international reports that may give a negative perception, yet it continues to offer a sound investment base and bring in more international business.

If you are based in this time zone, if you want a private internet bank account, or you simply want to deal with an Australian banking group, then Vanuatu is worth a closer look.

*Four days after this article was posted, the OECD announced that it had removed Vanuatu from its list of uncooperative tax havens. In a statement the organization said: “The OECD welcomes the commitment that Vanuatu has made to improve the transparency of its tax and regulatory systems and establish effective exchange of information for tax matters with OECD countries by 31 December 2005.”

Vanuatu will become the thirty second non-OECD country to commit to its principles and the first to be withdrawn from the list of countries deemed uncooperative.

The government of the Republic of Vanuatu has said it is important for the country to move into line with the OECD to pursue the long term development of its economy, whilst retaining its economic and fiscal autonomy.

The Pacific island nation has committed to a number of measures that will be gradually phased in. From the first tax year after 31 December 2003, the country will be ready to negotiate effective exchange of information agreements for criminals, and for civil tax matters procedures will be in place after the end of 2005.

Vanuatu has also assured the OECD that the appropriate authorities will now have access to information on the ownership of companies, legal entities and trusts established on the island. The government will also oblige all companies established there to keep accounts in line with outlined standards.

The last main amendment states that no new taxation regime or practice will be introduced, or an existing one modified, unless it complies with the principles of transparency and effective exchange of information.

In return, Vanuatu expects that it is withdrawn from the list of uncooperative countries and does not become subject to any framework of defensive measures by OECD member states. The country will now be invited to meetings of the OECD Global Forum and receive assistance in amending or implementing new laws and regulations.

After an article by Alaric Nightingale from http://www.investmentinternational.com/

Spanish Property

Spanish Property : The Business

A few years ago there was a Spanish law, which made it illegal for anyone to sell Spanish property or real estate unless he or she had an official Real Estate agents title and belonged to the association of real estate agents in Spain.

Spanish Property

Spanish Property

Titles were difficult to come by, only university graduates who had taken a formal course, or other professional people such as lawyers or architects were able to join this elite body of accredited specialists. All of who have had to pass an exam in order to receive their diploma.

These proud professional people are known as API’s. The API logo is displayed on the Agents office sign, on his stationary and also on his website. (API = Agente de la Propiedad Inmobiliaria)

A decade or so ago another breed of Property agents appeared on the scene, these were known as GIPE’s. (GIPE = Gestoria Inmobiliaria Propiedad España) Would be property dealers who attended a short but comprehensive private diploma course in the Costa del Sol.

Having successfully passed the final exam they were presented with a certificate entitling them to enter the real estate business, or so they thought at the time.

Having monopolised the Spanish property business for many, many years they were not going to give in easily, nor were they prepared to allow anyone to infiltrate into their hitherto private club. So armed with their Law Books they declared war on the GIPE’s.

It was a long and bitter war, most of the GIPE’s offices were closed down by the courts and quite a few individuals went to jail for contravening these long standing laws restricting anyone other than API’s from selling property in Spain.

Spanish Property Market Today

Years passed and Spain gradually became fully integrated into the European community. As more and more foreigners arrived from other parts of Europe pressure was brought to bear in the European courts until eventually a few years ago the law was abolished.

Now as a result of this change, things went from the sublime to the ridiculous and today anyone can be an estate agent, no university degree, and no training, in fact “no previous experience necessary”!

There are now literally thousands of estate agents, many with dubious reputations, many honest and responsible, all trying to corner their own little slice of the market.