A question I am constantly asked. I need to supplement my pension/income what are the alternatives to keeping money tied up in a bank account, either offshore or in Spain?
Bank deposits are reasonably secure (protected to €100k) however, with interest rates remaining low for some time to come returns are not good. Funds held offshore need to be reported on a Modelo 720 declaration. Interest will be taxed at 19% whether withdrawn or not and beneficiaries will not be able to receive the proceeds until the asset has been disclosed for succession tax purposes.
A tax efficient solution would be to invest in a Spanish Compliant Bond. No tax is paid until a withdrawal is made and tax is only then paid on the growth proportion of the withdrawal. Not only is tax deferred, but any tax due is paid directly to Hacienda by the bond provider and there is no Modelo 720 declaration requirement at this time. For joint accounts there is no potential liability to succession tax on first death.
Initial Investment €100,000
Grows to €130,000
Non Taxable return of capital €7,692
Taxable Income €2,308
Tax payable @ 19% €439 an effective tax rate of 4.39% on total withdrawal
Funds can be denominated in Sterling, Euros and Dollars with a minimum investment of £20,000, €25,000 or $35,000 with a top up facility of £15,000, €20,000 or $25,000 with a minimum allocation rate of 100%
Flexible withdrawal options available (maybe subject to changes) so clients can access their when it suits them
Funds featuring smoothing to help reduce the volatility of client investments with fund performance which has consistently been well above bank deposit rates and many investment returns.
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If you wish to discuss in more detail investing for tax efficient income or just a review of your existing pensions and investments please contact me on 647 681 974 / 965 994 855 or firstname.lastname@example.org