Spanish Compliant Bond
Tax-Efficient Investment for Expats
What Are Spanish Compliant Bonds?
Spanish Compliant Bonds are an investment solution tailored for expatriates residing in Spain. Combining the benefits of life assurance alongside flexible investment capabilities, these bonds offer an attractive, tax-efficient way to protect and grow your wealth.
Key Benefits
Tax Efficiency
Only the growth of the investment within a Spanish Compliant Bond is subject to tax, and this is applied only when withdrawals are made. Tax rates apply as follows:
| 19% on the first EUR 6,000 |
| 21% on EUR 6,001 to EUR 50,000 |
| 23% on EUR 50,001 to EUR 200,000 |
Example withdrawal:
Simplified Tax Administration
When withdrawals are made, tax on the gain is withheld and submitted directly to the Spanish tax authorities by the investment providers fiscal representative.
No Modelo 720 Reporting
Unlike many other investment accounts in Spain, Spanish Compliant Bonds simplify tax reporting by eliminating the need to declare the bond on the Modelo 720 annual declaration. This is important because the Modelo 720 is a form for reporting overseas assets, and failing to report them correctly can lead to penalties.
Investment Security
Many Spanish Compliant Bonds are held with providers based in Ireland, a jurisdiction known for its highly regulated financial services. Ireland’s strict regulatory standards ensure strong protection for savings and investments, as all assets are ring-fenced, ensuring they can’t be used by the institution for lending purposes. Being in Ireland also means that everything is conducted in English, simplifying management.
Wide Range of Investment Options
Spanish Compliant Bonds offer the flexibility to invest in a variety of UCITS-compliant funds, including shares, bonds, and other financial instruments. This allows diversification and chosen investments that align with your risk appetite and financial goals. Whether you’re seeking conservative, balanced, or growth-focused investments, there is a range of options suited to everyone’s needs.
Multi-Currency
International bonds provide multi-currency options, allowing investments in GBP, EUR, and USD. This offers flexibility to manage investments according to your currency preferences or market conditions, making it easier to align your investments with global financial strategies.
Tax Advantages for Succession Planning
The Bond can be structured to avoid Spanish succession tax entirely. If the policy is structured correctly, there will be no tax triggered upon the death of the first spouse, meaning the bond can pass between spouses tax-free. If the ultimate beneficiaries reside outside Spain, there will be no succession tax on the second death, as both the beneficiary and the asset are located outside Spain.
My Verdict
For expats in Spain with €25,000 (or the currency equivalent) or more to invest, the Spanish Compliant Bond is an ideal choice, offering a unique mix of tax advantages and investment flexibility. With access to global investment strategies, gross roll-up benefits, and effective succession planning, it is perfect for expatriates. Often referred to as the Spanish ISA, its simplified tax administration ensures a hassle-free investment experience for investors.