The Value of Local Financial Advice
This is the third article I have written on the value of choosing a financial adviser who is well-established in your local area; not just because this is a matter of great importance, but also because if you are forearmed, you can avoid the pitfalls and expensive mistakes that expats are encountering on a daily basis. In my last article, I explained how some ill-informed advice from a UK based adviser sadly resulted in the client receiving a €70,000 tax bill due to the lack of knowledge of the Spanish tax system. This month, I am going to share the uncomfortable and costly experiences that a new client of mine was recently confronted with.
Quite simply, the clients had a long-term relationship with their UK adviser. They held a large investment portfolio and over the years they had been transferring their investments over to ISAs to benefit from the tax advantages the ISA offered.
The clients had been in Spain since 2014, but kept most of their finances in the UK as they travelled back and forth between the two countries. Despite the clients becoming Spanish tax residents in 2019, the adviser continued to manage their investments with the same strategy.
Through the clients’ bank and the Common Reporting Standards requirements, the Spanish Authorities became aware of the recent transaction. This resulted in serious consequences.
You are not allowed new ISA subscriptions if you are not a UK resident.
Tax is due on profits from ISAs in Spain.
The clients are now having a full tax review from the Hacienda going back to 2014.
One can only imagine the stress these clients are facing and frustratingly, this could have been easily avoided if they had found a Spain-based adviser when they became residents.
This is an ongoing investigation that is going to be very expensive for the clients.
Additionally, the financial adviser was completely ignorant to the products that were tax efficient in Spain and available to these clients.
This is a common problem for advisers based in the UK. They wish to retain their long-standing clients with whom they have a trusted relationship and from whom will continue to receive the trail commissions and annual fees, but quite often they can be obtuse to the financial harm their clients risk. Following Brexit, it is very unlikely that a UK based financial adviser will have all the passporting requirements needed to provide regulated advice in the EU anymore.
Arguably, a UK based adviser should never be responsible for giving financial advice to someone based in Spain, as they have no idea of the implications the advice could bring on a client.
I often work alongside UK based advisers to assist their clients in preventing catastrophic mistakes. Please be vigilant with your financial planning in Spain and contact us for a no-obligation review of your portfolio.
120 Avenida Dr. Artero Guirao 2C
San Pedro Del Pinatar
Our office suite is easy to find on the main N332 through road of San Pedro del Pinatar with easy parking.
If you want more information or wish to make an appointment to discuss your own situation please call 657 684 094 or email email@example.com
This communication is not intended to constitute and should not be construed as; investment advice, investment recommendations or investment research. You should seek advice from a professional regulated adviser before embarking on any financial planning activity.
Blacktower Insurance Agents & Advisors Ltd is regulated in Cyprus by the Insurance Companies Control Service and registered with the DGS in Spain.
Blacktower Financial Management (Cyprus) Ltd is regulated in Cyprus by the Cyprus Securities & Exchange Commission and is registered with the CNMV in Spain.