Wealth Management Advice for UK Expats Living in Spain

Relocating to Spain offers UK expats a rewarding lifestyle: sun-drenched coastlines, world-class cuisine, and a slower, more enjoyable pace of life. But while the lifestyle may be laid-back, managing your wealth as an expat in Spain requires careful planning and expert advice—especially when navigating international tax systems, currency exposure, and cross-border investments.

Whether you’ve retired to the Costa del Sol, moved for business, or simply embraced the Mediterranean lifestyle, sound wealth management is essential to preserving and growing your assets. Below are key considerations every British expat in Spain should take into account.

1. Reassess Your Financial Goals for Your New Life

Your financial goals may have changed since your move. Whether it’s planning for a comfortable retirement, purchasing property in Spain, supporting children through university, or leaving a cross-border legacy, relocating requires a reset of your financial priorities.

A UK-centric financial plan may no longer serve you efficiently in Spain. Tailored advice from a financial adviser with cross-border expertise ensures your objectives are realistic, achievable, and fully aligned with your new life abroad.

2. Understand Your Tax Residency and Obligations

Spain has its own complex tax regime, and tax residency is determined primarily by time spent in the country—generally over 183 days per calendar year. Once you are deemed tax resident in Spain, you are liable for tax on your worldwide income and assets.

Some important areas to understand include:

• Wealth Tax (Impuesto sobre el Patrimonio): Applied to global assets above certain thresholds, which vary by region.
• Income Tax (IRPF): Income from UK pensions, rental properties, dividends, and savings may be taxed differently in Spain.
• Capital Gains Tax: Includes disposals of UK property or shares, even if gains occurred before moving.
• Modelo 720 Declaration: A mandatory disclosure of overseas assets worth more than €50,000 per asset class—failure to comply carries severe penalties.
• Tax optimisation requires deep knowledge of both UK and Spanish systems. A qualified adviser will help you structure your affairs to remain compliant while minimising tax exposure.

3. Evaluate the Structure of Your UK Pensions and Investments

UK pensions are often a major component of an expat’s wealth, but the way they’re taxed and accessed in Spain can vary considerably. Defined benefit schemes, SIPPs, QROPS (Qualifying Recognised Overseas Pension Schemes), and state pensions all have different implications.

Considerations include:

• Accessing pensions tax-efficiently in Spain
• Currency risk if pension income is in GBP but expenses are in euros
• Whether a QROPS transfer is appropriate (in some cases it may offer tax advantages, but it is not right for everyone)
• Similarly, ISAs lose their tax-free status once you become a Spanish resident. If your investment portfolio was built around UK tax wrappers, it may now be inefficient or even disadvantageous. Reassessing your investment structure is vital.

4. Use Spanish-Compliant Investment Structures

For British expats living in Spain long-term, Spanish-compliant bonds can be a powerful wealth management tool. These investment vehicles are specifically designed to be tax-efficient under Spanish law. Benefits include:

• Tax deferral until withdrawals are made
• Favourable treatment under Spanish savings income rules
• Succession planning advantages, allowing smoother inheritance transfer
• Working with an adviser who understands these structures—and who can recommend reputable providers—is crucial.

5. Plan for Succession and Cross-Border Inheritance

Spain’s forced heirship laws and inheritance tax regime are very different from the UK’s. In Spain, your estate may not pass as you intend unless you have carefully planned for it in advance.

Key differences to address:

• Succession rules vary by region, and default inheritance paths may override your UK will
• Spanish inheritance tax (IHT) is paid by the beneficiary, not the estate
• Non-residents may still be liable for Spanish IHT on Spanish assets

It’s vital to have a will that complies with both Spanish and UK law and a clear inheritance plan that minimises tax and ensures your assets are distributed according to your wishes.

6. Don’t Neglect Currency Risk and Banking Strategy

If you still hold a significant portion of your wealth in GBP, currency fluctuations can affect your purchasing power in euros. Regular transfers from the UK or drawing pension income in GBP could expose you to risk.

Consider:

• Multi-currency banking solutions
• Currency hedging or fixed-rate currency transfers
• Using local expat-friendly banking providers to streamline your finances
• An adviser can help you manage currency risk as part of your broader portfolio strategy.

7. Work With a Regulated Cross-Border Financial Adviser

Not all advisers understand the intricacies of UK-Spain cross-border planning. Look for an adviser or firm regulated in both the UK and the EU like Blacktower, that specialises in expat wealth management.

The right adviser will:

• Help you remain compliant in both jurisdictions
• Optimise your tax position –  Please speak with a specialist tax adviser
• Structure your wealth efficiently
• Provide regular reviews to adapt to changing laws and life circumstances

Final Thoughts

Living in Spain offers a relaxed lifestyle and many advantages, but also a complex financial environment. Getting it wrong can be costly. With expert guidance, British expats can navigate the maze of cross-border wealth management with confidence—ensuring that their finances support the lifestyle they’ve worked hard to enjoy.

If you’re a UK expat living in Spain and haven’t reviewed your wealth strategy recently, now is the time to consult with a specialist adviser who understands your unique needs.