Question Moving to Spain with Family and concerned about Wealth Tax

[pelias]

This is my first post and generally new to the game
I have moved to the Netherlands where I enjoy the 30% ruling at the moment. I am thinking of moving to Spain end of year with my family and kids which would go to school in Spain. I am concerned about the wealth tax that might incur, since I have a crypto portfolio, pension portfolio, stock investment portfolio and own shares in a private Jersey Ltd (which by proportion is largest by value).

I have following questions which are not clear to me:
- How will the Spanish tax authority know about the existence and especially the value of the private Jersey Ltd shares for the wealth tax calculation?
- I am planning to realize my crypto gains by converting to fiat and back to crypto in the Netherlands (where I am not liable for any capital gains tax due to my expat status). Do I need to declare the portfolio upon arrival in Spain?
- Is there any good way of structuring this?

Cheers

 

[Martin Everson]

I am concerned about the wealth tax that might incur, since I have a crypto portfolio, pension portfolio, stock investment portfolio and own shares in a private Jersey Ltd (which by proportion is largest by value).

Move to Madrid where there is no wealth tax. Btw don't go to Catalonia region with its separatist ambitions.

How will the Spanish tax authority know about the existence and especially the value of the private Jersey Ltd shares for the wealth tax calculation?

You will tell them.

Do I need to declare the portfolio upon arrival in Spain?

No.

The crypto will be considered your capital on arrival in Spain. You would declare it in your tax return in Spain.

Is there any good way of structuring this?

No.

Capital gains tax rate in Spain anyway is not crazy. Top rate of capital gains tax is fair. However if you sell within 12 months tax can be up to 52% depending on where you live.

 

[JackAlabama]

If you are moving anyway, maybe consider a country outside the eu?
It seems to me you have not made up your mind yet or have a very compelling factor going for Spain. (Besides what everyone likes about it basically).

 

[Martin Everson]

Yup there is zero reason to move to Spain other than weather perhaps. There is a big difference in going on holiday to Spain and enjoying your time there compared to making it your residence and getting hammered with taxes. Anyone with decent money should use Spain as a partial year playground without moving residency there.

If I moved to Marbella for example I would lose in excess of 3% of my wealth each year. That is if I did nothing but sat on the beach reading a newspaper and not earning any income or capital gains on my worldwide assets....thats crazy .

 

[John Andrews]

OP take a look at Croatia, similar weather except there's no wealth tax and dividends/capital gains are taxed at 10%. Crypto is tax free if you hold it for more than 2 years.

There's also Greece.

 

[pelias]

Thanks for the suggestions! I am still undecided but would prefer staying in Europe, parents getting old... Would Greece be any better compared to Spain regarding capital gains, wealth tax and crypto?

 

[pelias]

Yup there is zero reason to move to Spain other than weather perhaps. There is a big difference in going on holiday to Spain and enjoying your time there compared to making it your residence and getting hammered with taxes. Anyone with decent money should use Spain as a partial year playground without moving residency there.

If I moved to Marbella for example I would lose in excess of 3% of my wealth each year. That is if I did nothing but sat on the beach reading a newspaper and not earning any income or capital gains on my worldwide assets....thats crazy .

I once overheard that there is an optimal way to hold investment capital as a resident in Spain within the framework of a Spanish ‘tax approved’ investment Bond which are specifically designed to be tax-sheltered in Spain. What do you think of such a structure?

 

[JackAlabama]

Thanks for the suggestions! I am still undecided but would prefer staying in Europe, parents getting old... Would Greece be any better compared to Spain regarding capital gains, wealth tax and crypto?

Can you take your parents with you?
Greece is as bad if not worse.

How about Montenegro? That would give you a least some years of leeway.

 

[pelias]

Can you take your parents with you?
Greece is as bad if not worse.

How about Montenegro? That would give you a least some years of leeway.

They don't want to move anywhere Montenegro could be an option. What do you mean by "some years of leeway"?

 

[pelias]

You will tell them.

It is a private company, would I be able to make up a valuation?

 

[KJK]

Yup there is zero reason to move to Spain other than weather perhaps.

Cheap real estate perhaps (outside the biggest 3-4 largest cities)? Learning Spanish - whether for yourself or for the kids?

I somewhat agree, if you are considering the region, I think even the neighbouring Portugal offers better incentives (for new residents, retirees etc.) as far as I know.

 

[JackAlabama]

They don't want to move anywhere Montenegro could be an option. What do you mean by "some years of leeway"?

until they join eu and crs and all that crap.
It is set to be in 2025. Still a long way of f-ing things up till then.

 

[JackAlabama]

Cheap real estate perhaps (outside the biggest 3-4 largest cities)? Learning Spanish - whether for yourself or for the kids?

I somewhat agree, if you are considering the region, I think even the neighbouring Portugal offers better incentives (for new residents, retirees etc.) as far as I know.

regarding real estate, this is valid for pretty much all of europe.
Latin america has also spanish and often better tax.
I'd also opt for Portugal if it "must" be there.

 

[FreeBit]

This is my first post and generally new to the game
I have moved to the Netherlands where I enjoy the 30% ruling at the moment. I am thinking of moving to Spain end of year with my family and kids which would go to school in Spain. I am concerned about the wealth tax that might incur, since I have a crypto portfolio, pension portfolio, stock investment portfolio and own shares in a private Jersey Ltd (which by proportion is largest by value).

I have following questions which are not clear to me:
- How will the Spanish tax authority know about the existence and especially the value of the private Jersey Ltd shares for the wealth tax calculation?
- I am planning to realize my crypto gains by converting to fiat and back to crypto in the Netherlands (where I am not liable for any capital gains tax due to my expat status). Do I need to declare the portfolio upon arrival in Spain?
- Is there any good way of structuring this?

Cheers

Your kids 2 days after starting school in spain

 

[Golden Fleece]

From a recent Live and Invest Overseas article:

You've probably also heard about wealth taxes.

France's wealth tax is notorious. Historically, if you were a resident of France, the country's wealth tax applied to your worldwide assets, including jewelry (difficult to track and to value). If you hit the threshold (1.3 million euros, US$1.5 million), the tax started at a fraction of a percent.

In 2018, France changed its wealth tax law. Now only real estate is included when calculating the value of your assets to determine whether or when the wealth tax applies. The threshold of 1.3 million euros remains. If you're a real estate tycoon wanting to live in France, you should speak with a French tax advisor before establishing residency to understand what you could do to mitigate any potential wealth tax hit.

France gets a bad tax rap, but, in fact, Italy and Spain are probably more painful tax regimes... because of how each country calculates the amount of tax owed. The tax bands are similar among all three, but France divides household income by the number of units living in the household before applying the tax bands.

Spain imposes a wealth tax that varies by region. Italy charges a wealth tax on financial assets held outside the country... so you should consider moving your stock portfolio to an Italian broker if you're planning to become an Italian resident.

 

[JackAlabama]

From a recent Live and Invest Overseas article:

If you use an Italian broker you have the risk of 100% tax lol
(aka failure).
No wonder the economy is in shambles there with these insane politics. Also do not forget the youth unemployment rate in the high %.

 

[botero]

For avoiding the wealth tax, would transferring some of your assets to family members abroad work? For example, if you have a brother that lives in another country, you could cash out some of your investments, send it to him, and have him invest it for you. Ideally, this would be a country with no wealth or gift tax (e.g. Canada).

 

[Martin Everson]

I once overheard that there is an optimal way to hold investment capital as a resident in Spain within the framework of a Spanish ‘tax approved’ investment Bond which are specifically designed to be tax-sheltered in Spain. What do you think of such a structure?

Your referring to Spanish Compliant Investment Bonds. How will that help you with crypto or your own stocks? Do you have a provider willing to wrap those products into such an investment bond. Normally such providers offer their own selection of funds within such wrappers with super high annual fees and upfront advisory charges

It is a private company, would I be able to make up a valuation?

Yes you will and so will Spanish taxman also.

 

[JackAlabama]

Your referring to Spanish Compliant Investment Bonds. How will that help you with crypto or your own stocks? Do you have a provider willing to wrap those products into such an investment bond. Normally such providers offer their own selection of funds within such wrappers with super high annual fees and upfront advisory charges



Yes you will and so will Spanish taxman also.

Let us guess who will come up with the higher valuation and who gets the last say in valuation matters

Btw. They will also tell you the selling price of your home if you chose to sell it (relevant for tax issues).

 

[Kermit]

Linked article above is behind paywall. Text below:

A tiny, isolated nation in the Pyrenees is turning into a creative hub for some of Spain’s biggest social media stars.

YouTubers are flocking to Andorra, a principality of 77,000 people that’s best known as a haven for wealthy bankers, sports stars and tax-free shopping. Their arrival is a boost for an economy threatened by a declining population and the impact of climate change on its skiing industry.

“This is like the Silicon Valley of YouTubers -- everyone is here,” said Victor Dominguez, who runs the Wall Street Wolverine business and innovation channel on YouTube. He said he moved to Andorra last year to escape the pandemic and because “it’s easy to produce content when there’s another YouTuber five minutes away.”

Some of their Spanish compatriots suspect other reasons for the exodus of famous gamers including aLexBY11, Willyrex, Vegetta, The Grefg, Lolito and Staxx, and point to Andorra’s top-rate income tax rate of 10%, which compares to 54% back in Spain.

When star YouTube gamer ElRubius told his 39 million followers last month he was off to Andorra, Spanish national media condemned the move as cynical and unpatriotic. Spain’s tourism-reliant economy has been laid low by coronavirus, and youth unemployment stands at around 40%.

“I think it’s unsupportive. Railroads and pensions have to be paid for,” Ana Rosa Quintana, one of Spain’s biggest television celebrities, said on her Telecinco morning show.

Stung by the backlash, ElRubius took down a video in which he’d cited Andorra’s tax haven status as a “plus” and uploaded an open letter explaining that he moved in search of more anonymity. In Andorra, he could hang out with his friends in the street instead of being cooped up at home in Spain with the shutters closed.

“What I am going through these days in the mainstream media and in social media only shows how rotten the climate of debate is in Spain,” he wrote.

Andorran Economy Minister Jordi Gallardo said his government never courted social media stars. They came of their own accord to benefit from its great health and education, pleasant climate, fast fiber-optic broadband -- and low taxes.

“Well-known people can have a very normal life in Andorra. They can go shopping, do any activity without being the focus of media or any social pressure,” Gallardo told Bloomberg.

Since 2019, it’s been possible to give “YouTube” as your company’s purpose when registering it in Andorra, said local tax lawyer Pau Auge. He said the microstate is even drawing influencers from France and the Netherlands. He has YouTubers as clients and said the numbers are growing.

The indignation in Spain is having little obvious impact on their popularity. Viewer engagement for ElRubius, The Grefg and aLexBY11 has continued to grow since they spoke about moving to Andorra, according to social media marketing platform Socialbakers.

The media backlash has still been a shock for influencers who have millions of followers yet rarely find themselves in the national spotlight.

Maria Martinez, who saw a surge in demand for her YouTube fitness videos during lockdown, last month posted a lengthy video on Instagram justifying her move to Andorra with her husband. It failed to win over newspaper El Espanol, which published a take-down of her arguments.