Written by Ricky Bean,
18th August 2016

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This week, our expert Spain financial planning and tax adviser partner shares their thoughts on the implications of the Brexit vote on your finances when living in Spain.


1. Tax implications

The immediate effect of Brexit if you are in Spain and hold sterling assets or receive a sterling pension is a reduction in euro value, and, by implication, lower taxation. You should therefore always consider currency as an asset class and hold sufficient assets in your currency of expenditure to avoid currency shocks. Forward buying currency when pension income is involved is a useful tool to hedge currency risk over shorter periods.

We always recommend seeking advice from an Independent Financial Adviser (IFA) about your financial matters in Spain.

2. Euro loans

For those with euro loans who are servicing the debt from sterling income, the short term effects of the referendum decision have been severe with the devaluation of sterling, and this weakness may continue, so consider forward buying currency for at least part of the liability, even if the current exchange rate is unattractive, to protect against further falls in sterling value. We recommend consulting a currency specialist, such as our trusted partners, Smart Currency Exchange, about a currency tool called a Forward Contract, and finding out if this is a good fit for your needs.

Spain - Tax

We recommend consulting a currency specialist.


3. Pension income

Sterling pension income in Spain has been devalued and waiting for sterling to recover may not be an option for many. Where an individual holds non-sterling assets, they may consider drawing on these to supplement income needs. The shock devaluation for those living in Spain shows the importance, for those with drawdown pensions, Qualifying Recognised Overseas Pension Scheme (QROPS) or unvested pensions, of purchasing non-sterling assets as part of their investment mix.

4. Moving back to the UK

If you are planning to return to the UK and if sterling is weak when selling a euro asset, then forward buying currency is wise, so you can guarantee the value of your euros, as this will allow more effective planning. Again, it is wise to get guidance from a currency specialist about your currency planning.

5. Tax advisor

Tax considerations should always be addressed before moving between Spain and the UK – seek advice from a qualified tax adviser.

We always recommend seeking advice from an Independent Financial Adviser (IFA) about your financial matters in Spain. To be put in touch with our expert partners, contact us today.

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