In Spain, capital invested in an approved capital assurance is treated differently to other forms of investment for taxation purposes. These concessions are only available for approved capital assurances established by life insurance companies, which are authorized to sell insurance policies in Spain according to the European UnionÂ’s Third Life Directive.
Good financial consultants work together with bankers and insurance providers who are authorized to sell their product Â“Capital AssuranceÂ” in Spain. The Capital Assurance Scheme means that retired expatriates no longer have to break tax laws by secretly hiding their wealth off shore to avoid high taxation. By using the scheme your total wealth can be declared to the Spanish Tax authorities (Hacienda) and still remain relatively tax free.
Withdrawals of capital are not taxed.
The Spanish tax authority treats any withdrawal as part repayment of original capital and part gain. The capital element is not taxable.
Tax on Income is Reduced Substantially.
The gain element of any withdrawal is subject to income tax but is reduced by 40% if the plan has been held for two years. After fi ve years this reduction is increased to 75%.
Free of Spanish Inheritance Tax
If the beneficiaries on death are not residents of Spain, the capital will not be liable for Spanish Inheritance tax.
Free of Wealth Tax
If the plan, or any specifi c part thereof, is locked up, this would be exempt from wealth tax in Spain. No Taxes on Gains
No taxes are payable on gains provided, there are no withdrawals. Moving from Spain will not give rise to a taxable event. Pledging (using the Plan as security) will not give rise to a taxable event.
Capital Assurance is a life assurance product where the savings are invested through a wide-ranging choice of UCITS approved and regulated funds. It is the clients own choice how the investments are made and these can be amended at any time. However, in accordance with the regulations, the client will be restricted to a total of ten individual funds. Professional advice can be obtained from the banks own ivestment advisors. Th e Capital Assurance is open to individuals, trusts or companies who reside, or plan to reside, in Spain. It is a term life assurance product covering the death of the person(s) assured. It provides an automatic death benefi t of 101% of encashment value and may be written on a single life, joint lives or multiple lives.
Jurisdiction and complaints
Spanish law governs the Capital assurance. Th e client has the right to fi le complaints with the Spanish Â“Direccion General de SegurosÂ”, the
Â“Commisariat aux AssurancesÂ” or with the competent courts.