Financial Tips for Expats in Spain

In our article this week, we address some hot button topics that have been coming up in the financial discourse. We also provide you with some important take-away information that you may not be aware of.

Changes in pension law and UK investments

Due to the legal repercussions of Brexit, it is now against the law for UK-based wealth advisers to advise clients that are in Spain (and the rest of the EU). There are some areas that are not impacted by this legislation. Most investments in the UK, ISAs included, are not tax-efficient in Spain. Many of them need to be declared on an annual basis, and the tax must be paid on gains even if the money has not been accessed. Of course, this depends on each individual’s circumstances. At Private Client Consultancy, we help our clients analyse their current situation and help them to manage their assets or arrange ways for them to become compliant with Spanish laws.

For individuals with British private pensions that are in drawdown, it would be wise to have a professional approve any withdrawals to ensure that the pension fund continues growing and investments are replacing the money that has been taken out. This is where we come in. If you need help with your UK-based assets or have any other questions regarding your UK pension, please get in touch so that we can help review your situation.

Investments and the rule of 72

Devising strategies for your investments is only the beginning of your investment planning. If you do not review your plan regularly and maintain its effectiveness, you risk sacrificing a large amount of your sum. This is where it is essential to abide by the rule of 72. The rule of 72 is a simplified way of calculating the amount of time it will take for your money to double in value.

To use the rule of 72 on your investment, all you need to do is divide 72 by your average annual interest. For example, if your average annual interest is 6%, it would take around 12 years for your investment to double (72 ÷ 6 = 12). So, if you begin with an amount of €100,000, you will reach €429,187 at the 25-year mark.

If we are to contextualise this, inflation causes costs to double every 24 years. Therefore, your money is keeping its present value if it is not ahead of that. In order to make the most of your investments, it is vital to track their growth and plan ahead so that your investment strategy is successful. If you find that your investments are unsuccessful, it is imperative that you to get a second opinion and devise a new plan to optimise your results. Further down the line, this will make a huge difference to you, and you will thank yourself that you caught it early on.

At PCC, we put our clients first because we know that if they are happy, our advisers are happy.

With all of that said, we are happy to help you with a second opinion, if required. Email us at to schedule a free, no obligation appointment with one of our Wealth Managers.

Worries around Spanish state pension inflation

Spain had a €66 billion surplus state pension fund in 2011. Some viewed this as a positive because many other countries didn’t have a surplus. Right before the COVID-19 outbreak at the end of 2019, Spain was €16 billion in debt. The pension system now works in a way that makes it so people that are currently working pay for those who are now retired. The core of the matter here is that, if compared to its European counterparts, Spain has one of the highest proportions of its total income contributed to its state pension. To put this into context, the average percentage of workers’ final salary income that is received in retirement was at 72% in 2019 while in Europe it is 45%.

On average, Spanish workers receive much more for their state pension in comparison to their earnings than other countries in the EU. From one perspective, this is a great thing. However, from another, this places a significant burden on the country to provide such a high level of state pension to its people.

There is only one way in which Spain can continue providing these state pensions, and that is to decrease the amount of money and increase the age of retirement. However, this would, of course, require policy changes. Without this kind of policy change, the only way for the individual to not feel this burden is if they start saving into a private pension. This is difficult, though, because the Spanish culture does not always promote positive financial practices, and currently, 26% are saving into a private pension. This is astounding if compared to the UK where it is estimated that 65% of the eligible population contribute.

In addition to this, pre-Covid Spain had the second largest tourist industry. It employed around 2 million people and accounted for a large percentage of the country’s GDP. Given the current state of the world, drastic changes need to occur. We are addressing these changes and helping our clients to put plans in place so they can live comfortably in their retirement.

We are here to discuss your financial future and tailor your plan to suit your needs.