It will also include any investment income taxpayers earned over the year, such as interest, dividends, income from certain insurance contracts and annuities.
The data-sharing arrangement means the Hacienda has greater powers to analyse and cross-reference information, making it easier to investigate the tax affairs of wealthy individuals.
“There are fewer places for expats to hide. The net is closing because of the automatic reporting that’s coming in,” warns Speed.
Fake residency clampdown
Given the CRS agreement, there are concerns Spain will be clamping down on false claims of residency for those who live in the country but refuse to declare their income and assets.
Speed says that although she advises clients who have lived in Spain for more than five years to declare themselves as tax residents, many are against the idea.
“Often it is fear of the unknown because [the clients] don’t understand the Spanish tax system. Some people want to be fully above board.
“They don’t want to be looking over their shoulder, wondering what letter is going to come in the post. Then we get the other side where they absolutely do not want to be in the Spanish system, no matter what,” she says.
The uncertainty around Brexit and reciprocal residency rights may drive a greater number of clients to apply for Spanish tax residency, predicts Speed.
“If somebody has been on the radar in Spain and they’re officially resident and been here for five years, they may automatically qualify to remain in Spain without any additional requirements.”
Investment scam
Being able to spot unregulated investment scams, often aimed at unsuspecting wealthy Brits living on the Spanish coast, is another important part of the job, says Speed.
Most recently, she was approached by a client in December about investing in a fund that claimed to provide ‘guaranteed’ returns of up to 12% per annum.
“After unravelling the many layers the fund was wrapped up in, it was a Maltese-labelled unregulated investment, which was actually a Hong Kong fund for professional investors that had at least £500,000 to invest. I had my doubts as to whether people that invested in it would ever even get their money back.
“It’s completely unregulated and targeted directly at the public here in Spain through telemarketers and Facebook campaigns, with a glossy brochure, but there’s no substance in it,” Speed says.
Referring to such scams as “a big problem” in the region, she believes that increasing due diligence by the life companies is helping crack down on the number of clients who fall victim to dodgy investments.
“As advice firms are learning from past mistakes, product providers are also learning from those mistakes. The wrappers themselves do not have any legal requirement, because they are not providing advice.
“However, there is an ethical responsibility to ensure clients aren’t being misled and that they have actually got what they think they’ve got under the bonnet, in terms of what’s within the wrapper,” she says.
Looking ahead, Speed hopes to stop studying at some point in the future, although she credits her qualifications with “future-proofing” her business.
Calling on advisers in the region to help improve the professionalism in the industry, she hopes IFA firms in Spain will raise the level of knowledge and skills expected from their advisers.
Being a member of the Federation of European Independent Financial Advisers has really facilitated this, says Speed, whose own advisers attend the various seminars run by the organisation throughout the year.
“The training and development of financial advisers is getting there but I am not fully convinced. There needs to be a set process in place within every business but we are not where we need to be just yet.”
