# Share trading income and taxation in Spain



## IanWo (Feb 24, 2021)

I've moved from the UK to Spain and my only occupation now is investing and trading in stocks and cryptos.

I'm trying to find some basic information on what taxes I'll need to pay.

My initial investigations suggest that all income from this activity is treated as investment income, even if I have no other income. There seem to be personal and child allowances, but its unclear if they apply to just general income or if I can apply them to income from stock trading.

Is there a "for dummies" guide anywhere that explains this stuff to me and tells me how to set this up to minimise taxes owed?

Also, I have a UK SIPP. Do I need to do anything different with gains made within this plan?


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## mrypg9 (Apr 26, 2008)

IanWo said:


> I've moved from the UK to Spain and my only occupation now is investing and trading in stocks and cryptos.
> 
> I'm trying to find some basic information on what taxes I'll need to pay.
> 
> ...


I know nothing about trading but as part of our retirement income plan we had a SIPP based on commercial property which some years ago was converted into a Spanish tax compliant bond which bears no interest on capital gains until drawdown when the rate of interest is minimal.

I have no idea as to the mechanics of this since my knowledge of these things is nil, I look at the bottom line, nothing more, and rely on professionals to manage my affairs.

Withall due respect to my fellow posters, I would neither seek nor take advice from internet forums on anything to do with taxes or money generally as I can’t afford to take risks, apart from those you expect from any investment.
So I would suggest consulting a good accountant.


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## Turtles (Jan 9, 2011)

The SIPP gains are not taxable until you start making withdrawals. Then they are taxed as income for that year, although there are some complex rules that permit lower taxation of income from annuities.
I would recommend developing a strategy that is more buy and hold than day trading, otherwise you will be filling out a page of the tax return for each transaction. You do get allowances applied to capital gains and investment income, but I have to confess that the details are beyond me. I just enter the data and see what I have to pay at the end. It's not ideal, but it means I don't have to spent a week of my life filling out a web form. 
For those who say "get a gestor to do it", the work comes from compiling the data you need to give to the gestor. Entering it is quick. Also, good luck finding a gestor who understands anything about trading for a living. When they inevitably misinterpret the relevant law they will refuse to take responsibility for the fines.


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## mrypg9 (Apr 26, 2008)

Turtles said:


> The SIPP gains are not taxable until you start making withdrawals. Then they are taxed as income for that year, although there are some complex rules that permit lower taxation of income from annuities.
> I would recommend developing a strategy that is more buy and hold than day trading, otherwise you will be filling out a page of the tax return for each transaction. You do get allowances applied to capital gains and investment income, but I have to confess that the details are beyond me. I just enter the data and see what I have to pay at the end. It's not ideal, but it means I don't have to spent a week of my life filling out a web form.
> For those who say "get a gestor to do it", the work comes from compiling the data you need to give to the gestor. Entering it is quick. Also, good luck finding a gestor who understands anything about trading for a living. When they inevitably misinterpret the relevant law they will refuse to take responsibility for the fines.


No way would I use a gestor for such financial matters. Gestores don’t have the professional qualifications or standing of accountants or lawyers. I’m sure some are competent enough in less complicated affairs but the majority are in effect knowledgeable ‘fixers’.


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## snikpoh (Nov 19, 2007)

Turtles said:


> The SIPP gains are not taxable until you start making withdrawals.


Are you sure about that? Maybe it's specific to SIPPs.
Bonds only work that way if it is held in a 'Spanish wrapper'.


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## mrypg9 (Apr 26, 2008)

snikpoh said:


> Are you sure about that? Maybe it's specific to SIPPs.
> Bonds only work that way if it is held in a 'Spanish wrapper'.


It is indeed held in a Spanish wrapper. I’ve never been sure what that means, only know it reduces my tax liability. Linked to Spanish Tax Compliance bonds, apparently.


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## mrypg9 (Apr 26, 2008)

As well as huge tax savings compared to non- compliant bonds there is no obligation to declare under Modelo 720.


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## Isobella (Oct 16, 2014)

IanWo said:


> I've moved from the UK to Spain and my only occupation now is investing and trading in stocks and cryptos.
> 
> I'm trying to find some basic information on what taxes I'll need to pay.
> 
> ...


There is lots of financial pages for expats on the web you would be better consulting. Most accountants would not be able to advise you correctly on trading. We do online trading but in UK. Wouldn't touch Cryptos as I (and many others) think they are a sort of ponzi scheme. We use an accountant recommended by a broker. Sometimes a financial advisor can be better but finding an honest one is a minefield.


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## Turtles (Jan 9, 2011)

SIPPS are pensions, so they are not taxed by Spain until you want to start taking out. 

I've just swiped the following from another site regarding Spanish compliant 'bonds' (They aren't bonds - perhaps they are called that because it sounds solid.)

"

Capital gains tax deferral and planning. As your compliant investment bond grows in value no annual tax is taken - it is deferred to the time you start withdrawing. This results in gross roll up benefits in the early years, adding value to the portfolio and realising a higher rate of compounding.
'Proportional tax relief'. When you come to take withdrawals from your Spanish investment bond the tax authority in Spain will see part of your withdrawal as your original income. For example - You invest £500,000, after some years it grows to £750,000 (two thirds original capital, one third growth). You withdraw £100,000. Only one third of this taxable so only £33,333 subject to tax."
While the site goes on to list a couple of other features (inheritance and reporting benefits), the above 'advantages' also apply to any stockmarket or bond investment held outside a bond wrapper. I appreciate that it is worth paying something to have your money managed if you are not a specialist, but the SCB is very unlikely to save you much tax and is an excellent place for the issuing company to hide scandalous levels of fees and opaque, underperforming investment strategies.


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## Isobella (Oct 16, 2014)

I appreciate that it is worth paying something to have your money managed if you are not a specialist, but the SCB is very unlikely to save you much tax and is an excellent place for the issuing company to hide scandalous levels of fees and opaque, underperforming investment strategies.

Exactly. When Mum died I found one "bond" she had was giving a dire return and being charged 6% for the privilege of it being managed.


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## far_wide (May 7, 2020)

Turtles said:


> SIPPS are pensions, so they are not taxed by Spain until you want to start taking out.
> 
> I've just swiped the following from another site regarding Spanish compliant 'bonds' (They aren't bonds - perhaps they are called that because it sounds solid.)
> 
> ...


Just to second this - I did some research as I smelt a rat re: these spanish compliant bonds. There's a reason they feature hugely on google when you look up Spanish investing, as they're very profitable to those who issue them. The hidden fees are horrendous, to the extent where it's better paying your own way.

What I'm personally less clear on at the moment is whether there is always tax to be paid on unrealised gains as well as anything you actually sell in the year. I have a horrible feeling that you do have to still. Can anyone confirm?


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## Turtles (Jan 9, 2011)

You pay tax IF you sell.


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## Turtles (Jan 9, 2011)

...assuming you aren't liable for wealth tax.


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## mrypg9 (Apr 26, 2008)

far_wide said:


> Just to second this - I did some research as I smelt a rat re: these spanish compliant bonds. There's a reason they feature hugely on google when you look up Spanish investing, as they're very profitable to those who issue them. The hidden fees are horrendous, to the extent where it's better paying your own way.
> 
> What I'm personally less clear on at the moment is whether there is always tax to be paid on unrealised gains as well as anything you actually sell in the year. I have a horrible feeling that you do have to still. Can anyone confirm?


Fees can be high, so you look for a good but not overpriced manager.

iIm very happy with mine.


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## mrypg9 (Apr 26, 2008)

I don’t look for investment advice from google or any other internet site. I wouldn’t take advice on any important matters from an internet site. Before leaving the Uk sixteen years ago we took advice from our long serving and much trusted company accountant. . My Spanish tax compliant wrapper has performed well over the years since we came to Spain in 2008. I don’t care what it’s called, bond or whatever and I have no interest in managing my own money. I have neither the inclination or the knowledge. Other things appeal more, like helping unwanted and abandoned dogs find new homes.

I’m extremely risk adverse so my portfolio was chosen accordingly. Even so, to get a yield of 7% post fees in a COVID year makes me content. Keep watching Netflix, folks....


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