In recent years, Spain has tightened its tax regulations concerning the ownership of foreign assets, especially those held in jurisdictions designated as non-cooperatuive “fiscal paradises” (tax havens). Among these, the Channel Islands of Jersey and Guernsey, as well as the Isle of Man and Gibraltar, are specifically listed in Spanish law. As such, Spanish tax residents with financial interests in these jurisdictions are subject to specific tax obligations — particularly regarding capital gains taxation on an annual basis.
This article outlines the legal framework, the implications for taxpayers, and the steps individuals should take if they currently hold or are considering holding assets in these locations.
What Does Spanish Law Say About Assets in Tax Havens?
Under Spanish General Tax Law (Ley General Tributaria – LGT) and complementary legislation such as the Personal Income Tax Law (Ley del Impuesto sobre la Renta de las Personas Físicas – LIRPF), Spain imposes strict reporting and taxation requirements on residents holding assets abroad. In particular:
Royal Decree 1080/1991, which defines the list of countries and territories considered tax havens, this includes the Channel Islands, the Isle of Man, Gibratar and Britsh Virgin Isles amongst others. You can check the full list here.
According to Article 95 bis of the LGT and Articles 14 and 46 of the LIRPF, assets located in tax havens are subject to annual capital gains taxation, regardless of whether the asset was actually sold or otherwise realized.
This means that Spanish tax residents must annually declare and pay tax on the notional capital gain — the increase in value between the original purchase price of the asset and its market value at the end of the tax year.
Who Is Affected?
This legal framework affects:
Spanish tax residents, including expatriates and foreign nationals who spend more than 183 days per calendar year in Spain or whose centre of economic interests is in Spain.
Individuals planning to move to Spain, who may already hold offshore savings or investment accounts in the Channel Islands or similar jurisdictions.
Heirs and beneficiaries of such assets who become tax residents of Spain.
These regulations are particularly relevant for wealthy British individuals, many of whom maintain offshore accounts in Jersey, Guernsey, or the Isle of Man as part of estate planning or wealth management strategies.
Required Reporting: Modelo 720
When taking up residency in Spain, new Spanish residents must file the Modelo 720 (Informative Declaration of Assets Abroad) if they hold:
Bank accounts, securities, or insurance policies abroad valued at over €50,000.
Real estate or other types of assets located outside Spain.
This means that anyone who moves to Spain who has assets in tax havens is obliged by law to declare them.
What Should You Do If You Hold Assets in Tax Havens?
1. Seek Professional Advice Before Establishing Residency
If you’re planning to move to Spain and hold assets in jurisdictions like Jersey, Guernsey, or the Isle of Man, consult with a Spanish tax advisor before establishing residency. It may be advisable to restructure or relocate your holdings in advance.
2. Obtain Accurate Valuations
To comply with the annual capital gains tax requirement, you’ll need to provide accurate end-of-year valuations of all relevant assets. This can be complex, particularly for investments held through trusts or complex vehicles.
3. Ensure Compliance with Modelo 720
Timely and accurate submission of the Modelo 720 is essential. Even if assets generate no income, they still must be reported if thresholds are met.
4. Regularly Review Your Financial Structure
Offshore arrangements that once provided tax advantages may now result in higher tax burdens under Spanish law. A review of trust structures, company holdings, and offshore portfolios is strongly recommended.
5. Consider Voluntary Disclosure
If you have not previously declared these assets or are unsure of your compliance, voluntary disclosure — before any administrative investigation — can mitigate penalties.
Final Thoughts
The Spanish tax system is increasingly aligned with international transparency standards. Holding assets in tax havens such as Jersey, Guernsey, and the Isle of Man — while legal — comes with heightened scrutiny and tax obligations for Spanish residents. With the annual taxation of unrealised capital gains on such assets, the cost of non-compliance can be substantial.
At Legal Financial Tax, we specialize in advising individuals and families on international tax planning, wealth structuring, and cross-border compliance. Whether you are already a resident of Spain or planning a move, our legal and financial experts can help ensure you are fully compliant — and tax-efficient.
Contact us to book a confidential consultation.