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The Spanish Lawyer Online

Spanish Equity Release Fiasco

Exposing Danske Bank, Rothschild, Nykredit, Sydbank and Others


Archive for September, 2011

The Equity Release Lie Exposed

September 11th, 2011

As we know, some of the “Equity Releasers” were utilizing the insurance wrapper to cajole otherwise debt-free property owners to release the largest possible chunk of their wealth and give it to irresponsible banks so that they could mitigate the taxes (Inheritance and Wealth) and with clever “banking”, get a monthly salary, etc. Rothschild, Danske Bank, Landsbanki and Nordea, among others, used the Unit-Linked/Capital Assurance to tell the tale that those funds would be under the radar of the Spanish taxman, as Nordea put it, “Keeping it in the family – efficient tax planning”. But, since as early as 1999, the Spanish Tax Office had already plans for these schemes…when specifically stating that Inheritance Tax would apply in full, by repeating insistently, literally, that:


“ where policy holder and beneficiary are different, the amounts derived from the insurance will be subject to IHT in Spain”


I would also throw in article 18 of the Spanish Inheritance Tax 1999 Regulation which states that, in the event of non-residents for tax purposes (referring to the inheritors), the amounts derived from life insurance contracts will be taxed in Spain where the contracts were signed with Spanish insurance companies or signed in Spain with foreign insurance companies that operated in Spain.

Are these schemes therefore not a deliberate tax-defrauding deception designed to release precious equity that, thereafter and in the best of cases, got lost due to irresponsible management and in the worst, misappropriated?


The following documents are binding enquiries (consultas vinculantes) answered by the tax office proving the above. Please note they are in Spanish:

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Seeking Spanish Prosecutor’s Opinion on Equity Release

September 1st, 2011

The Spanish Prosecution (Fiscalia) has appointed a Specialist Prosecutor for the protection and care of the elderly, named Fiscalía especialista en materia de protección y defensa de las personas mayores.

I’m sure many victims of the Equity Release will loath being tagged as elderly but the word “old” is used in this blog as a neutral descriptor, just meaning that a person has lived for so many years (some of us wish we actually live for so long!).

Having said this, old is here referred to a collectivity of people that, due to their age, were naturally worried about issues such as inheritance tax mitigation, having some disposable income and whilst trying to achieve this, not being kicked out of their homes to end up under some bridge in Estepona, Marbella, Altea or Calpe, to mention a few.

And so, one of the initial actions the Equity Release Victims Association will be carrying out is to report to the named Prosecution Service those banks that indulged in the illegal practice of sending the elderly to live under bridges, which is what could happen soon to a few and potentially, to hundreds, so that they fully investigate how these entities could have ever offered this product, in Spain.