Spanish Equity Release Fiasco

Page 27 of the brochure Guide to Wealth and Tax Planning in Spain gives us some clues of extreme deceit. Not only it openly vindicates the evasion of Spanish taxes by elaborating on specific tax concepts, but this essay also contains suspicious omissions that, if known, would have made a potential subscriber of the product pull out.  The most crucial omission is contained a Spanish tax provision quoted on page 27, top right, which reads: 

“ non-residents tax payers are only liable on the basis of assets located in Spain (or rights acquired by virtue of inheritance or donation), or where the life insurance policy has been established through a Spanish insurance company.”

This quote is inspired on article 7 of the Spanish Inheritance and Gift Tax Act, which says the above but also, the following: “or where the life insurance has been established by foreign insurance entities operating in Spain”.

Which clearly leads us to conclude that Nordea consciously omitted a crucial bit of information that, if inserted, would have made the whole proposal of Equity Release fall by the wayside and thus, the brochure would have not existed. If all of those who signed with Nordea had been given the benefit of objective and transparent tax information, rather than deliberately manipulated, they would have not been saddled with these obnoxious products. Unfortunately, they were lied to.

Article 282 of the Spanish Penal Code stipulates: “manufacturers or traders that, when advertising products and services, make false or untrue statements about the same, capable of causing serious damage to customers, will serve a minimum of 6 and a maximum of 12 months imprisonment.”

 Documents

• Nordea-Brochure (PDF ~800 kb)

Antonio Flores Uncategorized Equity Release, Equity Release Victims Association, Inheritance tax Spain, Nordea, Nordea Bank

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?

Documents

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

• Equity-Release-DGT-V0068-99-de-30-junio-1999.-DGTrib (PDF ~25Kb)
• Equity-Release–Cons.DGT-242003-de-4-marzo-2003.DGTrib (PDF ~25Kb)
• Equity-Release-DGT-32001-de-26-febrero-2001 (PDF ~25Kb)
• Equity-Release-Cons.DGT-192003-de-5-febrero-2003.DGTrib (PDF ~25Kb)

admin Uncategorized Danske Bank, Danske Bank Capital Assurance, inheritance tax, Landsbanki, Nordea, Rothschild

It does not cease to surprise me how have Scandinavian banks taken a liking for English money. In this instance, we now find out that Nordea also roamed the Costa del Sol in search for the cherry-pick British unencumbered-property owners to wreak havoc in the finances of otherwise hard-working retirees.

In this instance, in respect of other Skandi banks and Rothschild, Nordea basically followed suit with the lies:

1. No inheritance tax for the children.
2. Monthly cash in the pocket of the subscriber to the miracle product.
3. Full protection granted to the property serving as collateral security.

But also:

1. Blatant contempt for the Spanish regulatory/supervisory bodies, the CNMV and the DGS (even though the latter gets mentioned as the venue to place a complaint), as this product was not registered with them (it appears they tried to register it with the FSA but were fobbed off). In turn, they chose to go regulated via the Luxembourg “Commissariat aux Assurances”, in the Grand Duchy of Luxembourg. They then say that the laws of the country of commitment (Spain) would be applicable, but also mentions that the national law where this person is resident would be applied in the first instance.
2. Blatant contempt for Financial, Civil and Consumer Protection legislation.
3. Unintelligible contracts.
4. Utter unsuitability of the product sold to the profile of the “victim”.

Interestingly, the second thing one reads when reading the paperwork supplied by in 2004 Nordea is a mention to excluded risks, “suicide“: is this foresight, or just an available option in view of the performance effectively achieved by the fantastic product?

Antonio Flores Uncategorized eq, Nordea