Working offshore and the term offshore is used in private banking to describe banks and services located outside the country of residence of the client. For offshore accounts, funds are domiciled in a different country abroad and are regulated by the authorities of the holding country.
The so-called 183-day rule serves as a guideline for determining tax residency. In essence it states that if a person spends more than half of the year (183 days) in a single country, then this person will become a tax resident of that country. For example, British citizens working abroad do not need to pay UK tax on their earnings provided they are deemed to be non-resident in the year and that all duties are performed outside the UK.
We have arranged many mortgages for clients who are exempt from income tax liabilities, meaning they do not have tax declarations to support their stated earnings. These clients vary from oil rig workers (see case study) to clients living and working on yachts and cruise ships – usually clients not working on land.
You will need to pass the bank’s affordability criteria as you would if you lived onshore and, whilst you don’t have a tax declaration, as long as you can prove your income, we can help. You may be asked for 2 years’ of bank statements, 6 months’ of payslips and an employment contract.
One obstacle that may arise is the anti-money-laundry check, but as long as you can provide a valid proof of address this should not be a problem. We have plenty of experience in this field and will assist clients if there are any issues related to the banks anti-money-laundering procedures.
Exclusive mortgage conditions
With the volume of business we process in the Spain, we are able to negotiate the very best conditions with our banking partners; far better than those that may be available to our clients should they go to the banks directly. In fact, we have been achieving resident interest rates (for our non-resident clients) which is unheard of!
In terms of the amount that can be borrowed, some banks reduce the overall borrowing from 70% to 60% or even 50% due to clients not having tax declarations. However, for many clients, we have still managed to achieve the highest borrowing amounts possible through our contacts, with exclusive interest rates.
You will benefit significantly by using our service and this is especially important in Spain right now, following the introduction of the new mortgage legislation whereby some banks are no longer offering certain fixed rate products to clients earning in currencies other than Euros. Additionally, for significant investments, a mortgage may help offset a wealth tax liability.
Mortgage process when working offshore
Once the mortgage is approved, the process remains very local to where your new property is located. We have local representatives who know the areas inside out; we also work with local lawyers and valuation companies (all approved by the Bank of Spain) to ensure our clients receive the very best service all the way through to completion. On completion day, a representative of the local bank branch will sign the mortgage on behalf of the bank and our clients can continue to manage their everyday banking requirements locally thereafter or online.
We look forward to assisting you throughout the entire process, from start to finish, so that you can purchase your new property in Spain.