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I'm Spanish but I work and live in the UK, therefore my the latter is my tax residence.

I want to start investing from my home country to avoid problems if I leave the UK (frozen accounts and the like). I guess that I would need to declare my (hypothetical) gains and pay taxes for them in the UK, right?

If so, how can I link these gains to an UK ISA to get the corresponding tax relief?

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You can't. ISAs can only be provided by authorized ISA managers, and they are in the UK. (Official list here https://www.gov.uk/government/publications/list-of-authorised-isa-managers/isas-authorised-managers .) You will not find one in Spain, and can't you just magic up your own ISA wrapper around some Spanish assets. (Also note that attempting to become an authorized manager yourself is not feasible - see exclusions in https://www.gov.uk/guidance/apply-to-be-an-isa-manager !)

I wouldn't be too worried about problems if you open a UK ISA and then leave the country; it's a common enough situation. Official advice at https://www.gov.uk/individual-savings-accounts/if-you-move-abroad

An alternative to investing via an ISA in the UK would indeed be to use a Spanish broker or bank etc instead. But you would likely then have the hassle of declaring any gains and income to HMRC via (probably) a self-assessment's foreign pages, while those gains and income would be tax-free in an ISA.

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  • I have asked to Vanguard directly and they have told me that they would freeze my account if I leave the UK, but I'm not 100% sure since I can't find a Vanguard document that provides the details about what exactly is a frozen account. I only have vague explanations from their customer support. – Martel May 1 at 22:49
  • I'd interpret "frozen ISA" as meaning you can't add to it. I'd be very surprised if they stopped you withdrawing your own money (e.g I believe there are plenty of folks retired abroad and living off of UK ISA savings - and having to pay tax on them because their country doesn't recognize the ISA wrapper - but the point is they can still access the funds). More info at thisismoney.co.uk/money/expat/article-6618459/… . In any case, wouldn't you simply withdraw the funds before you left the UK, at least if you were pretty sure you weren't coming back? – timday May 2 at 9:04
  • Yes and no, the short term risk of the investment I have in mind is astonishing high, yet the long term one is not. Therefore, it might happen that, when I leave, the investment NAV is below my original investment, so I need to wait until it recovers. – Martel May 2 at 10:56
  • That sounds like a fallacy, if the asset is liquid with minimal spread on trading. For example you buy some index tracker for £20K today, 3 years from now it's worth £10K as you sell it for cash, withdraw the funds from the ISA and leave the country and reinvest the £10K in the same index tracking fund but via a Spanish broker. Then a few decades later it's (hopefully) worth lots more than the initial investment. Briefly withdrawing the funds to cash to move jurisdiction shouldn't make much difference and whether the fund was above or below initial value when you sell is irrelevant. – timday May 2 at 13:36
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    you are right, I didn't think it that way. Probably I would incur in expenses related to opening new accounts and currency exchange, but those are probably acceptable if you are moving abroad to get a better job or similar. Thanks – Martel May 2 at 14:47

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