x
By using this website, you agree to our use of cookies to enhance your experience.

TODAY'S OTHER NEWS

Own a home in Spain? What will Brexit mean for you?

After a few weeks of being top of the news agenda again, Brexit has been relegated to second fiddle thanks to the announcements of new Covid lockdowns in the UK and tightening restrictions throughout Europe.

However, there are still many question marks surrounding the fallout from Brexit – in particular, what it means for people who own property in the EU.

While there’s been plenty of debate about how Brexit will affect Britons’ ability to go on holiday within the EU from January 2021 onwards, what happens to those who own property there?

Advertisement

In response to a wide range of queries from anxious British owners of property in Spain, the experts at CostaLuz Lawyers have shared their insights into what Brexit will and won’t affect, based on what we know so far.

“We’ve been responding to plenty of queries about residency but also about property ownership in Spain and how that is affected,” Keith Rule from CostaLuz Lawyers said. “We wanted to share some detail about what the future holds in order to allay property owners’ concerns – and those of anyone looking to buy property in Spain in 2021 as well.”

The Q&A is reproduced below.

Will the property purchase process change as a result of Brexit?

No. Britons who buy property in Spain will still have to follow the same purchase process.

I own property in Spain – will Brexit affect my rights as a homeowner?

No, it won’t. Property rights are never linked to residency status. All owners of property in Spain have the same rights and obligations, regardless of where they are from.

Are there any tax implications?

There aren’t any tax implications in relation to property ownership. However, the rate of non-resident income tax that British nationals have to pay increased from 19% to 24% from January 1 2021. This is because Spain, along with other EU countries, distinguishes between EEA and non-EEA nationals.

How long can I stay in my Spanish property after Brexit?

From January 1 2021, rules regarding the length of your stay in Spain have changed. You are no longer able to stay for more than 90 days at a time in a 180-day period.

Note that the 90 days starts as soon as you enter the Schengen Area. This means that if you travel to Spain via France, for example, the time you spend in France counts towards your tally of 90 days.

What if I want to stay for longer – can I join two periods of 90 days?

No. At present you can only spend up to 90 days in Spain, then you must leave the country. You will then not be able to return to the Schengen Area until 180 days have passed since your date of entry into Spain (or elsewhere in the Schengen Area).

You can, however, divide the 90-day period into smaller chunks, for example by spending two periods of 45 days each in Spain.

Does the 90-day rule apply even if I own property in Spain?

Yes, it does. Spain may, of course, introduce new legislation to favour British property owners and allow them to spend longer periods of time in the country. However, at present, the government has not announced any new rules.

Will Brexit affect my rights as a homeowner in Spain?

No. The UK’s decision to leave the EU does not affect homeownership rights in Spain. These will continue to be the same as they were prior to Brexit.

Will my NIE change when the UK leaves the EU?

No. Your NIE (foreigner’s identification number) is valid throughout your lifetime and does not change.

What if I am officially resident?

If you have a Spanish residence permit (known as the Tarjeta de Identidad Extranjero/TIE), your status falls under the Withdrawal Agreement set up between the UK and EU. This means your rights in Spain and the rest of the EU do not change after Brexit.

Note that, on 4 July 2020, the Spanish authorities introduced a new residency card for British nationals in Spain. Known as the TIE (tarjeta de identidad de extranjero), the card expressly states that the holder is a beneficiary of the Withdrawal Agreement between the UK and the EU. It also confirms the holder’s right to live in Spain.

“There is bound to be a period of adjustment following January 1 2021 for Britons who own property in Spain, particularly for those impacted by the 90-day rule. It’s important for property owners to stay abreast of any further developments over the course of 2021 (and beyond) to ensure that they are fully aware of their rights and obligations,” Keith Rule added.

Brexit tax hammer blow for Spanish holiday home owners?

Elsewhere, leading tax advisory firm Blick Rothenberg has warned that UK owners of Spanish holiday homes face significantly higher tax bills following Brexit. 

Robert Pullen, tax partner at the firm, explained: “From 1 January 2021, UK based owners of Spanish real estate will suffer a 24% tax rate on income, after the previous 19% tax rate expired when the transition period ended on December 31. This is a swingeing increase of over a quarter, a direct result of the Brexit vote being implemented, and the UK being seen as a non-EU country.”

Pullen added: “In addition to the higher tax rate, the Spanish tax authorities will no longer permit any expenses to be deducted, meaning the gross income will be taxed – this could be a huge increase, disproportionate to any real profit made. To take a simplified example, if income of €1,000 per week was generated for six months over the holiday season, that’s gross income of €24,000 per year. If expenses of €14,000 were incurred, and ignoring any allowances, a tax bill of €1,900 would have been payable before Brexit. After Brexit, that jumps to €5,760 – three times as much."

He concluded: "Whether this also has an effect on the local property market, factoring in the fluctuating GBP-EUR exchange rate, remains uncertain. There will be many unexpected tax implications of Brexit – this is just one.” 

Gibraltar issue resolved at the last

One potentially divisive issue has been solved – in principle, at least, providing clarity to all sides – as a result of a last-minute deal between the UK and Spain allowing for free movement between Gibraltar (a British overseas territory) and much of the EU.

The agreement – confirmed just hours before Gibraltar, famed for its monkeys, rock and odd ‘Britain in the sun’ vibe, was set to become the only frontier marked by a hard Brexit – was hailed by the UK and Spain.  

On New Year’s Eve, when the agreement in principle was announced, Spain’s foreign minister Arancha González Laya said: “Today is a day for hope. In the long history of our relations with the UK, related to Gibraltar, today we’re facing a turning point.”

As part of the deal, Gibraltar - situated on the southern tip of the Iberian peninsula - will be able to join EU programmes and policies such as Schengen with Spain acting as a guarantor, González Laya told reporters.

She added: “Schengen will be applied to Gibraltar, with Spain assuming responsibility as a member state. This will allow for the abolishment of controls between Spain and Gibraltar.”

As a result, the EU’s newest external border will be found at Gibraltar’s airport and port, with checks undertaken by the EU’s Frontex border agency. The arrangement will be in play for an initial four-year period.

González Laya, when questioned over whether the arrangement would include the presence of Spanish security forces in Gibraltar – a major sticking point in the negotiations up till the end - said the technical details would be published in 2021.

Brussels will now receive the agreement, where the European Commission will enter into negotiations with Westminster to turn it into a treaty. González Laya estimated the process would take approximately six months. Until that point, she insisted Spain would work to ensure that mobility at the border would be ‘as fluid as possible’.

Boris Johnson also hailed the deal. “I wholeheartedly welcome today’s political agreement between the UK and Spain on Gibraltar’s future relationship with the EU,” he said in a tweet. “The UK has always been, and will remain, totally committed to the protection of the interests of Gibraltar and its British sovereignty.”

Pedro Sánchez, Spain’s prime minister, praised the deal as marking the start of ‘a new era’ that would allow for ‘the removal of barriers’.

Poll: Do you understand the post-Brexit environment when it comes to owning property in Spain?

PLACE YOUR VOTE BELOW


icon

Please login to comment

MovePal MovePal MovePal
sign up