The changes that Brexit brought to the ownership and status the English have in Spain.

In this article, we will address one of the issues that most affects English homeowners in Spain after Brexit. As we pointed out in our previous article, on January 1, 2021 the UK officially left the EU. This release involves a series of legal changes that you should be aware of if you own property in Spain after Brexit.

However, it should be noted that the process of buying a property and the rights of the owners do not change. Property rights are not tied to the state of residence.

All property owners in Spain after Brexit have the same rights and obligations. This is independent of the provenance.

So, what are the tax changes you need to know if you own a property in Spain after Brexit?

Although from a real estate perspective there is no change in the taxation of non-residents in the EU, there have been changes that affect English homeowners in Spain after Brexit, in terms of concerns the type of income tax levy, for those non-EU residents who have a rental property.

Being a resident of a non-EU country, the tax rate has increased from 19% on net income, payable to 24% on the total amount of rent on your income statement. This happened after the previous tax rate of 19% expired. It all happened when the transition period ended on December 31, 2020.

That is, the tax rate is increased from 19% to 24% and the deduction for expenses such as ICI, repairs, community expenses, interest, etc., is not authorized. Indeed, Spain, along with other EU countries, distinguishes between nations belonging to the European Economic Area and nations that do not. To better understand this point we will take a simplified example.

Before Brexit, income of € 1,000 per week was generated for six months in the holiday season, resulting in gross income of € 24,000 per year. If there had been expenditure of € 14,000, without taking into account the rebates, a tax bill of € 1,900 would have been paid.

On the other hand, after Brexit, with the same income, if you own property in Spain, the tax bill rises to € 5,760, or three times more.

How long can you stay in your Spanish property?

This is one of the changes that Brexit has brought to homeowners in Spain. Since January 1, 2021, the rules regarding the length of your stay in Spain have changed. You cannot be there for more than 90 consecutive days in a 180-day period.

Therefore, you can spend up to 90 days in Spain and then you have to leave the country. Then, you will not be able to return to the Schengen area until 180 days have passed since your date of entry into Spain. This also applies to any other place in the Schengen area.

Keep in mind that the 90 days start as soon as you arrive at a location in the Schengen area. This means that if you travel to Spain via France, for example, the time you spend in the latter country counts towards the 90 days count.

If you want to stay longer, you just won’t be able to. However, you can break the 90-day period into smaller parts. An example would be to spend two periods of 45 days each in Spain.

The government could introduce new legislation in favour of British owners. An example would be allowing them to spend more time in the country. However, the government has not announced any new rules.

What if you were an official resident and owner of real estate in Spain after Brexit?

If you have a Spanish residence permit (called a Foreign Identity Card / TIE), your status is governed by the exit agreement established between the UK and the EU. This means that your rights in Spain and the rest of the EU do not change after Brexit.

The Spanish residence permit is an identity card currently issued to non-European Spanish residents. The card includes UK residents. However, it should be noted that the card issued to Britons is slightly different from that issued to other third country nationals.

The British therefore have an easier residence path than residents of other countries outside the EU. British citizens who had a residence permit prior to January 1, 2021, will retain their rights to stay, work, study and have social security. Of course, as long as you were residing in Spain before that date.

For Britons who had not acquired a residence permit before the effective date of Brexit, the rights will be those established by the general immigration regime.

Although a visa is not required for short trips, a register of visitors from non-EU visa-exempt countries is being introduced, for longer stays you must apply for a visa if you want to stay more than 90 days in a 180-month period in Spain. Several visa options are available. But, almost all of them are very difficult to obtain as a non-EU citizen.

Xerxes Tax and Law
Tel: 0034 968 006 087 or 0034 868 283 993