As we already know, on 1 January 2021, the UK officially left the EU. This exit implies a series of legal changes that you need to be aware of if you own a property in Spain after Brexit.
However, the process of buying property as well as the rights of property owners remain unchanged. Property rights are never linked to residency status.
All property owners in Spain after Brexit have the same rights and obligations. This is independent of where they come from.
What are the tax changes you need to be aware of if you own a property in Spain after Brexit?
Although from a real estate point of view there are no changes in taxes for non-EU residents, there have been changes that affect English property owners in Spain after Brexit, in relation to the income tax rate for non-EU residents who have a rental property.
Being a resident of a non-EU country, the tax rate went from 19% on the net yield to be taxed to 24% on the full amount of the rent in their income tax return. This happened after the previous tax rate of 19% expired. It all happened when the transition period ended on 31 December 2020.
In other words, the tax rate is increased from 19% to 24% and, in addition, the deduction of expenses such as IBI, repairs, community fees, interest, etc. is not allowed.
This is because Spain, along with other EU countries, distinguishes between nations belonging to the European Economic Area and nations not belonging to it.
To better understand this point we will take a simplified example.
Income of €1,000 per week was generated for six months during the holiday season, that is a gross income of €24,000 per year.
If you had incurred expenses of €14,000, and without taking into account allowances, you would have paid a tax bill of €1,900 before Brexit.
Therefore, if you own a property in Spain after Brexit that increases to €5,760, in other words, three times as much.
How long can you stay in your Spanish property?
This is one of the changes that Brexit has brought about for property owners in Spain. From 1 January 2021, the rules regarding the length of your stay in Spain have changed. You can no longer more than 90 days in a row in a 180-day period.
Therefore, you can spend up to 90 days in Spain and 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. This also applies to any other place in the Schengen area.
Note that the 90 days start as soon as you arrive in a Schengen area location. This means that if you travel to Spain via France, for example, the time you spend in France counts towards the 90-day count.
If you want to stay longer, you simply cannot stay longer. However, you can divide the 90-day period into smaller parts. An example would be spending two periods of 45 days each in Spain.
The government may introduce new legislation to favour British homeowners. An example would be to allow them to spend more time in the country. However, at the moment, the government has not announced any new rules.
What happens if you are an official resident and homeowner in Spain after Brexit?
If you have a Spanish residence permit (known as a foreigner’s identity card/TIE), your situation is governed by the exit agreement between the UK and the EU. This means that your rights in Spain and in the rest of the EU do not change after Brexit.
The Spanish residence permit is an identity card currently issued to non-EU residents in Spain. The card includes residents in the UK.
However, it should be noted that the card issued to British nationals is slightly different from the one issued to other third country nationals.
Therefore, British nationals have an easier path to residence than residents of other non-EU countries.
British nationals who were holders of a residence permit before 1 January 2021 will retain their rights of residence, work, study and social security, provided they were resident in Spain before that date.
Residence visa for investment or Golden Visa.
This is a residence visa that is issued to a non-EU citizen who has the intention of making a significant investment in the Spanish economy. The visa offers the holder and his/her family members residence in Spain and visa-free access to the Schengen area.
In most cases, the Spanish Golden Visa is issued to someone who purchases real estate.
However, they are also available to entrepreneurs who invest in a Spanish company, so they are also called Spanish Investor Visas.
Who can obtain a Golden Visa for Spain?
In order to obtain a Golden Visa for Spain, you must make one of the following investments:
– Acquire real estate in Spain for a minimum value of 500,000 euros. The property can be a single unit or several units, with an overall value of not less than 500,000 euros.
– Make an investment in Spanish public debt of at least EUR 2,000,000.
– Buy shares in a company or make a deposit in a Spanish bank of at least 1,000,000 euros.
– Invest in a new business that offers employment opportunities, contributes to scientific and/or technological innovation and has a relevant socio-economic impact in the area where the business will be developed.
Entrepreneurship visa
The entrepreneurial visa allows you to reside in Spain for a maximum period of two years, provided that you start up an innovative project that is of interest to the country’s economy.
In this sense, we are referring to a visa for non-residents who intend to start a business venture in EU territory (in our case in Spain) that benefits the general interest.
What do we mean by general interest?
Business projects need to fulfil a series of conditions in order to obtain this type of visa:
– Create employment at least in the long term.
– It must create good investment opportunities.
– High technological level
– Have patents.
Non-profit temporary residence
This is perhaps the easiest to obtain and the most attractive, especially among retired British people.
A visa for temporary non-profit residence is effectively issued to people who can demonstrate that they have sufficient funds to support themselves in Spain, without working or studying.
Instead, you have to show that, either through savings or monthly income from pensions or investments, you can support yourself independently while living in Spain
This means that you should be able to demonstrate an annual income of approximately €27,115 (£23,436) as an individual and €33,894 (£29,300) as a couple to qualify for this type of visa.
Am I entitled to free healthcare if I am a permanent resident?
British citizens who are pensioners and entitled to UK NHS healthcare can transfer their entitlement to free healthcare to Spain using the S1 form.
This procedure involves presenting your S1 form at the INSS (Instituto Nacional de la Seguridad Social) office in Spain. Prior to this, it is necessary to have applied for a non-profit residence visa at the Spanish Consulate General in London.
British citizens who have lost the right to health coverage in their country of origin and, therefore, cannot apply for S1, can access health care through private health insurance.
They can also access public health insurance in Andalusia through the special agreement.
If I am a non-resident in Spain, what happens to my healthcare?
Health care can be received due to the social security coordination protocol of the commercial agreement and the royal decree law 38/2020, so that non-residents can receive emergency medical treatment during their temporary stay.
All they need is a free UK Global Health Insurance Card (GHIC) or a current European Health Insurance Card (EHIC).
The EHIC is valid until 30 June 2021 or until it expires, if the date is later than 30 June 2021.
By now, you know a bit more about how Brexit affects English property owners.
There have been some of the changes to your rights and obligations that you need to be aware of if you own a property in Spain after Brexit.
If you have any further questions do not hesitate to contact us, at Meridional we will be happy to inform you.
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