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How Brexit may affect you buying a Spanish Property

How Brexit may affect you buying a Spanish Property

We are approaching the end of the transition period and from the 1st of January 2021, the UK will be considered a third-party country. There are still lots of uncertainties as we are currently waiting as to whether a deal between UK and EU can be achieved before the end of the year.

Many people are calling us to ask whether they should continue with their Spanish purchase, or whether their dream of buying a property in Spain from 1st January 2021 will be affected. Their intention is not to become a Spanish resident but just to spend period of time in Spain on their holiday. That is why, we have decided to write a brief article with some information which we hope will be helpful.

In a nutshell, there is no reason why your right of buying a property in Spain should be affected by BREXIT. You can still buy a holiday home in Spain now or after 1st January 2021.

There are no restrictions under Spanish law for a non-resident to buy a property in Spain. The restrictions you are likely to encounter may be limited to the length of time you may be allowed to stay in Spain legally. If you are British citizen, as a resident of a non-Schengen country, you will only be permitted to spend 90 days in Spain during any 180-day period without a visa, to enjoy your holiday home. If you wish to stay longer, you will need to consider the appropriate visas you may need.

Please note that visits to Schengen countries within the previous 180 days before you travel to Spain, would count towards the 90-day limit.

For your information, the Schengen area consists of 26 European countries (of which 22 are EU states): Belgium, Czech Republic, Denmark, Germany, Estonia, Greece, Spain, France, Italy, Latvia, Lithuania, Luxembourg, Hungary, Malta, Netherlands, Austria, Poland, Portugal, Slovenia, Slovakia, Finland and Sweden, along with Iceland, Liechtenstein, Norway and Switzerland.

Therefore, if you wish to stay longer than the above period in Spain, you will need to meet the entry requirements and most likely applying for a visa and/work permit. If you have a visa/or work permit, your stay will not count towards the 90-day limit.

It is likely that you will be asked for some information at the border control in Spain, such as your date of return, to show that you have sufficient funds for your stay and also to use the separate lane at the airports when queuing. You may also get your passport stamped on entry and exit.

Also, from 1st January 2021, you need to make sure that you have at least 6 months left on your passport to travel to Spain, so make sure your passport is valid before you book your trip. You need to make sure you have good travel insurance and you may also need to obtain your international driving permit.

But apart from the above, nothing really should affect your right of buying the property or spending short periods of time in your holiday home.

However, an area which is likely to be affected is Spanish tax. If you have a holiday home in Spain and you rent it out when you are not there, it is likely that you will need to pay higher taxes in Spain. This is because EU citizens currently enjoy the same benefits as Spanish nationals, i.e., reductions or lower tariffs, however they are not applicable for citizens of a third country. When you rented out your Spanish holiday home in the past, you would have submitted tax returns and paid Spanish taxes on the rental income. For the period from 1st January 2021, the rental income will not be taxed at the usual 19% you are accustomed to, but it is likely to increase to around 24% as UK will be considered a third country.

UK has, however, a double tax treaty with Spain. Under the terms of this treaty, you would have to declare and pay Spanish taxes on the Spanish property rental income. Then, when completing your UK tax return, you may still need to show the Spanish property rental income, but you may be able to deduct the Spanish tax you paid against any liability you may have. Please make sure you get tax advice in relation to both your UK and Spanish taxes.

In summary, even if there is a no deal Brexit, there is no reason why you should not continue with your dream of having a Spanish property to spend your holidays, as long as you do not exceed the period of time you can legally stay in Spain.

If you are considering buying a property in Spain or you are concerned about potential issues of Brexit in your particular case, please contact our Spanish and English-speaking dual qualified solicitors, Carmen who will be able to assist.