Lawyer Raymond Nesbitt explains eight key points British nationals should be mindful of if they plan to remain in Spain in a post-Brexit world.
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By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21st of February 2019
I never imagined a day would come where I’d be forced to write such a sad article as this one. It pains me greatly to see the United Kingdom leave the Union. I had already reviewed the huge negative impact this event will bring to thousands of expatriates in my article Brexit and You.
In this article I will simply assume it as a fait accompli and try to explain as simply as I can muster how you should best prepare for this once-in-a-lifetime (unfortunate) occurrence. This article is aimed at helping those who will remain in Spanish territory after this fateful event.
Some of the bullet points listed below can only be accomplished before the UK breaks away from the Union, so it is strongly advised you plan ahead to ensure you secure your rights and entitlements before this takes place (29th of March 2019).
The idea is to keep it simple and write these eight tips as a check list for ease of comprehension. If you are interested in delving further, just follow the links supplied in each point.
- Attain a NIE number.
A NIE number is a tax identification number for foreigners which identifies you before the Spanish Tax Office and allows you to file and pay taxes in Spain. The reason on why it is needed, is explained in-depth in our article: NIE Number Explained – 8th May 2017
- Apply for residency. Join the Registry for citizens members of the Union
If you are going to spend over 3 consecutive months in Spain, it is mandatory you enrol. If you are a EU national (i.e. British) you must attain a Certificado de Registro de Ciudadano de la Unión. This is the equivalent to the former residencia card. So why is all this hassle relevant you may be asking yourself? Because in a post-Brexit world, if you did not register yourself as a member of the Union before the UK breaks away, you will be stripped off a series of rights and entitlements to which you would otherwise have been entitled. You may also be regarded as an illegal alien in EU territory by the Authorities, which may even lead to your deportation to your country of origin. This is one of the points I mentioned in the article’s introduction that is time-gated. It is of crucial importance you secure your rights as a EU national before Brexit is triggered and you are no longer regarded as a EU national. You will no longer be able to join this registry post-Brexit, as this fast-track legal procedure is reserved only to EU nationals. Take heed, this is the most important advice we can give you by a long shot. You can apply for Spanish residency through us: Spanish residency.
- Enrol in your town hall census
In Spanish, this is known as empadronarse. By law, if you spend more than 183 days in a calendar year in Spain you should register in your town hall. This allows your town hall extra money from the central government to finance public services such as ambulances and firemen. This administrative act is also required for a number of admin procedures which will demand you produce a certificate of enrolment (Certificado de Empadronamiento).
- Swap your UK driving licence for a Spanish one
If you are a Spanish resident, you must change your UK driving licence for a Spanish one. You only have 2 years to do this without a penalty. I had to do this myself when I moved back from the UK and it is a very straightforward procedure. Within 2 months you will be posted a new EU/Spanish driving licence. Needless to say, you can’t drive around in Spain with a UK-plated car if you are a Spanish resident.
- Submit your resident tax returns
- IRPF: Spanish residents are taxed on their worldwide income and assets. You will be required to file once a year an income tax return. If you work in Spain, lease or derive any income in Spain (or abroad) you need to submit IRPF. More on this here: Spanish Resident Income Tax (IRPF).
- Wealth tax (Patrimonio): This tax is only paid by affluent taxpayers; most people do not have to pay it. As a Spanish resident you have a personal tax allowance of €700,000 per partner (in Andalusia). So, a couple, would have a combined tax allowance of €1,400,000. In addition, residents have a further allowance of €300,000 on their main home, per taxpayer. So, for a married resident couple, the combined tax-free allowance would be €2,000,000. If your net wealth exceeds this amount, then you must file once a year Patrimonio. More information in our tax article: Spanish Wealth Tax (Patrimonio) – 8th November 2011.
- Modelo 720: All residents in Spain with assets over €50,000 abroad, must report it on filing this tax form. There is no tax to be paid on completing this tax return. Its sole purpose is to act as means of control on assets held abroad by Spanish residents and nationals. This tax form has proven to be most unpopular and it is single-handedly responsible for a mass exodus of British (and other foreign nationals) in the hundreds of thousands. Its disproportionate fines are currently being challenged in Brussels. We explain it in detail in our tax article: Tax form 720 – 20th April 2018.
- Apply for an EU Social Security card
It is strongly advised you apply for one to have unfettered access to healthcare. More on this matter in our article: How to Apply for Healthcare in Spain – 8th November 2014
- Apply for permanent residency
If you are able to demonstrate a continued legal residence in Spain for a period of 5 years, you may now apply for permanent residency, which grants you unconditional residency without any restrictions.
- Apply for Spanish nationality (optional)
After 10 years of continued and legal residency in Spain, you may opt for a Spanish nationality.
This is a very serious matter you should carefully consider. Unlike the United Kingdom, where we can hold dual nationality with other countries, Spain is very restrictive. It only allows you to hold dual nationality with a limited number of countries with which it has strong historic liaisons (mostly Ibero-American, Philippines, Portugal, Andorra and Equatorial Guinea). Meaning that if you decide to take up Spanish citizenship you will be forced to relinquish your nationality of origin by the Authorities. And there is no turning back. I stress this is by no means necessary and it is purely optional. Your EU rights will be safeguarded even if you remain British till your last breath.
Did you know?
Brushing aside the fact that if you remain more than 3 months in Spain, you must apply by law for residency, the fact is that becoming resident in Spain offers some great (tax) advantages.
- From a taxation point of view: Tax advantages on becoming resident in Spain – 8th March 2018
- From a healthcare point of view: How to Apply for Healthcare in Spain – 8th November 2014
Did you know that if you become resident, for example in the region of Andalusia, there is no inheritance tax to pay? As in nil.
Did you know that if you are resident, there is a national tax allowance of 95% in inheritance tax on the main home for the surviving spouse and children? Several autonomous regions improve on this increasing it to 99.99%
Did you know that EU-residents can knock off 70%, or more, from their tax bill on renting out as they qualify for lenient landlord tax relief?
Did you know that as an EU-resident you are taxed at the lower tax rate of 19%, as opposed to the 24% applied to the rest of the world? That’s 21% less tax if you do the Maths.
Did you know that on selling your property you will not be withheld 3% of the sales proceeds by the Spanish Tax Authorities, unlike non-residents?
Did you know that under 65-year-old residents can apply for a rollover relief on their capital gains tax liability on selling up? Meaning no CGT is paid.
Did you know that over 65-year-olds may benefit from absolute relief on selling their main homes? Meaning no CGT is paid.
These are just a small sample of the many benefits that await you on taking up residency in Spain.
Seek tailored legal advice on your particular circumstances, read disclaimer below.
“A house divided against itself cannot stand.” – Abraham Lincoln
Abraham Lincoln (1809 – 1865). From an impoverished humble background of corn farmers, this self-taught American lawyer, strategist and politician would rise to serve as the 16th US President. He resolutely ensured a pro-Union victory, strengthened the federal government, modernized the economy, brought about the emancipation of slaves and preserved the Union. During his tenure, he held presidential elections in 1864 to be re-elected, amid a devastating Civil War that threatened to tear his country apart and engulf it in a sea of darkness; yet he gave example in the face of adversity, holding steadfast to his ideals, steering the ship safely into port and acting as a beacon of Democracy which light shone with a fierce intensity the likes of which the world has never witnessed, before or since. Never again would a country hold presidential elections amidst a bloody civil war in what constitutes one of History’s greatest democratic feats to date. But most importantly, he went into great lengths to ensure the festering wounds left open during the fratricidal Civil War were healed; generously reconciling both sides in equal terms, as one nation, indivisible, under God. It is for this very reason, that more than two centuries on, he is widely regarded as the greatest American President to grace the White House; likely the greatest American of all time, towering above the rest. Through his courage and sacrifice, which ultimately would claim his own life, he laid the groundwork of what was to become the greatest and most powerful nation on earth over the next two centuries. A true statesman that would always put ahead of any consideration the best interests of his people, by tearing down divisive walls and fostering at every opportunity union.
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Article also published at Larraín Nesbitt Lawyers: 8 tips for Brexit
Tax & legal services available from Larraín Nesbitt Lawyers:
- Spanish residency
- Conveyancing – Buying
- Conveyancing – Selling
- NIE Number (Tax Identification Number)
- Will writing service (Spanish will)
- Wealth Tax
- Tax form 720
- Holiday Rental Accounting Service (HRAS)
- Spanish Resident Income Tax (IRPF)
- Spain: register your residency – UK Government
- Living in Spain – UK Government
- How to Apply for Healthcare in Spain – 8th November 2014
- Brexit and You – 21st February 2018
- Brexit and Spanish Residency – 21st September 2018
- How to apply for Spanish residency – 1st February 2019
- 8 tips for Brexit – 21st February 2019
Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No delusional secessionist politician was harmed on writing this article. Voluntas omnia vincit.
2.019 © Raymundo Larraín Nesbitt. All rights reserved.