By Leon Fernando Del Canto
From a tax point of view, British residents and businesses registered in the U.K. will experience very little change, as the double tax treaty between the U.K. and Spain will remain. The treaty—which is in place to ensure that British and Spanish residents are not taxed twice on the same income—covers income and capital gains both for individuals and corporations.
The Spanish nonresident tax (IRNR), wealth tax and inheritance tax obligations must be reconsidered in light of Brexit, so seeking expert tax and legal advice is recommended in each case.
Tax investigations of nonresidents are on the rise in Spain and this is not going to change. Of course, the “Beckham” rule, which allows a very favorable regimen to expats working in Spain, will continue, as will the “Golden Visa” scheme which offers residency permits to non-EU nationals in return for an investment of 500,000 euros or more in Spanish property.
On the other hand, some of the tax benefits applied to EU citizens by virtue of Spanish regional laws, for inheritance and gift tax purposes, were already extended to third countries in February 2018, when the Spanish Supreme Court ruled that tax residents in non-EU countries should be eligible for the tax benefits provided by the regional laws, just like individuals who are tax residents in Spain and in the EU. The Spanish government has created an informative page where different scenarios are outlined, depending on the type of deals that are executed during the Brexit process. The page can be accessed here.
We can conclude that there will be changes in the areas of immigration, customs, consumer law and other areas mentioned above, but the effects of those changes remain to be seen and will depend on the negotiations between the U.K. and the EU. We should not underestimate the significance of negotiations between Spain and the U.K. when it comes to areas such as family law and immigration, due to how many residents from each country live in the other.
It is also worth mentioning that there are so many individuals with interests between Spain and the U.K., so some of us are doing what we can within our sphere of influence to ensure that Spain continues to be a country where Britons feel at home.
Leon Fernando Del Canto is an international tax barrister and founding partner of Del Canto Chambers in London. He is a member of the Honourable Society of Lincoln’s Inn, The Worshipful Company of Tax Advisers, the Association of Taxation Technicians and the Madrid Bar.
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