With March 29th 2018 marking one year exactly until the UK leaves the EU its in many peoples minds. Until all the negotiations are complete we won’t know exactly how UK citizens will be treated but we can look at the current set up for non- EU nationals.
Jonathan Eshkeri, Director of E&G Solicitors in Spain says:-
Brexit and British holiday home owners in Spain
So, looking at the “down side”, often a good place to start for the purposes of comparison, in the event of a total separation of the UK from the EU what exactly will be the position of Brits who own, or who want to own property in Spain with the intention only of holidaying there?
Frankly, there will be almost no change. It is extremely unlikely that a visa will be required to enter the country, and in any event any visa application would almost certainly be subject to a visa waiver programme similar to the ESTA programme in the USA. No-one holidaying needs more than three months in the country at a time; the purchase taxes and council tax will remain the same. The rights of property ownership will be unchanged, as will be purchase tax, stamp duty and VAT. On the ground, during one’s lifetime, there will be almost no noticeable difference.
You will still have a right to buy property in Spain after Brexit
The right to buy property in Spain is not restricted to EU citizens. Anyone who can pay the purchase price is able to purchase property in Spain. After Brexit this will not change. Many people from all corners of the world buy and own property across Spain.
Buying property in Spain after Brexit will not cost you any more money
The cost of buying a property in Spain is the same whether you are a Spanish national, a national of the UK, or a national of the USA or China. The costs of buying a property are not affected by your nationality. Broadly speaking, the costs of buying a property in Spain are comprised of the purchase tax, the Notary’s fee, the property registry fee and some small miscellaneous expenses. These are the same for anyone who buys a property in Spain and will not be affected by Brexit.
The effect that Brexit will have upon the Spanish property market and upon currency may affect the cost to you in real terms, but it has always been the case that the worldwide property market is subject to fluctuation.
You will still have the right to buy a property in Spain to rent it out after Brexit
In Spain your right to do what you wish with a property that you own is not affected by your nationality. If you wish to buy a property in Spain to rent out, whether short term or long term, then you will still be able to use the property for that purpose after Brexit, according to the rules applicable in each autonomous community.
What may change is the rate at which you pay tax upon the rental income that you earn in Spain. At present, for EU citizens, the rate at which rental income is taxed is 19%. After Brexit it may be the case that UK citizens are obliged to pay tax at the same rate as non EU citizens, which is currently 24%. It is important to note, however, that you may be able to set off the tax paid in Spain against your UK tax bill for the same income.
The biggest area for potential change comes in relation to inheritance tax. At the moment, as citizens of an EU Member State, UK nationals pay inheritance tax at the same rate as Spanish citizens. This has greatly reduced inheritance tax bills for many. It is possible that the situation in Spain may change after Brexit and so greater attention will need to be paid to estate planning if that is something that concerns you.