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What are the consequences of Brexit on the Non-Resident Tax, in the case of income obtained by individuals without a permanent establishment in Spain?

This tax affects income obtained in the Spanish territory by non-resident taxpayers, both individuals and entities (article 1 of Spanish Non-Resident Taxation Law). However, in this article we will just focus on individuals.

 

The following exemptions will no longer apply:

  • Interest and capital gains derived from movable property obtained by residents of another Member State of the European Union (EU) with certain exceptions.
  • Exemption for reinvestment in habitual residence for taxpayers of the EU, Iceland and Norway: the capital gains obtained by the transfer of the property that was their habitual residence in Spain may be excluded from tax, provided that the total amount obtained by the transfer is reinvested in the acquisition of a new habitual residence.

 

Taxable base (article 24.6 of Spanish Non-Resident Taxation Law) : Expenses as per article 24.6 will no longer be deductible. As per previously applicable article, taxpayers residing in another Member State of the European Union, individuals, could deduct expenses following requirements of the General Spanish Taxation Law. For example, in the case of property rentals located in Spain will from now on be taxed for the full amount of the rent without the possibility of deducting any expenses.

 

Tax rate (article 25 of Spanish Non-Resident Taxation Law): In relation to income taxed at the general tax rate, the general tax rate of 19% applied to EU residents will no longer be applicable and 24% will be the new applicable rate.

 

Option for EU residents to pay taxes as Spanish tax residents (article 46 of Spanish Non-Resident Taxation Law): It will no longer be applicable the special regime by which non-resident taxpayers, individuals, who prove that they are residents in another Member State of the European Union or in a Member State of the European Economic Area, and who have obtained income from work or any economic activities in Spain, could choose to pay taxes as a regular resident taxpayer under the General Spanish Taxation Law without losing their status as non-resident taxpayers.

GET YOUR RESIDENCY PERMIT IN SPAIN BEFORE BREXIT ! DO YOU WANT TO MOVE PERMANENTLY TO SPAIN?

 

As you know, all those UK citizens wanting to move permanently to Spain for the first time or all those living here without having a green residency card in force could apply for residency permit with virtually the same requirements as European citizens until the end of transition period.

 

The main difference since 6th July 2020 is based on the process, which has been split into 3 steps:

  1. You or your representative will submit all documents proving you comply with all requirements (mainly having full health coverage in Spain and being financially solvent to live here). This may take up to 3 months to be solved.

 

  1. Once your file is approved, you will need to go personally to the Foreign Office within a month and complete the process of identification (photograph, finger print and paying the administrative fee).

 

  1. The residency card will arrive within approx. another month and you will need to go and collect it in person.

 

It is quite important to proceed before the end of transition period, otherwise the EU requirements for UK citizens would no longer be valid and you would need to apply for residency with strict conditions for non-EU citizens.

 

If you would need any further information or assistance on our behalf, do not hesitate to let us know at www.andalucia-lawyers.com

 

EXCHANGE OF YOUR SPANISH RESIDENCY PERMIT BEFORE BREXIT

Following instructions from Spanish Foreigners Office, from 6th July and until the 31st December 2020 -providing there is no extension of the transition period-, all UK nationals willing to keep their condition as residents in Spain after Brexit could exchange their green residency permits for new ones called “TIE” (non-EU residency cards). For the moment it is just an option, but these non-EU residency cards could be compulsory after transition period as per information from the Foreigners Office.

 

You could be in any of these situations:

 

  • TEMPORARY RESIDENCY CARD
    • If you have legally lived in Spain less than 5 years – you can exchange it for the new residency permit that will be valid for 5 years.
    • If you have legally lived in Spain more than 5 years, but you do not have the permanent residency card – you can exchange it for the new residency permit that will be valid for 10 years.

 

  • PERMANENT RESIDENCY CARD
    • You must exchange your permanent residency card for the new residency permit that will be valid for 10 years.

 

The process is quite simple:

  1. Obtaining appointment at the Foreigners Office (Brexit)
  2. First visit: submitting the application.

This time you would need to bring a photograph and they will take your finger print.

You will need to pay a small administrative fee.

  1. Waiting for a couple of weeks until card is ready
  2. Second visit: collecting your new residency card

 

It is quite important to exchange your residency card before the end of transition period, otherwise the green card would no longer be valid and you would need to apply for residency with strict conditions for non-EU citizens.

 

If you would need any further information or assistance on our behalf, do not hesitate to let us know.at www.andalucia-lawyers.com