Brexit and You

Raymundo LarraĆ­n Nesbitt, February, 19. 2018

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21st of February 2018

 

We have all listened to the embellished speeches, to the staunch defence of lofty ideals and as a result witnessed a splintered society consequence of the dissension sowed by irresponsible career politicians always eager to advance their own power even it is at the expense of a nation’s future. We are all too familiar with the political spiel, but how does Brexit really affect you, how does it affect your pocket?                                                            Image credit:  Theophilos Papadopoulos

This is something seldom spoken about. I will try to briefly summarise in this blog post the (short-term) impact of this landmark political decision from the Spanish perspective of non-resident British wishing to find a bolthole under the sun.

  • Income tax: Increased from 19% to 24%.
  • Inheritance tax: Lenient regional tax allowances will no longer be available; only national ones.
  • Inheritance tax: Local tax allowances will no longer be available.
  • Rentals: British residents will no longer qualify to benefit from generous landlord tax relief which reduce, on average, a rental income tax bill by a minimum of 40% (on average by 70%).
  • Capital gains tax: No rollover relief (under 65-year-olds) on reinvesting the sales proceeds in a new main home located in the United Kingdom.

 

Brexit has quantifiable adverse monetary effects for hundreds of thousands of expats.

It is my personal opinion that Brexit is an ill-conceived idea fruit of the unbridled arrogance of a single politician that took a gamble with all our children's future and lost miserably. It will greatly weaken the United Kingdom for generations to come and plays right into the hands of our nation's enemies that work tirelessly to weaken our resolve and undermine our institutions that secure peace and prosperity for us all.

With all its flaws, the European Union has brought peace and prosperity to Europe for three quarters of a century (backed unwaveringly by our US cousins). A Europe which historically is prone to be ravished by petty wars. Turning our back on this political feat leaves the door ajar to political instability, to in-bred nationalisms, which power-hungry men to the East will be only too eager to exploit. For the sake of our children's future, we should avoid this historic error.

Those who cannot remember the past are condemned to repeat it.” – George Santayana.

 

What the future holds

Leaving my crystal ball aside, as a Member State, the United Kingdom is compelled to negotiate in block with the European Union’s appointed chief Negotiator, Mr Michel Barnier. I’m sure general de Gaulle would feel somewhat vindicated by the poetic justice of a Frenchman in the role of having to slap a ‘non’ to the UK – repeatedly –. There is no hiding this fiasco will be the most expensive divorce settlement in recorded history, some 60 billion euros. Which goes on to explain why the pound is sitting at an all-time low.

That said, once it is a fait accompli next 29th of March 2019 at midnight, and the dust settles, the United Kingdom will be unshackled to once more strike individual deals with Member States. Amongst them, Spain.

It is undeniable the sway British hold over the Spanish economy. British are, by a long shot, the number one nation exporting tourists to Spain with over 18 million pa (and growing). The Tourism industry, set up slily by general Franco in the sixties, is Spain’s number one contributing GDP industry with over 16% (in fact, Spain became in 2017 the world’s second tourist destination overtaking the US). Not to mention that British unwaveringly spearhead the real estate market in Spain by number of non-domestic sales year-on-year. Likewise, the construction business in Spain accounts for a significant GDP contribution, with almost 6%. So, given the British clout over Spain's economy, like it or not with cherries on top, if the United Kingdom sneezes, we catch a cold in Spain.

British nationals, with the intent of acquiring property or who plan to become resident in Spain (i.e. retire), should be treated über generously from a taxation point of view to foster investments in Spain. Additionally, healthcare plays a major role for senior citizens, so this matter should also be agreed upon allowing them full rights. Spain must compete (aggressively) with our neighbours Portugal and France to attract British investments. The hawk-eyed politicians of these two countries, especially the former, have been all-too busy over the last two years approving fiscal and legal measures to entice British investments that put to shame what short-sighted Spanish politicians have been doing (nada) with their attention all-consumed by domestic matters.

Bottom line, for the sake of us all, the Spanish government should bend over backwards to reach an attractive proposition post-Brexit casting aside any inbred prejudices. This would allay investor fears and money, British money, would once more pour into the Spanish coffers in droves. Unashamedly borrowing a slogan from Bill Clinton's campaign, "It's the taxation, stupid."

One can only hope that Madrid gets a grip and realizes what is at stake here for the national economy. It is in the best interests of both nations that we seek a consensuated solution that works for us all in a brave new world.

Politics: the art of creating new problems where none existed.”

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in inheritance, conveyancing, taxation and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

 

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Conveyancing-related articles

Buying Property in Spain from a Private Seller (Resale Property) – 21st of February 2017
Buying Property in Spain from a Developer (Off-Plan Property) – 8th March 2017
How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
Buying Property in Spain – 10 Reasons to Hire a Lawyer – 8th November 2016
Selling Property in Spain – 10 Reasons to Hire a Lawyer – 8th December 2016

Please note the information provided in this blog post 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 politician was harmed on writing this blog post. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.