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Last Article:

8 tips for Brexit

Raymundo Larraín Nesbitt, February, 12. 2019

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.

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

Image credit:  Theophilos Papadopoulos

 

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21st of February 2019

Introduction

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.

 

  1. 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

  1. 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 of 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 important 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. We explain this in more detail in our blog post: How to apply for Spanish residency.

  1. 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). 

  1. 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.

  1.   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. 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 report. 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

 

  1. 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

  1. 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.

  1. 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.

 

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, since or after. Never again would a country hold presidential elections amidst a bloody civil war in what constitutes one of History’s greatest democratic episodes 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.

 

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

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, 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 952 19 22 88 or by completing our contact form.

 

Article originally published at Spanish Property Insight: 8 tips to get ready for life after Brexit

 

Tax & legal services available from Larraín Nesbitt Lawyers:

 

Brexit-related articles

 

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. VOV.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

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Last Blog Entry:

Andalusia to abolish inheritance tax in 2019

Raymundo Larraín Nesbitt, February, 18. 2019

Blog post copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
18th of February 2019

Well, I’ll eat my hat. Politicians doing their job, whatever next?

Andalusia’s centre left wing party was ousted from power last December after 37 years in control. With the turn of tide, the new centre-right wing ruling coalition (including a far right-wing party) have agreed in Seville this week to abolish inheritance tax in Andalusia. It won’t actually be abolished – excuse the catchy title – it will be suppressed by 99% on all estates over €1 mn. This translates into only HNWI’s paying a paltry amount on inheriting; the rest of us get to walk away scot-free.

This landmark tax reform is without a shadow of a doubt one of the most important tax milestones in the autonomous region of Andalusia over the last 4 decades (since its inception in 1982). It is the result of a long-winded campaign led by political activists, such as the group ‘Stop Sucesiones’ and other right-wing political groups.

The change translates into 99.99% of inheritors in Andalusia will no longer need to pay inheritance tax on inheriting assets from their parents or spouse, which is a welcome respite. Despite what you may hear, IHT never taxed the ‘rich’ but the hard-working middle class. These fiscal changes are in addition to those approved in 2016 and in 2017 which I had already profusely covered in previous articles and blog posts (see below for related taxation articles).

This bold move allows Andalusia to jump onto the front of the band wagon of other autonomous regions in Spain which are applying reductions on IHT to such an extent which in practice translates to almost suppressing it i.e. Madrid, Basque Country, La Rioja, Navarre, Catalonia, Valencia, Balearic, Canary Islands and now Andalusia too, leading the pack.

Andalusia will officially become in 2019 a tier 1 tax-friendly region for inheritance tax, even surpassing Madrid in some respects. As I had previously pointed out in other tax articles of mine relating to Spanish Inheritance Tax, there was an ongoing movement throughout Spain over the last decade to suppress or greatly reduce inheritance tax to the point of negating it. This trend has finally coalesced into this new regulation.

In a nutshell, inheritance tax will be as follows in Andalusia:

Requirements to benefit from this tax allowance

  • Inheritor/estate beneficiary/taxpayer needs to be EEA/EU-resident.

 Inheritance Tax in Andalusia

  • Pre-existing wealth nil-rate band raised to €1,000,000 (per inheritor).
  • Estates equal to or below €1,000,000 will go untaxed (per inheritor).
  • Estates over €1,000,000 will benefit from a 99% exemption (per inheritor). Meaning you only pay 1% over what exceeds the 1mn threshold.

Who benefits?

  • Group I: natural and adopted children under 21.
  • Group II: natural and adopted children over 21, spouse, registered civil partnerships, parents, adoptive parents, grandparents and great-grandparents.

 

Conclusion

This is as positive as news get. Inheritance taxation had traditionally been Andalusia’s Achille’s heel. It turns out it will now become one of its main selling points! Go figure.

I really do not need to explain how positive this tax news is for Andalusia and the broader market. I never thought I would live to see the day Andalusia led the abolition of IHT in Spain, even surpassing liberal Madrid, but there you go. Times change and the world moves on.

Holding structures incorporated with the sole purpose to mitigate or negate IHT liability will now become redundant in Andalusia following the approval of this change in regulation. This law is expected to be approved over the course of 2019.

For once, I’m happy to commend politicians on adopting a sensible tax measure that benefits legions and contributes towards dynamising the Andalusian economy. Kudos to them!

I don’t want to push my luck, but now that politicians are on a warm fuzzy mood, can we ask them to show some love and adopt a similar programme to Portugal’s Non-Habitual Resident tax scheme (NHR) to attract non-resident investments, particularly British? Pretty please with cherries on top?

“It’s the economy, stupid.” – James Carville

James Carville (1944). He coined this political slogan as campaign strategist of Bill Clinton’s successful 1992 presidential bid against sitting president George H. W. Bush.

Blog originally published at Spanish Property Insight: Andalusia to abolish inheritance tax in 2019

Legal services Larraín Nesbitt Lawyers can offer you

 

Inheritance-related articles

 

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 article. VOV.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

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Last Press Entry:

Non-Resident Taxes in Spain

Sanitas Healthplan Magazine, January, 21. 2019

Sanitas Healthplan is a major health insurance provider in Spain, also known as BUPA in the United Kingdom. They kindly use as source for one of their blog posts, one of our companies’ taxation articles for non-residents.

Healthplan Magazine blog post: Non-Resident Taxes in Spain

Original article can be found published in our website: Non-Resident Taxes in Spain

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