14Oct
2020

Brexit – Spanish Residents

THE LEGAL AND TAX CONSEQUENCES OF BREXIT FOR RESIDENTS OF SPAIN

The United Kingdom left the EU of which Spain is a member on 31 January 2020.

The subsequent transition period whereby virtually all matters remain the same ends on 31st

December 2020 and from 1st January 2021 the full effects of Brexit according to the International

Treaty known as the Withdrawl Agreement signed by the UK and the 27 countries of the EU comes

into effect.

Residence card/certificates “certificado de registro” or “TIE”

If you already have the light green card or certificate issued by the Spanish police confirming at the

time of application you were a citizen of a country forming part of the EU (like the UK up to 31

January 2020) there is no requirement at this stage to apply for any additional certificate or authority

to remain resident in Spain.

If you do not have one and you are living or want to remain in Spain without restrictions on your

freedom of movement then you should apply for a new Identity Card known as ´´TIE´´ (Tarjeta de

Identificacion Extranjero – Foreigners Identity card ) which the Spanish authorities began to issue to

Uk applicants from 6 July 2020 onwards . This card will also include a personal photo which given

that the light green residence card does not have one may be preferred by some as an easy means to

prove your Id in Spain.

So long as you have the green residence card already or apply for the TIE before the end of the

transition period on 31st December 2020 then the applicant will benefit from the provisions of the

Withdrawl Agreement which include the right to continue to work , live and retire in Spain

In particular

– To have access to the Spanish State Health care system . In particular pensioners will be able

to use form S1 available from the UK government which will be recognised in Spain.

– Automatic Upgrading of State pensions as if you lived in the UK

– Recognition without undue impediment of professional and other qualifications which may be

relevant to work etc

Such rights will not necessarily be available to applicants who submit their applications from 1st

January 2021 onwards and obtaining residence status in Spain is likely to involve more stringent

tests as regards existing income to support oneself and private health care provision than exists at

present as freedom of movement will by then have ended . It may also mean having to take your

driving test again in Spain if a Spanish driving licence has not been obtained by then.

Legal Residency and Tax Residency in Spain

The Spanish Revenue regard a person who spends more than 183 days of the year in the country or

who has the centre of their vital economic interests or whose wife and/ or dependant children live in

Spain as being tax resident in the Country.

Possession of the light green existing residence card or the new TIE will make it difficult to rebut any

presumption that the Spanish Revenue make that a person is tax resident in the country

Tax residence in Spain brings with it certain obligations including:

– To file an annual Tax return in May /June of each year (except for certain exempted groups )

in relation to the previous tax year (the Spanish Tax year is the same as the calendar year

January to December )

– If you have assets in any one of the 3 specific categories (basically property , bank accounts ,

shares and other investments ) with a value in excess of 50,000 euros held outside Spain

(whether in the UK or elsewhere ) there is an obligation to report their existence to the

Spanish Revenue upon becoming Tax resident on Revenue form ´´ modelo´´ 720. Failure to

do so or doing so inaccurately can lead to disproportionately heavy fines .

As a Tax resident you should be aware that not just Income Tax but in addition Spanish Capital Gains

and Inheritance and Gift Tax will become relevant that will affect your worldwide assets. In some

exceptional circumstances you may also become subject to Spanish Wealth Tax as well although in

practice few people have sufficent assets to be affected by this.

Everyday living

As far as living in Spain the following points should be noted as from 1st January 2021.

a. Please ensure that your UK Passport has at least a further 6 months to run before it expires to

avoid problems entering or leaving Spain which forms part of the Schengen área.

b. ´´Pet Passports´´ issued in Spain will not be recognised in the UK in the same way and some

forward planning as regards vaccinations for animals will be essential.

If you require clarification on any of the points raised in this letter then please contact us. Equally we

can assist you with other issues relating to your Spanish property including:

– Powers of Attorney and Spanish Wills signed in the Uk or Spain

– Spanish Capital Gains Tax , Inheritance or Gift Tax advice

– Income Tax Returns and Declaration of Assets on form 720

– Utility services ,Banking and Insurance issues

In particular last year important changes were introduced in Gift Tax in Andalucia as regards lifetime

gifts made between parents and children or spouses which reduces the tax burden of Gift Tax by up to

99 % of what was previously payable and you may be interested to find out more about this for you

and your family.

We remain at your disposition and would be grateful if you would acknowledge receipt of this

communication by e mail to p.rodriguez@interlex-spain.com.