Editorial transparency and use of artificial intelligence
This article forms part of the CostaLuz Lawyers blog and is published for general informational and educational purposes only. It was prepared with the assistance of artificial intelligence tools and, before publication, was substantively reviewed and editorially approved by Maria de Castro, a Spanish-qualified lawyer registered with the Cádiz Bar Association under number 2745, founder of CostaLuz Lawyers and the person responsible for the editorial review of the published content.
This article does not constitute legal, tax, immigration, employment, estate-planning or investment advice and does not replace an individual assessment and the professional work of the appropriate CostaLuz Lawyers specialist. No action or omission should be based solely on this information.
As British nationals are well aware, Brexit has changed a long list of regulations in Spain. In tax terms, the most relevant are non-resident tax rates. From January 1st 2021, British nationals will pay the non-EU rate, currently 5% higher than the EU rate. In this article, we explain the implications for the changes in non-resident tax rates in Spain for British nationals.
The main effects
As well as a rise in the general rate of non-resident income tax, British nationals will no longer be eligible for certain exemptions after January 1st. These changes come about because Spain, along with other EU countries, distinguishes between EEA and non-EEA nationals.
Own a home in Spain? Read our FAQs with all the answers to what you need to know about Brexit and property.
Higher rate
British nationals will be liable for a higher rate of non-resident income tax after Brexit. Instead of the 19% tax levied on income earned by non-resident EEA nationals, British nationals will have to pay 19%.
You are liable for non-resident income tax in Spain on income from activities such as property (e.g. holiday rentals) and employment.
Thinking of becoming resident in Spain? Read our guide to residency for British nationals post Brexit.
End to exemptions
From January 1st 2021, British nationals will no longer be exempt from income tax in certain instances. Note that some exceptions will still apply, but in general, they will not be able to benefit from exemptions in the following cases:
- Interest and capital gains from personal property obtained by residents in another EU state.
- Profits distributed by subsidiary companies domiciled in Spain to parent companies in another EU state.
- Dividends and profit shares from pension funds in another EU state.
- Fees paid to a company resident in another EU state.
- Capital gains reinvested in a habitual residence within the EEA.
From January 1st 2021, British nationals will generally be liable for income tax on all of the above.
Did you know? Brexit does not affect the bilateral double taxation agreement between the UK and Spain. This will remain in place and apply as usual from January 1st 2021.
Get professional advice
Tax regulations are complicated in all countries and Spain is no exception. To make sure you comply with taxation rules and only pay what you need to pay, consult the experts. The Costaluz Lawyers fiscal team has years of experience helping foreigners in Spain – residents and non-residents – with professional tax advice. Find out about our services here https://www.costaluzlawyers.com/resources/tax-representation-in-spain/ and then get in touch for a free consultation.
For a complete overview of taxation in Spain, see our Your Guide to Spanish Tax.
Aviso legal: Esta informacion se proporciona unicamente a titulo orientativo y no constituye asesoramiento fiscal o legal personalizado. Cada caso debe evaluarse de forma individual segun las circunstancias especificas del cliente. Es imprescindible consultar a un especialista cualificado antes de tomar cualquier decision.
Legal Notice: The content on this page is provided for general informational and educational purposes only. It does not constitute legal advice and should not be relied upon as such. No action should be taken based solely on this content without first seeking independent professional legal counsel. Each case requires individual assessment based on its specific circumstances. CostaLuz Lawyers accepts no liability for actions taken or not taken based on this content.
Questions about Spanish tax?
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Maria:
¡Good afternoon! Welcome to Costaluzlawyers.es. How may I assist you today?
May 02, 18:51 hYou say:
Hello Maria. I am the British (non-resident) owner of a property in Andalucia which I rent to holiday makers when I am not using the property. Under the new tax rules I understand that, post Brexit, I will no longer be able to claim for any expenses incurred, so will have to pay a full 24% of any income I receive. In the past I have submitted my tax returns to an accountant/gestor who calculates the exemptions I can claim (for example, for the costs of cleaning the property, or laundry) and then forwards my claim to the tax authority. However I can now see no reason to continue with this system (what would the accountant do for me?), so my question is: What is the simplest way to declare my income, without an intermediary? Is there, for example, an online form I can complete and send direct to the tax authority? Regards, Peter James
https://www.agenciatributaria.gob.es/AEAT.sede/en_gb/procedimientoini/GF00.shtml
You can find above full info on 210 form ( Non resident Income without permanent establishment) and below, official full info on electronic filling:
https://www.agenciatributaria.es/AEAT.internet/en_gb/Inicio/Ayuda/_comp_Consultas_informaticas/Categorias/Presentacion_de_declaraciones/Impuesto_sobre_la_Renta_de_no_Residentes/Modelo_210/Presentacion_electronica_del_modelo_210/Presentacion_electronica_del_modelo_210.shtml
Jointly own property with husband. I am british and he is irish citizen. We both residents of uk. If I have to pay rate of 24% does he pay 24% or 19% being a eu citizen.
Dear Sally,
Thanks for contacting us through our blog.
In answer to your question on rental taxes, if you own the property 50/50, each one of you will have to file a declaration with its corresponding rate.
Best,
Maria
Hello I an a uk british subject who has an old green residency paper which i believe i can now change into a new residency card .?.
And i have a s.i.p. Health card as i worked legally in spain up until 2020 ( when working my boss paid the employment tax)
Before as a police pensioner in the uk i did not have to pay tax in Spain as well as the uk
Can you tell me if this is still the case …..????? If i do not work in Spain
Thanks
Hi Peter Blyth,
You will be able to apply for residency through the Withdrawal Agreement if you were living in Spain before 31/12/20 and have continued to reside in Spain since that date. The granting of residency through the Withdrawal Agreement is based on two requirements:
1) Effective residence in Spain before 31/12/2020.
2) Medical insurance with full coverage before 31/03/21 (if you are not covered by the Spanish Health System).
Both requirements must be met in order to be granted residency.
hi i live in spain for 170 days or less and have a pension in uk and pay tax on said pension i have a home in uk where my wife lives and my son but am traveling around Europe mostly in a motorhome what is my status now am going back in January to clear up things as i am 75 and have a prostate problem.
Hi Ian!
I hope this email finds you well. I am Maria L. de Castro, the General Director of Costaluz Lawyers. I understand you have some concerns regarding your residency and tax status between Spain and the UK, given your unique situation.
Tax Residency: If you reside in Spain for less than 183 days within a calendar year, you typically aren’t considered a tax resident of Spain. This means you may not need to pay taxes in Spain on your worldwide income, given you’re already doing so in the UK on your pension. However, it’s crucial to maintain clear records of your time in each country to ensure compliance.
UK Taxation: Given that your pension is from the UK and you pay taxes on it there, your primary tax residency likely remains in the UK. There are double taxation agreements in place between the UK and Spain to prevent being taxed twice on the same income.
Healthcare: If you are utilising healthcare services in Spain due to your medical condition, it’s imperative to ensure you’re covered correctly, either through reciprocal healthcare agreements or private insurance.
Brexit Implications: Post-Brexit, the rules for UK citizens in Spain and the Schengen area have evolved. You’re allowed 90 days within a 180-day period for short-term stays in the Schengen region without needing a visa. Overstaying could lead to potential fines or re-entry bans.
Potential Residency: If Spain becomes a more permanent fixture in your life, you might consider securing formal residency status, offering clarity and added rights, especially in the post-Brexit landscape.
Your health and wellbeing are paramount. Given the intricacies of your situation, I strongly advise you to have a more in-depth consultation with our team to better understand your rights and obligations in both the UK and Spain. We are here to guide you every step of the way and ensure all your concerns are addressed adequately.
Please contact us if you want us to send to you Our Terms and Conditions.
Warm regards,
Maria L. de Castro
General Director
Costaluz Lawyers
Hello, I am a UK citizen and I lived in Spain from 2015 to 2022. I have a Spanish “permiso de residencia”, tipo de permiso “Permanente articulo 50 TUE”. It expires in 2031. I have been resident in Sweden since December 2022, with a Swedish residence card. Can I return to Spain to live? Is my Spanish residence permit still valid? On the back of the card is printed “Emitido bajo art.18.4 acuerdo retirada”
Thank you
Dear Gerald:
Your residence permit is still valid as it expires in 2031, so you can return to Spain.
The problem may arise when your residence permit expires and you wish to apply for permanent residence, for which you must have resided continuously in Spain for the last 5 years. This continuity will not be affected by absences from Spanish territory of up to six continuous months, as long as the sum does not exceed ten months within the five years. If it is for work reasons, it may not exceed a total of one year within the five years required.
Hope the above helps. Please, let us know if you need assistance with this.
Best wishes
Maria
Hello Maria,
I am a UK citizen with Spanish residency. Last year I withdrew my UK private pension as a lump sum and am now in the process of completing my first RENTA declaration. I need to know if my private pension will be taxed as a retirement savings scheme, or as a pension (as I understand that different tax rates apply) and also whether my pension lump sum payment could be eligible for the 40% tax-free allowance on contributions made prior to 2007 (the pension was paid-up and contributions ceased in 1997), which I have read about.
If you are able to help me, I would be very grateful.
Kind regards
Michele
Dear Michele,
Thank you for contacting us.
Please be informed that if you are a tax resident in Spain, you will be levied with Personal Resident Income Tax and you will pay tax on all your income, including pensions, no matter where in the world they were earned.
Given that Spanish taxes depend very much on each situation, on each specific case and there are many rules, reductions and exceptions, and there is specific regulation for pensions, we can offer to study your case with your real situation, checking thoroughly the Spanish tax legislation, the Double taxation agreement signed by Spain and give you a proper answer and to determine whether you are obliged to file a tax return and in this case what will be the amount of income tax to be paid. We will be pleased to offer you our tailored consultancy, which is a written reply or a tax legal report.
Also, in order to evaluate your case, we will send you our Data Request to your private email.
At your disposal for any further clarification.
Kind regards,