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Spanish Tax Moving from UK to Spain

by Uncategorised

Planning for Spanish tax in Spain before taking up residency

Contrary to popular perception Spanish taxation is often not as bad as many think, or are led to believe it is.  The reality is of course that if you take up Spanish residency, you become liable to pay tax in Spain.

Rather than avoid the matter as many do or have done, anyone who’s just moved over and recently taken up residency or is planning to, should be considering the fiscal aspects of their transition and getting ready for Spanish taxation.

By taking time to plan, it is often possible to minimise potential Spanish tax exposure, and limit it, or at very least fully understand it.

We recommend anyone moving to Spain from the UK to follow these 5 steps:

Simple Steps to Successfully becoming a Spanish Tax Resident

  • Learn about the tax system – what needs to be done and when
  • Understand how the Spanish tax regime differs in your situation and what tax you will have to pay
  • Find out what tax treatment applies to assets you own and tax breaks that you currently enjoy
  • Make changes in your financial set up to minimise, limit or avoid Spanish tax
  • Get professional advice on financial or tax matters in both the UK and Spain

Tax in Spain and Spanish Residency

Without a doubt the Spanish tax system is very different to the UK’s. Income tax allowances vary depending age and whether your have dependents, tax rates for earned income are higher, and there are different rates for other types or income such as that from investments or from letting residential property.

You can read more about the different types of tax in Spain here.

Spanish Tax – Things For You To Consider When Moving from the UK to Spain

Savings

These have to be declared to the tax office if all your cash amounts to the equivalent of €50,000 or more. You don’t pay tax on savings, only on interest, however if your savings along with your other assets including your home amount to more than €1m,  Wealth Tax applies on the amount above the €1m allowance. (€700 overall wealth plus additional €300k main home allowance).

Investments

If you have investment ISA’s, these lose their tax free status once you become resident in Spain. You would become liable to pay Capital Gains Tax on any growth or interest. Gains on other investments also attract Capital Gains Tax. If you don’t have proof of how much of the ISA or investment is capital that you put in, and how much is gain, everything drawn out will treated as investment income and taxed as a Capital Gain. The tax rate starts at 19% and goes up to 26%.

Pensions

Work pensions are taxed as regular income in Spain, however due to the UK leaving the EU, personal pensions such SIPP’s are treated as general investments. This can be beneficial, as with correct planning, tax paid on drawdown from these can be significantly reduced, often to less than you would pay as a UK resident.

Tax free lump sums are taxed as either income or Capital Gain in Spain, depending on the type of pension they are paid from. Lump sums should therefore be taken before you take up residency in Spain.

Transfer of pensions from one provider to another may also be deemed to be a full drawdown of the fund and subject to tax.

Property

If you are planning to sell your home in the UK, you need to be aware that if you do so after becoming resident in Spain, you might have to pay Capital Gains Tax. General advice is to sell whilst you are still tax resident in the UK and not take up residency in Spain until the following tax year.

If you are not planning to, or able to sell your property before you move to Spain, there are things you can do to enable you to avoid Capital Gains Tax in Spain if you want to sell your home in the future.

Financial Advice

Now that the UK is no longer in the EU, UK Financial Advisers cannot provide services to, or advise clients who live in the EU, unless they have a branch in an EU country. Conversely, most UK financial and investment product providers will not accept instructions from EU based advisers unless they also have a branch in the UK and are registered with the UK regulator the Financial Conduct Authority.

There are very few UK Financial Advisers who can provide services or advice to clients who live in Spain, and even fewer who are sufficiently qualified or have the necessary knowledge to provide financial advice taking into account Spanish taxation.

Moving from the UK to Spain and Planning Spanish Tax Residency

Changing tax residency from the UK to Spain in our opinion, in most circumstances, is not something that should be done without financial advice and Spanish tax planning.

There are potentially very costly mistakes that can be made due to not getting advice or getting the wrong advice, as well as big advantages that can be achieved with well advised planning.

To avoid potentially life changing costly mistakes we cannot emphasize strongly enough the importance of getting the correct guidance and advice.

Spanish Residency Financial & Tax Review

If you have recently moved to Spain, or are planning to do so and are not sure about your tax position, have questions about tax in Spain, or would like assistance with Spanish tax planning, we can provide you with an initial review of your situation and at no cost.  We’ll highlight key tax points relating to tax, your situation and answer your general questions.

You may need further help understanding how tax in Spain affects you, or planning to limit how much it does.  In which case our team of financial and tax consultants specialised in change of residency planning between UK and Spain, are here to help.

Fill in our Spanish residency financial & tax questionnaire to get your free no obligation review.

Spanish Residency

Financial & Tax Review Questionnaire

The initial review of the information and feedback is free of charge.  Following the review if you would like a consultation, fees start at £249 / €295+IVA.

You can also fill in a short form (below) if you’d prefer to just send us a summary of your situation and specific questions for review.

Free No Obligation Initial Review

Golden Visa Property

Portugal Ends Golden Visa – Will Spain Follow?

by ImmigrationLatestPropertyVisas

Portugal has ended its Golden Visa residency program for property investors. This announcement came just a week after Ireland terminated of its ‘Golden Visa’ Immigrant Investor Program.

Both countries introduced Golden Visas in 2012, as did Spain, as they struggled to recover from the global financial crisis. The aim was to prevent banking collapse by bringing foreign money into their real estate markets.

According to Forbes, the scheme has brought in €6.8 billion direct investment into Portugal since its launch in 2012, with the most of the money going into real estate. The knock on effect of this has been rents and house prices have soared in a country which is among the poorest in Western Europe, where according to Reuters, more than half of workers earn less than €1,000 per month.

Because Portugal’s ‘Golden Visa’ program didn’t require any minimum time to be spent in Portugal, properties were bought and left empty, or just used for 2 or 3 weeks and rented as holiday lets for the rest of the year. This resulted in distortions in both the rental and sale sectors of the property market.

The increase in properties let short term for holidays, reduced the availability of long-term rents, pushing up prices which became unaffordable to locals. In Lisbon, short-term rentals now account for more than 60% of listed properties. Lisbon is the third costliest rental market in Europe after Milan and Paris. Rents increased by 37% in that city in the fourth quarter of 2022 alone.

The ‘golden visa’ investment entry point became the floor price for properties in many parts of Portugal. Sellers priced their properties for wealthy foreign buyers pushing asking prices way beyond what locals could afford.

Aside from upsetting the ordinary Portuguese, ‘Golden Visa’ schemes like those offered by Portugal, Ireland and Spain are seen as a back door entry for nationals of non-EU countries into the EU and also vehicles for money laundering.

The European Parliament announced in March last year (2022) that citizenship by investment programmes (i.e. Golden Visa Schemes) should be gradually removed. This proposal passed with 595 votes to 12. EU pressure has already forced Malta, Cyprus, Latvia, and Bulgaria to scrap their ‘Golden Visa’ residency initiatives, so it is not surprising that Ireland and Portugal followed suit, and maybe is only a matter of time before Spain follows.

The Spanish left-wing party political party, MásPaís this month put forward a bill proposing and end to the property option in the country’s Golden Visa residency program.

So Portugal’s shop is closed, but as things stand Spain’s ‘Golden Visa’ Property Investor Residency remains an option (for now) for those who have €500k to invest in a property.

If you’re interested in obtain a Spanish Golden Visa through property investment, the clock is ticking … the time to act is now.

Digital Nomad Visa Spain

Digital Nomad Visa for Non-EU Remote Workers in Spain

by ImmigrationVisas

The Digital Nomad Visa is now available in Spain following the passing of the new Startups Law, ‘Ley de Startups‘.  This visa which allows the holder to live in Spain and work remotely or online, can be applied directly in Spain, or via the Spanish Consulate in the country in which you currently reside.

To get a Digital Nomad Visa, applicants must have sufficient funds to support themselves, proof they can work remotely from Spain, and must already have been working in their current ‘remote worker’ employment or self-employment prior to applying.

Holders of the Digital Nomad Visa are eligible for a special income tax rate fixed at 24% for the first 5 years, offering higher earners reduced income tax compared to normal residents.
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Wealth Tax Set To Be Replaced By Large Fortune Tax

by Tax

Andalucía has become one the top 3 regions in Spain with the least taxes.  On the 21st September 2021, the regional president, Juanma Moreno, announced the scrapping of Wealth Tax in Andalucía.

The tax has accounted for just 0.6% of income for the regional government (€95m annually), and Moreno believes the change will have a very positive impact on increasing revenue by attracting investment.

A large number of the highest wealth tax payers left Andalucía in 2020, resulting in a loss of income of estimated at around €18m (€3.5 million euros in wealth tax and €14 million in personal income tax).

The president is hoping that removing Wealth Tax will encourage people with high income who spend long periods in Andalucía, but are not tax resident, to make it the region their permanent home and pay tax there.

Moreno’s estimate is that the tax reduction will attract 7,000 new residents, the result being that the 0.6% of income lost will be far exceeded, through income tax and other indirect taxes collected.

As wealth tax hasn’t been abolished, the annual tax return still has to be done according if, according to the law, ‘ . . . the value of their assets or rights, determined in accordance with the tax regulations, is greater than €2,000,000 euros.’  However 100% tax relief will be being granted to zero the liability.

New ‘Large Fortune’ Tax Proposed

The good news of Andalucía’s Wealth Tax reform, was shortly muted by news that the Spanish government plans to impose a temporary national ‘tax on large fortunes’.  The tax is yet to be approved by parliament, but is is expected to be implemented for 2023 and 2024 and will affect individuals with net wealth above €3 million.

Since wealth tax is collected by the regional Government, it was confirmed that any wealth tax paid would be offset against any ‘large fortune tax’ bill.  As Andalucía now give 100% wealth tax relief, residents in Andalucia won’t have to pay wealth tax, however if their net assets equal €3 million or more, they would have to pay the ‘large fortune tax’.

The proposed rates are as follows:

  • 0% up to €3 million of net wealth
  • 1.7% between €3 million and €5 million of net wealth
  • 2.1% between €5 million and € million of net wealth
  • 3.5% for a net wealth of over €10 million

According to the information provided by the Spanish Ministry of Finance, the tax on ‘large fortunes’ tax will affect 23,000 taxpayers and raise €1.5 billion in revenue, which will be used to finance policies to support the most vulnerable who are affected by the recent steep rises in cost of living.

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Spanish Non-Lucrative Visa for UK British Nationals

by ImmigrationLatestTIE tarjeta de identidad de extranjeroVisas

The Spanish Non-Lucrative Visa offers residency to British nationals who have the financial means to support themselves without working.  The Spanish Non-Lucrative Visa scheme is therefore ideal if you are retired or have passive income, for example from a portfolio of properties or other investments.  The Spanish Non-Lucrative Visa allows full-time residency in Spain with an expectation of a minimum of 6 months residence maintained.

What does the Spanish Non-Lucrative Visa Offer UK British Nationals?

The Spanish Non-Lucrative Visa gives permission to reside in Spain for up to 5 years, providing ongoing eligibility requirements continue to be met.  The TIE, tarjeta de identidad de extranjero is the residency card that is issued.  The TIE is initially valid for 1 year, and can be renewed twice for 2 years at a time.  When 5 years of full-time residency has been completed, permanent residency can be applied for.

A Visa for Full-Time Living in Spain

The Non-Lucrative Visa is intended for people who want to live in Spain full-time.   Time spent in Spain does not count towards the Schengen limit, so travel in the rest of the Schengen area up to 3 months out of 6 months, is also still possible.

Spouse or legal partner, children under 18 years and dependent ascendants can also obtain residency in Spain under the Non-Lucrative Visa scheme.  This of course providing there are sufficient financial means to support all applicants.

Unlike the ‘Golden Visa‘, there is a minimum amount of time that must be spent in Spain to be able to renew residency, so it may be not ideal for holiday home owners who want to spend more than 3 months in one go in Spain, but typically spend less than 6 months altogether, e.g. 5 months over the winter.

How does a British UK National Apply for a Non-Lucrative Visa & Residency?

British nationals who wish to get a Non-Lucrative Visa, must apply for it at the Spanish Consulate in the UK, or if they reside in another country, through the consulate of that country.  Once the visa has been approved, it’s valid for 90 days from the date of issue.  During this time the holder must travel to Spain and apply for their residency card or TIE tarjeta de identidad de extranjero.  The application for the TIE, must be made within 30 days of arrival in Spain.

Applications for the Non-Lucrative Visa cannot be presented by a legal representative and must be applied for in person.  There is an application fee of £516.

Summary of Non-Lucrative Visa General Requirements

The Non-Lucrative visa applicant must:

● Have a valid passport with at least 1 year before expiry
● Not have entered or stayed illegally in Spanish territory
● Not have been refused entry in any of the 26 Schengen countries
● Have sufficient financial means to cover personal and family living costs (€27,000 for the applicant plus €7,000 for each dependent family member)
● Be 18 years or over, with no criminal record in Spain nor in the countries where they have resided in the previous 5 years
● Have access to public healthcare, or private health insurance with an insurer authorised to operate in Spain

You can read more about the costs and requirements in our article Understanding the Requirements and Costs for British Nationals to Get Spanish Residency

FAQS About the Non-Lucrative Visa for Spanish Residency for British Nationals

CAN INCOME FROM MY BUSINESS OR SELF-EMPLOYED REMOTE WORK BE USED

No, the non-lucrative residency visa does not allow the holder to carry on any business activity whilst in Spain

CAN SAVINGS BE USED INSTEAD OF INCOME?

Savings may be taken into account in lieu of income, or to ‘top up’ a shortfall in the minimum required amount.  Savings must be sufficient to cover the minimum income requirement for the duration of the residency.  E.g. for 5 years residency with savings only requires savings of 5 times €27,000.

WHAT ABOUT TAX RESIDENCE?

Non-lucrative residency is intended for people that want to live in Spain for 6 months or more.  If the minimum amount of time has not been spent in Spain, the residency renewal may be turned down.  The 183 day rule is the starting measure for determining tax residency.  You are deemed to be a Spanish tax resident if you spend 183 days or more in Spain during any one calendar year.  You would also be deemed to have change your country of habitual residence, and therefore fiscal residence if for example you spent 180 days in Spain, 120 in the UK and the other 65 in another, or other countries.

DOES THE NON-LUCRATIVE VISA OFFER PERMANENT RESIDENCY?

Non-lucrative residency can lead to permanent residency in Spain.  To obtain permanent residency the holder of the visa must prove effective residence (more than 183 days per year) throughout a qualifying period of 5 years.

HOW LONG DOES IT TAKE TO GET A NON-LUCRATIVE VISA AND TIE?

The Spanish Consulates in the UK give a timescale of 3 months.  Having assisted with multiple non-lucrative visa applications through all the Consulates, we have found they typically take 2 to 3 weeks from date of submission to be approved.  If applications have queries raised or additional information requested, then they will of course take longer.

If you need more information or advice about getting a Non-Lucrative Visa for residency in Spain, or would like to employ the services of a professional company that specialises in Spanish residency visas, we’ll be glad to assist.  Please get in touch.

Get A Free Spanish Residency Visa Assessment

Phone/WhatsApp (+34) 951 77 55 44 / (+44) 033 000 10 777

Taxation UK Pensions Spain

Taxation of UK Pensions in Spain

by PensionsPersonal Tax Returns

Spanish residents are subject to tax on all their worldwide income, and this may also include taxation of UK pensions in Spain.  Unlike the UK, where aside from the tax free lumpsum, payments from pensions above the earnings threshold, are subject to income tax, in Spain, the applicable rate of tax and whether you pay tax, depends on the type of pension.

Since the UK left the EU, the variation in taxation of UK pensions in Spain, has become even more complicated due to the fact that some types of UK pensions are no longer considered to be pensions in Spain.  To illustrate how complicated taxation of UK pensions in Spain can be, the following shows all the different tax scenarios that could apply to various UK pensions and payments from them.  They can be:

  • Exempt from declaration
  • Non-declarable and totally exempt from being taxed
  • Partly exempt from taxation
  • Taxed as regular income
  • Considered as withdrawals from a savings account
  • Taxed as investment income
  • Treated as capital gains
  • Exempt from Wealth Tax
  • Included as assets for Wealth Tax purposes

Considering the above, it’s clear that working out or understanding taxation that will apply to a UK pension in Spain isn’t straightforward and requires a good level of knowledge on the matter.  So how does Spain differentiate the types of pension or income that in the UK we consider to simply be a pension?

Taxation of UK Pensions in Spain vs Retirement Savings

One of the biggest differences in taxation of UK pensions in Spain, arises due to the fact that personal pension schemes, such as Self Invested Personal Pensions, or SIPP’s, are no longer considered as pensions for Spanish tax purposes.  Instead they are treated as retirement savings or investment schemes and therefore subject to taxation as general investments, i.e. tax on the capital gain.

In many circumstances this can be advantageous as Spain’s rates of tax for capital gains are a lot lower than general income tax rates.  Additionally, if you are planning to move to Spain, you could potentially crystalise all gains, prior to taking up residency and thus ‘arrive’ in Spain with 100% capital in your retirement savings scheme.

Conversely as retirement savings or investment schemes are counted as assets forming part of overall wealth, larger UK personal pensions may create or increase a Wealth Tax liability, whereas pensions in Spain are exempt from Wealth Tax.

The second major difference is the Pension Commencement Lump Sum, or 25% UK tax free cash payment.  This is taxable in Spain.  If paid from a scheme considered to be a pension in Spain, e.g. a company pension, it will be subject to general rates of income tax. If taken from scheme considered to be retirement savings, e.g. a SIPP, capital gains tax rates will apply.

Let’s now look in more detail at the taxation of different types of UK pensions in Spain.

UK pensions treated and taxed as general income in Spain

UK state pension

The UK state pension is considered as pension income and therefore taxable as general income in Spain.

UK company pensions

Income from UK employment pensions such as final salary and group pension schemes, is treated as general earned income by Spain, the same as if it were a salary paid by an employer.

UK Government pensions

Pensions paid by the UK Government, would be to subject to general income tax, however under the terms of the double tax agreement between the UK and Spain, these pensions may only be taxed in the UK and are exempt from taxation in Spain.

To name a few, UK Government pensions including Teachers, NHS, Fire Service, Police, Armed Forces, Civil Service, Local Government are all pensions that are exempt.

There are some exceptions to the UK Government pension Spanish tax exemption.  If the pension administered and by a third party, e.g. some NHS pensions are a Capita scheme, then the pension is counted and taxed as general income in Spain

UK pensions treated and taxed as retirement savings or investments in Spain

Under Spanish tax law, for a personal pension held outside of Spain to be counted as a pension in Spain, it must meet specific criteria defined in the law, or otherwise be regulated as pension in the EU.  Until the UK left the EU, all UK personal pensions like SIPPs did not meet criteria under Spanish law, however fell under EU pension regulation.  Since Brexit they are no longer under EU regulation, and are therefore treated as either retirement savings or investments.

Generally speaking, any personal pension that is not a work pension paid by the employer or the employers pension scheme, that allows flexible drawdown gets this treatment.

Under tax rules in Spain, it is only the capital gain in a retirement savings scheme that is taxed when a withdrawal is made.  So to work out how much of a payment is taxable, you need to know the difference between the amount that was paid in, the contributions into the scheme, and the value of the scheme at the time of the withdrawal.  This is often quite complicated and could involve checking through hundreds of transactions over many years. If records are not available, it will be impossible to prove the difference to the tax office, in which case the tax office would require the full amount withdrawn to be taxed as a capital gain

Annuities Purchased with UK Personal Pension Funds

Once again, another different way a type of UK pension income is taxed in Spain.  Income from annuities purchased using funds saved in a UK personal pension scheme has a separate tax treatment.

The annuity payment is deemed to be a part return of capital and part taxable income.  The split between capital return and taxable income, is determined by the age of the person at the time the annuity is taken out.   The table below shows the splits for lifetime annuities according to age when purchased.

Up to age 40 years 40% is taxable
Age 40 – 49 years = 35%
Age 50 – 59 years = 28%
Age 60 – 69 years = 24%
Age 66 – 69 years = 20 %
70 years plus = 8%

Taxation of UK Pension Transfers & Lump Sum Payments

A Spanish resident transferring a UK company pension into a personal pension, i.e. a final salary defined benefits scheme into a flexible drawdown personal pension scheme would be deemed by the Spanish tax office to be taking an income payment and income tax would apply to the full amount transferred.

Similarly, a transfer from a flexible drawdown personal pension scheme, to for example, an overseas pension scheme, (QROPS or ROPS), would be viewed as a crystallisation of the fund and liable for capital gains tax on all the growth, (or the full amount if the capital/growth split cannot be evidenced).

As already mentioned, UK pension tax free lumps, in many cases, or if not planned carefully, will be liable for tax in Spain.  Basic guidance is to make any changes and to take lumpsums before taking up residency in Spain.  Our advice to anyone with pensions planning to move to Spain is to take advice from professionals who fully understand taxation of UK pensions in Spain.

UK Pensions and Wealth tax in Spain

We highlighted at the start that sizable personal pension pots may present Spanish wealth tax issues.  To generalise, if the personal pension is not accessible, e.g. you are under UK pension age (currently 55), then the scheme should be exempt from wealth tax.  However if it is accessible, e.g. you are age 55 with funds in a SIPP, then the funds won’t be exempt.

Taxation of UK Pensions in Spain and Planning for Spanish Residency.

It is clear that the taxation of UK pensions in Spain is not straightforward.  There are huge pitfalls and mistakes that can be made as well as significant tax advantages that can be achieved with well advised planning.

Financial Advisers in the UK do not know and understand the Spanish tax system and the many variations in taxation that apply to the different types of UK pensions.  Similarly most gestors and accountants in Spain who complete tax returns for clients who have UK pensions, don’t know and understand the different ways in which tax applies in Spain to the different types of UK pensions.

As a result without the correct guidance and advice, many individuals end up with incorrect tax declaration, pay more tax than they should have, or worse still expose themselves unwittingly to huge tax liabilities.

To avoid potentially life changing costly mistakes, we cannot emphasize strongly enough the importance of getting the correct guidance and advice.

OLS Legal Financial Tax specialise in UK to Spain change of tax residency planning.  Our Financial & Tax Consultants are UK trained and qualified financial advisers and have decades of experience helping individuals from the UK to plan this very important part of their transition to Spain.  Supported by our Spanish tax adviser professional partners, they are able to guide and advise you whatever your situation.

Fill in the brief form below to provide us with details about your situation and get a free no obligation initial review.

Free No Obligation Spanish Tax Review

Spanish Residency

Financial & Tax Consultation

The initial review of the information and feedback is free of charge.  If following the review if you would like a full consultation, fees start at £249 / €295+IVA.

UK Financial Advisers With Clients Living in Spain and other EU countries

by BrexitFinancial

We wrote an article recently detailing that many British nationals living in Spain and other EU countries, have received letters from their UK banks telling them that their accounts will be closed at the end of 2020.  This due to no Brexit trade deal having been agreed.  

That article explained the impact of no Brexit trade deal on financial services providers in the UK.  After 31st December 2020, these service providers will not legally be able to carry on providing services to their expat clients who reside in Spain or other EU countries.

The Brexit transition period ends at the end of the year, and with it the financial services licence EU ‘passporting’ rights which allow UK firms to provide financial services in EU countries. 

As a result many providers, including Financial Advisers, are withdrawing their services as advisers where their client is a UK national living in the EU.  It is only a small minority of financial service providers that have taken the necessary steps to establish themselves in the EU so they can continue providing their services. 

It is therefore quite likely that from 2021, most expats living in Spain or other EU countries will not be able to receive advice or services from their UK Financial Adviser.  Clients and advisers alike who are affected by this, should be acting now to make alternative financial arrangements. 

UK Financial Advisers and Advice in the EU After the Transition Period

The UK is unlikely to get any special access to the EU over and above any other third country.  That was a benefit of being in the EU.

Any UK IFA firm that wishes to carry on business with clients in an EU country such as Spain, will need to be authorised by the regulator of that country to be able to do so.

The options an adviser may have are to:

  • Get approved to advise in the EU country in which they have clients
  • Partner up with a firm that is already established in the EU
  • ‘Sell’ their EU based client to an EU firm of advisers

Getting a financial services licence, is not a quick or straight forward process, and it’s not cheap either, so this will not be viable for most UK financial advisers.  This means that many Brits living in Spain and other EU countries who currently have UK financial advisers, will need to find new one.

Brits In Spain With UK Financial Advisers

If you live in Spain and have a UK Financial Adviser, there is a good chance that they are not going to be able to legally carry on as your adviser next year.  If they have told you they can, you should ask them to provide you with confirmation of the EU permission that they have obtained.

We have heard of UK advisers that have told their clients that they just need to just use the UK address of a friend or family.  The issue cannot be fixed by pretending you live in the UK.  If your adviser is not licenced to advise in Spain their Professional Indemnity Insurance will not cover their advice or services.  The UK regulator and their insurance provider would certainly take action, if they became aware of advisers doing this.

If you are affected by this or think you may be, and haven’t already spoken to your UK financial adviser you should do so.  If you’re not sure what to do or need to find adviser in Spain, we can recommend firms and advisers who are licenced to advise in the UK, Spain and other EU countries.

Please feel free to get in touch and ask to speak to one of our Financial Services Advisers.

Contact Us

Phone & WhatsApp (+34) 951 77 55 44 / (+44) 033 000 10 777

 

 

 

UK Banks To Close Accounts & Withdraw Services for Brits Living in the EU

by BanksBrexitFinancialLatest

The UK press and expat papers in Spain have all carried articles warning that thousands of Brits living in the EU will have their UK bank accounts closed by the end of the year.

In the UK the The Daily Mail, The Guardian, The Times and The Daily Telegraph to name a few, have all detailed how banks including Lloyds, Barclays and even the Queen’s bankers Coutts, will be closing expat accounts and withdrawing services.  The reason for this is the UK’s failure to agree a post-Brexit trade deal to allow cross border Financial Services to continue.

Banks are having to make decisions as to which EU countries to pull out of and which to continue operating in.

Lloyds Bank confirmed to The Sunday Times that it will be withdrawing services from Holland, Slovakia, Germany, Ireland, Italy and Portugal – a move that will affect 13,000 British customers.

The bank, which is Britain’s biggest banking group, started writing to its customers living in these countries since August, telling them that their UK bank accounts would be shut on December 31.

Barclays also confirmed that its banking and credit-card customers living in the EU had started receiving letters.

Why Are UK Banks Closing Accounts & Withdrawing Services for Brits Living in the EU?

Until now the UK banks and other financial service providers have been able to use the EU ‘passporting’ system to provide services to customers living in other EU countries.  In the absence of a Brexit trade deal, the UK will no longer be able to use the passporting system,  This means when the transition period ends, it will become illegal for UK banks and other financial service providers to offer their services to British customers living in EU countries unless they have a licence in each country to do so.

Given the relatively small amount of customers that UK banks have that live in the EU, for most UK banks and other financial service providers, it is not commercially viable to go through the process of obtaining licences and establishing branches in each EU country where they have British expat customers.

Which UK Banks Are Closing Accounts and What Services Are Being Withdrawn?

All the major UK Banks have either already confirmed that they will be closing expats accounts and withdrawing services, or are in the process of reviewing the services that they offer.  Closures will affect current and savings accounts, ISA’s, credit cards and investment accounts.

It is not just bank accounts that are affected.  Customers are also having their credit card facilities withdrawn.  And its not just banks that will not be able to continue offering services.  All financial service providers will lose the ability to serve customers in living in EU countries, unless they have opened up shop in each country where the want to provide their services.  This includes insurance providers, investment companies and firms who provide financial advice.

Will Any Banks or Other Financial Service Providers Continue Offering Services?

Most banks have already made the decision not to continue offering services in the EU.  The decisions are simply based on the commercials.  If it’s not commercially viable for big banks with thousands of customers in the EU, to continue operating, then the same will apply to other financial services providers.  Not least financial advisers.

Many Brits who moved to Spain have kept their UK financial advisers.  This is understandable given that they will usually have had a relationship with them for many years and can therefore rely on them and trust them.  The vast majority of UK financial advisers will will not have the means or justification, to go to the expense of setting themselves up in Spain, to continue servicing a few clients who live there.

The reality is that many thousands of Brits throughout Spain and the EU, stand to be abandoned by their UK banks, financial advisers and other service providers due to Brexit.

Read more about UK Financial Advisers and their EU resident clients post Brexit.

What Do Should I do If My UK Banks or Financial Service Provider is Unable to Provide Services in the EU?

A short term measure could be to use the address of a friend or family member.  This could help you keep your account open for the time being giving you some time to plan and sort out new arrangements. If you do this, it’s important that you check the terms of the the accounts that you have.  Most accounts that include a credit facility, (overdraft, credit card etc), actually require you to be resident in the UK, not just have a UK address.

It really does depend on your situation, and the reason why you use the account provided by your UK bank.  If you need an account denominated in GBP (pounds), to make and receive payments, then online account providers like for example Revolut, may have a solution.  They offer accounts in the main currencies including GBP, and support direct debits in both EUR and GBP.

Some Spanish banks also offer GBP accounts, and there are also a few international banks such as Standard Bank, that provide accounts in all the main currencies.  With the advent of online banks, it’s also quite easy to open accounts with EU online banks, so there are quite a few options to set up alternative banking arrangements.

One thing to also be aware of is that come 1st January, Spanish banks will be able to charge to receive payments from UK banks, so it’s worthwhile taking the time now to fully review your banking setup.

Of course, whilst there are options, when relationships stretch back many decades and your banking has been a habit of a lifetime, being abandoned is a bitter pill to swallow.

If you are affected by this or think you may be, the first thing you should do is contact your UK bank or financial adviser to find out where you stand.  If you then need to set up new banking arrangements, it’s advisable to do so without delay.

If you’re not sure what this means to you, whether you’re affected, or not sure what to do and would like to speak to a professional who can guide and advise you, please feel free to get in touch and ask to speak to one of our Financial Services Advisers.

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What is Modelo 720?

by FinancialLegal

Modelo 720 is the form which has to be completed by Spanish residents to declare overseas assets to the Tax Authorities.  The requirement applies to anyone who lives in Spain, who owns, or is beneficiary to overseas assets worth €50,000 or more.

The Modelo 720 overseas assets reporting requirement, was introduced to clamp down on tax fraud being committed by Spanish residents who have acquired, or intend to acquire, assets, and or hide wealth outside of Spain in order to evade paying tax.  You can read more about this in our article – Overseas Assets Declaration.

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Exchanging Your Spanish Residency Certificate for the TIE for British UK Nationals

by BrexitLatest

The TIE, Tarjeta de Indentidad de Extranjero, is the Spanish identification card for citizens from third countries (non-EU) who reside in Spain.  Since July 2020 British UK nationals moving to Spain have also had to apply for this card, as the UK is no longer in the EU.

If you already have a Spanish residency certificate, you do not have to apply for the TIE, but you can voluntarily exchange your certificate for the card.

Both the Spanish and UK Government websites and their Consulate pages confirm that the green residency certificate, A4 and credit card sized remain valid for UK nationals and prove the holders residency and retained rights under the withdrawal agreement, having settled in Spain before the UK left the EU.  However considering the issues some have encountered during the recent Covid19 travel restrictions, e.g. multiple incidences of authorities and airlines not understanding the rules and denying certificate holders entry to Spain, it is advisable to get the TIE.

Aside from this the card is a full bio-metric national ID card, therefore so much more useful than the paper certificate.  The card also has the words ARTICULO 50 TUE, a reference to note that the holder was resident in Spain before the end of the transition period and has retained rights.

The Residency Certificate TIE Exchange Application Process

The application process is relatively straight forward, and appointments are readily available in most areas at the Foreigners Offices and National Police Stations.

You need to have a pre-booked appointment.

You can make an appointment through the following link:

https://sede.administracionespublicas.gob.es/icpplus/index.html

For your appointment you will need:

*Completed EX23 application form
*Your existing EU residency Card and a copy
*Passport and a copy ( a copy of your passport and the application is acceptable if you are in the process of renewing it)
*Small passport (carnet size) photo 32mmx28mm
*Recent padron (if you have changed address since you obtained your residency certificate)
*Modelo 790 form with 12 euros tax paid and stamped at the bank

When you present your application your fingerprints will be taken, and if everything else is in order, you will be given confirmation of your processed application and told to make an appointment to go back and collect your card in 5 to 6 weeks.  You may have to wait longer.

If you currently have a temporary residency certificate, your new TIE will be valid for 5 years.   You can apply to get a permanent one, either when you reach the 5 year anniversary of the date you got your residency certificate, or at the 5 year expiry of your TIE.

If you currently have a permanent residency certificate (with the word ‘permanente’), your new card will be issued for 10 years and thereafter is automatically renewable.  If you have held a temporary residency certificate for more than 5 years (but didn’t upgrade it to permanent), you may also be issued with a 10 year permanent TIE.

The TIE for British UK Nationals

Withdrawal Agreement TIE for British UK Nationals
The new Withdrawal Agreement TIE ‘tarjeta de idenitidad de extranjeros’ for British UK Nationals

Need a Hand With Your Residency Certificate TIE Exchange Application?

Residency Certificate TIE Exchange Service

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