BREXIT: All you need to know… but were afraid to ask!

Back in January 2020 the EU Council and the United Kingdom signed and ratified the Brexit Withdrawal Agreement, which contains the highlights regarding how the Brexit affects nationals of the parties who are living in the UK or in the EU territories.

In general terms, the said agreement laid down a transition period whereby the things shall basically stay as they are, in order to enable people to make decisions and take measures on time. That is, the transition period buys time in order for those affected (EU citizens who want to stay in the UK and UK nationals who want to stay in the EU) to get the paperwork sorted and their status confirmed.

The transition period expires by the end of 2020. The current Coronavirus crisis has changed the whole scenario for those who are affected by the Brexit, as the Spanish Administration offices are currently closed to the public and this implies a de facto reduction of the available time to deal with the Brexit paperwork. Consequently, those who were already in Spain and wanted to get their permissions will have an additional period of three months in order to apply.

Bearing in mind the above, we have prepared the following list of the usual questions that we receive from our clients:

I want to become resident in Spain, is there any problem?

According to the Brexit agreement, during the transition period (in principle till the end of 2020), any UK national is entitled to come to Spain without restrictions to become resident, get a job, set up a business etc. After the transition period expires, the rules which would apply would be the standard inmigration laws which allow a great deal of discretionality and restrict the possibilities to work, set up a business etc. Getting a residency permission shall be much more difficult after the transition period.

According to a recent regulation enacted in July 2020 by the Spanish authorities, the “newcomers” shall not be granted the “old” residency documents but the new card which is adapted to the Brexit agreement.

The current coronavirus crisis has in fact shortened the available time to sort out this transition period as the Spanish borders have been closed to those who are not Spaniards or residents and the Spanish Administration offices have been closed until July. Now the offices are opened again but they just attend by booking a meeting and the number of meetings has been reduced too due to the measures to fight coronavirus. We are having the experience that many police stations are not giving meetings for essential dealings such us NIE applications etc, therefore we are advising our clients to begin the process to register as soon as possible by preparing the required documents and filing the petition online if possible through the special access that the authorities have enabled for lawyers with Power of Attorney.

I am resident in Spain, what are my rights?

The Brexit agreement provides that  those who have been residents in Spain for five years shall be entitled to keep their residency rights as they have so far:

  • They can stay and leave with their passports without needing Visa,
  • They can work and they can keep running their businesses or set up new ones.
  • Their family members can also stay under the same conditions, though there are some particularities which affect them.
  • They keep their rights even if they leave, as long as they are not absent from Spain more than 2 consecutive years AND THEY ARE STILL RESIDENTS ONCE THE TRANSITION PERIOD EXPIRES.

It is important to underline that the term “residency” means PERMANENT RESIDENCY PERMISSION. Consequently, all other permissions (study visa, etc) are excluded.

As to what happens with those who have not the five years residency period, the Agreement envisages a transition period which would finish by December 2020. During the transition period, it is possible to apply for the residency documents and they shall be allowed to complete the five years residency time to achieve the permanent residency permission.

Are they going to ask me to get new permissions if I am already resident?

The Spanish Government has issued a recent regulation in July 2020 whereby all British nationals who are residents in Spain are entitled to apply and get a card which would specify their special status under the Brexit agreement. The regulation underlines that this application is to be done during the transition period or in certain cases, three months later. Even though the regulation states that this new card is not an obligation but an option, there is no specification as to what happens if you do not exchange the current residencia for the new paper. It might be that they consider that once your residency expires you are not entitled to get the special permission anymore but go through the general dealings of the Inmigration laws, which are more complex.

Consequently, the status of those British nationals who are residents “with residency papers” but who have not exchanged their old residency papers for the new permissions remains blurred after the transition period expires, and this is likely to give them problems. For this reason we encourage those British nationals to begin the exchange process ASAP.

The proceedings to get the residency card can be filed online through the special access granted to lawyers. Please feel free to contact us if you needed this service.

I am British and I am resident in Spain but I still have the British driving license. Do I need to get a new driving license?

The Spanish Traffic Authority’s website makes clear that during the transition period the same rules valid so far would apply until December 2020, which means that the British Driving License would remain valid in Spain until December 2020.

Having said that, it is advisable that those UK nationals who are going to stay in Spain deal with the exchange of the driving license as soon as possible since the end of the transition period still seems far away but the sooner the better. The proceeding should be (1) getting the new card (2) getting the British driving license exchanged.

Can the Spanish authorities take an expulsion decision against me?

Expulsion can take place only on grounds of public policy, public security or public health and this applies in general during the transition period and also to those who have permanent residency permission.

For these reasons it is important – particularly to those who are currently working in Spain – to have the document in order to cover situations such us unemployment etc.

If I have a property in Spain but I am not resident, will I need a visa to travel to Spain?

During the transition period you will need no visa, you can travel only with your passport. The question would be what would happen after the expiration of the transition period and the answer is the ETIAS system which the EU is currently developing.

The ETIAS (European Travel Information and Authorisation System) is an electronic travel system which shall be in force in 2021. Such system shall allow citizens of certain countries to enter the EU zona visa-free,  as long as they stay up to 90 days, consequently it is ideal for tourists and business travels. The ETIAS shall be available online, the fee will be low (around € 7) and the reply shall be delivered electronically within 4 days-2 weeks maximum.

Given that the transition period finishes by December 2020 and the ETIAS would be ready by 2021,  hypothetically the UK citizens would need a VISA to travel to Spain during the intermediate period (end of the transition period in December 2020 – availability of the ETIAS), but in order to avoid further distortions the EU Ambassadors have made public a decision whereby they would look for the way to ensure that the UK nationals can travel to EU territory only with the passport until the ETIAS is definitively ready.

After the Brexit transition period, can I work in Spain?

Yes but unless the new Treaty includes any specifications, the general rules on inmigration would apply. Consequently, it would be necessary to get a work visa, which takes time and a complex process, before coming to Spain.

After the Brexit transition period, can I invest in Spain?

Yes, the general rules allow foreigners investment by purchasing assets in Spain (real estate etc) and also setting up businesses. However, only a few of these investments would entitle you to get a permanent residency permission.

Consequently, you can purchase a property but unless it falls under one of the specific cases of the Golden Visa, you shall not be entitled to stay longer than 90 days.

In contrast, it is possible to get a residency visa if you set up a business in Spain, but the Spanish rules on economic inmigration would apply and that would make necessary to explain and justify the investment to the satisfaction of the Spanish authorities, before you are granted the residency permit. In other words, discretionality plays a role here.  On this point (investment in businesses) we would have to wait for the terms of the new Treaty in order to check whether there is a different treatment to the general rules.

If I merely have a holiday house, will I have to pay more taxes?

The taxes levied on property ownership so far are the council tax bill (which is the town hall’s) and the non-residents tax.

Concerning the council tax bill, the Brexit should not make any difference. Admittedly, some people benefit from a council tax bill reduction on the basis of them being permanent residents in the town, but these people would still be entitled to such benefit if they stay here and they would lose it if they left, therefore the Brexit does not affect them as such.

Regarding the non-resident tax, the Brexit would imply that the rates might increase from 19% to 24%.

Would the Brexit imply an increase of the inheritance tax?

The inheritance tax is levied on the transfer of assets located in Spain upon death of the former owner/s.

The European Court found back in 2014 that the Spanish regulation was against EU law since it granted allowances and reductions in the tax charge to residents in Spain in contrast to heirs who were resident abroad. As a consequence, the said regulation was rendered null and void and foreigners can currently apply the same rules as residents in Spain for the purposes of the inheritance tax.

However, the new regulation issued after 2014 still treated differently the inheritance charge of those residents in the EU territory in contrast to others who had no residency in EU territory, so that only those residents in the EU Territory were entitled to use the reductions & allowances. This has changed again on the basis of recent rulings of the Spanish Supreme court done in cases where residents from outer countries were concerned – residents in Canadá, Costa Rica and Switzerland, Supreme Court decisions dated 19/2/18, 21/3/2018 y 22/3/2018 –

Consequently, the Brexit would not imply an increase of the inheritance tax charge.

About Fairway Lawyers

English, German and Spanish speaking lawyers/abogados serving Spain's Marbella, the Costa del Sol, Granada, Antequera and inland Andalucia. Tel: Telephone +34 952 77 11 50 or email: diego@fairwaylawyers.com If you have a matter that requires immediate attention please contact Diego Echavarria +34 606 307 885 (mobile)