With the UK currently set to leave the EU by the end of January 2020, anyone who owns a Spanish holiday home needs to be prepared for the impact of Brexit on taxation.
Spanish tax law makes specific provision for EU/EEA residents that benefits people living in member states over others from outside the EU bloc. In some cases, this is expected to lead to a considerably increased Spanish tax bill.
The changes Spanish holiday home owners are likely to face include:
- Higher tax on rental income with no deductions allowed in respect of costs
- Higher tax on deemed rental income
- Compulsory use of the state system for inheritance
- Loss of capital gains tax benefits
- Loss of deferral on exit tax
- New 10 per cent tax on dividend paid to a UK company that owns less than a 10 per cent share of a Spanish company
If you have a Spanish holiday home, it is vital that you start planning for the effects of Brexit now.