Claiming residency in Spain
We may not know what’s happening with Brexit, but assuming it goes ahead we do know that you should have until 31 December 2020 to become resident in Spain to keep all your EU rights to health, pension etc. So, how do you do that?
The most important legal issue you will need to deal with if you are an EU citizen spending more than three months in Spain is that you will need to register as a permanent resident in the country with the Central Register for Foreign Nationals (Registro Central de Extranjeros).
You can register this at either your local police station, or the Foreigner’s Office (Oficina de Extranjero). If you do live most of the year in Spain, you will be violating the law if you do not obtain a resident’s card. A tourist from the EU can only stay a maximum of 180 days and there is a €300 fine if you overstay.
Find out what you need to know about moving to Spain after Brexit: How to Live in Spain After Brexit
Residency and Brexit
For British people wanting to move to Spain permanently, the message is clear that only by being resident in Spain before the end of the transition period – currently set at 31 December 2020 – will your right to live in Spain be guaranteed.
The agreement originally made in December 2017 and still in force, essentially says the following:
• UK nationals who are lawfully residing in Spain by the end of the transition period will be able to continue to reside in Spain.
• That includes children born or adopted outside Spain after the end of the transition period.
• Close family members (spouses, civil partners and unmarried partners, dependent children and grandchildren and dependent parents and grandparents) will be able to join you in Spain after exit under these rules, so long as the relationship existed before the end of the transition period and continues to exist when they join you in Spain.
• Spain may require UK nationals and their family members covered by the agreement to apply to obtain a status conferring the right of residence and/or obtain a residency document. However, the paperwork for applications will be kept simple, free or low cost, and you will have at least two years to submit your application.
• You and your family members can leave Spain for up to 5 years without losing your right to return.
• You and your family will continue to have the same access as you currently do to healthcare, pensions and other benefits.
You must register in the Town Hall (ayuntamiento) in the locality of your property. You might consider this your first step to becoming integrated into Spanish life.
The Ayuntamientos have much more powers than town halls in the UK, and the Mayor of each town or village personally carries a lot of responsibility. The town halls require the inhabitants to register as they receive funds from local and central government for each citizen on their Municipal Register of Inhabitants (Padrón Municipal) which helps them to provide local services such as policing, maintenance, health centres and so on.
Once registered, you are an official member of the community and this confirms your presence in the country, which can be very useful. You will need the certificate of registration (Certificado de Empadronamiento) to buy or sell a car, register your child in school, get married and to vote in council elections. Most importantly, this certificate is required to apply for your NIE card (tax number, without which you cannot buy a property) and for registering your residency.
It can take time to register with each authority, but there are a number of benefits to doing so. We would recommend speaking with a tax lawyer who can fully explain all the consequence of becoming a tax resident in Spain – this is a very complicated and complex business, and we can put you in touch with the right company for you.
Residency for tax purposes
Becoming a permanent resident is not the same Residency for tax purposes – the latter depends on how long you spend in Spain each year. Spending more than 183 days per annum in Spain will make you a Spanish resident for tax purposes and you will have to pay Spanish Income Tax on any worldwide income.
We can put you in touch with a trusted independent financial advisor in Spain who has plenty of experience helping UK buyers moving to Spain.
There are several tax advantages of becoming a permanent resident in Spain. For example, permanent residents over the age of 65 years, who have owned their home for more than three years, are not subject to Spanish Capital Gains Tax. If you are under 65, the maximum tax you will be charged will be 20% (although this may change!); for a non-resident this will be 35% (this may also change!).
As a resident, you will not have 5% of the total purchase price withheld and kept by the Spanish Tax Authorities as a guarantee against any tax liabilities you may have when you sell your property. There are also other advantages to be taken into consideration relating to Inheritance Tax, Wealth Tax and Non-Resident Property Owner’s Tax.