Residency schemes for post-Brexit buyers of Spanish property
With Brexit looming ahead, local solicitor Raquel Perez explores possible residency incentives the Spanish government may put on the table for UK buyers.
SURELY the British and Spanish governments will arrive out some amicable agreement which will allow Brits to continue moving to Spain unimpeded by residency requirements and other forms of red tape… right?
If previous incentives by the Spanish government to boost the property market is anything to go by, we may be looking at a low level Golden Visa Scheme for UK buyers, a Bronze Visa of sorts.
In 2012 the government revealed plans to grant residency to foreigners who purchased a home in Spain worth more than €160,000. At the time the idea was to encourage buyers from countries such as China and Russia to buy in Spain whilst the local economy and traditional markets such as UK recovered from the economic crisis. This was later morphed into the so-called ‘Golden Visa’ scheme and the investment amount was increased to €500,000 following Portugal and Ireland’s lead.
However, we suspect that if such scheme was to be applied to post-Brexit buyers the figure would most probably be the lower of the two!
So what conditions does a foreigner need to meet to buy a property in Spain?
1. Can anyone buy a property in Spain? Are there no residency or employment requirements to buy a property in Spain?
To buy a property in Spain, you only need an NIE (Número de Identificación de Extranjeros ) number which is an identification number given to foreigners.
2. If a foreigner buys a property in Spain but maintains his or her residency status in their home country, do they still pay taxes in Spain?
All taxes related to the purchase of the property must be paid in Spain. This inludes IVA (VAT) if it is a new property or ITP (transfer tax) if a resale property, as well as fees related to the valuation, notary, administration and land registry costs. Similarly, taxes such as IBI (an annual property tax) and refuse fees are paid in Spain.
There is also a form of tax which applies to non-residents for any income generated in Spain, called la Renta de No Residentes (IRNR), as long as they don’t already pay standard income tax (IRPF).
A person is considered to be a resident in Spain if they spend more than 183 days here.
Everything will depend, however, on whether one pays income tax abroad and the existence of double taxation treaties to avoid taxation of the same income in both countries.
3. Do mortgages in Spain need to be given by Spanish Banks of can one obtain an mortgage or loan abroad for a Spanish property?
If you obtain a loan outside of Spain it is recommended that it be with a financial institution which has branches in Spain.
Conversely Spanish do offer mortgages to non-residents, and many of these have branches worldwide.
4. If you buy a property in Spain do you have the right to register at the local town hall and obtain residency?
These are two different things, the municipal register (padrón) falls under the jurisdiction of the local town hall, and includes everyone who lives in the municipality regardless of their nationality or residency status. Buying a property in Spain does not guarantee residency will be granted.
Under existing residency schemes, is residency granted to the buyer only or to all their immediate family? Are there any other family members who might also qualify? Who can apply? What are the requirements and what documents are needed? Where do I apply?What other benefits are there?
For answers to these and anything else you’d like to know about residency schemes in Spain click here for a free initial consultation with Raquel.