UK based owners of Spanish properties will now face significantly higher tax bills following Brexit ..
Following the UK’s departure from the EU, Robert Pullen, tax partner at leading tax advisory firm Blick Rothenbergtax has commented that “From 1 January 2021, UK based owners of Spanish real estate will suffer a 24% tax rate on income, after the previous 19% tax rate expired when the transition period ended on December 31. This is a swingeing increase of over a quarter, a direct result of the Brexit vote being implemented, and the UK being seen as a non-EU country.”
This means that all UK-based landlords, who provide a property for long-term lets or holiday accommodations, will now pay more tax as from 2021. In addition to the higher tax rate, the Spanish tax authorities will also no longer permit any expenses to be deducted, meaning the gross income will be taxed – this could be a huge increase, disproportionate to any real profit made.
To simplify this , if income of €1,000 per week was generated for six months over the holiday season, that’s gross income of €24,000 per year. If expenses of €14,000 were incurred, and ignoring any allowances, a tax bill of €1,900 would have been payable before Brexit, however now this jumps to €5,760 – three times as much.