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As British nationals are well aware, Brexit has changed a long list of regulations in Spain. In tax terms, the most relevant are non-resident tax rates. From January 1st 2021, British nationals will pay the non-EU rate, currently 5% higher than the EU rate. In this article, we explain the implications for the changes in non-resident tax rates in Spain for British nationals.

The main effects

As well as a rise in the general rate of non-resident income tax, British nationals will no longer be eligible for certain exemptions after January 1st. These changes come about because Spain, along with other EU countries, distinguishes between EEA and non-EEA nationals.

Own a home in Spain? Read our FAQs with all the answers to what you need to know about Brexit and property.

Higher rate

British nationals will be liable for a higher rate of non-resident income tax after Brexit. Instead of the 19% tax levied on income earned by non-resident EEA nationals, British nationals will have to pay 24%.

You are liable for non-resident income tax in Spain on income from activities such as property (e.g. holiday rentals) and employment.

Thinking of becoming resident in Spain? Read our guide to residency for British nationals post Brexit. 

End to exemptions

From January 1st 2021, British nationals will no longer be exempt from income tax in certain instances. Note that some exceptions will still apply, but in general, they will not be able to benefit from exemptions in the following cases:

  • Interest and capital gains from personal property obtained by residents in another EU state.
  • Profits distributed by subsidiary companies domiciled in Spain to parent companies in another EU state.
  • Dividends and profit shares from pension funds in another EU state.
  • Fees paid to a company resident in another EU state.
  • Capital gains reinvested in a habitual residence within the EEA.

From January 1st 2021, British nationals will generally be liable for income tax on all of the above.

Did you know? Brexit does not affect the bilateral double taxation agreement between the UK and Spain. This will remain in place and apply as usual from January 1st 2021.

Get professional advice

Tax regulations are complicated in all countries and Spain is no exception. To make sure you comply with taxation rules and only pay what you need to pay, consult the experts. The Costaluz Lawyers fiscal team has years of experience helping foreigners in Spain – residents and non-residents – with professional tax advice. Find out about our services here and then get in touch for a free consultation.

Maria Luisa Castro

Director and Founder
María founded CostaLuz Lawyers in 2006 and is the Firm’s Director. María is registered Lawyer number 2745 of the Cadiz Bar Association and is licensed to practice in all areas of law throughout Spain. Working closely with her team, María has developed the firm into one of the most highly regarded and trusted Spanish Law Firms acting for English-speaking clients with legal problems in Spain. We’re here to help. Contact us today for a free no-obligation consultation.

2 thoughts on “Brexit changes non-resident tax rates in Spain for British nationals”

  1. try to help you with our chatbot.
    ¡Good afternoon! Welcome to How may I assist you today?
    May 02, 18:51 hYou say:
    Hello Maria. I am the British (non-resident) owner of a property in Andalucia which I rent to holiday makers when I am not using the property. Under the new tax rules I understand that, post Brexit, I will no longer be able to claim for any expenses incurred, so will have to pay a full 24% of any income I receive. In the past I have submitted my tax returns to an accountant/gestor who calculates the exemptions I can claim (for example, for the costs of cleaning the property, or laundry) and then forwards my claim to the tax authority. However I can now see no reason to continue with this system (what would the accountant do for me?), so my question is: What is the simplest way to declare my income, without an intermediary? Is there, for example, an online form I can complete and send direct to the tax authority? Regards, Peter James

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