Some people have asked us if their holiday home costs may increase post Brexit, if it takes place on the 31st January 2020. Currently, yes they will. Many people do not realise this, so we think it important to inform you. Firstly, non resident taxation:-
Non Resident Taxation
One tax that is likely to increase if the UK leaves the EU without a Withdrawal Agreement in place covering this is the amount of non resident tax you pay. This is the tax by all property owners for having a holiday home in Spain, payable by December 31st for the year previously.
The rate currently that you pay as a resident of a EU country is 19% a year (so for 2020 you will pay the same amount as previously, as the UK has not left the EU in 2019).
However if no new agreement is made to retain the same benefit, such as with Norway (they are not a member of the EU). The rate for non-residents for non-EU countries is a punative 24% currently (except Norway). Then the tax will increase to 24% (or possibly more) for UK citizens for 2021. It needs a similar agreement to Norway guaranteeing the lower rate. Or holiday home costs may increase for British post Brexit, certainly for the non-resident tax or imputed income tax.
In addition to non resident tax, holiday home owners renting out their property pay rental tax in Spain. An important point is that non EU citizens are not able to deduct expenses from their rental income as the British are able to now.
That means that a lot of current expenses cannot be used to mitigate tax. Items such as yearly property expenses proportioned for the time that the property is let, professional fees deducted (with an invoice). Also key holding fees, internet/TV bills, etc. Nothing is able to be deducted for non European citizens.
Also the rate applicable will be 24% again instead of also 19%. But this rate applies immediately this year whem the UK is no longer part of the EU. Thus it is expected that after January 31st 2020, immediately this quarter, British holiday home owners who let out their homes will be worse off in terms of their rental income, as holiday home costs increase for British post Brexit. Please contact us if you would like any assistance with regard to payment of non resident tax or other issues.
can i ask what tax i will have to pay if i do not rent my property out