Brexit Tax Hammer Blow for Spanish Holiday Home Owners
UK owners of Spanish holiday homes face significantly higher tax bills following Brexit, say leading tax advisory firm Blick Rothenberg.
Robert Pullen, tax partner at the firm, explained “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 31 December. 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.”
Pullen added “In addition to the higher tax rate, the Spanish tax authorities will 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 take a simplified example, if income of €1,000 per week was generated for 6 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. After Brexit, that jumps to €5,760 – three times as much.
Whether this also has an effect on the local property market, factoring in the fluctuating GBP-EUR exchange rate, remains uncertain. There will be many unexpected tax implications of Brexit – this is just one.”