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Post-Brexit in Spain

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8 Jan 2021

As from January 1st, 2021, UK is considered as a third country having this a tax impact of which we highlight the following:

Non-Resident Income Tax

The tax exemption on dividends and interests paid to EU residents as well as capital gains tax exemption from the sale of mobile assets is not applicable to UK residents. This implies the end of the parent-subsidiary EU Directive.

Roll-over tax exemption from the sale of the house that was the permanent home while residing in Spain reinvested in a new permanent home is not applicable to UK residents.

UK residents are not entitled to deduct expenses from rental income but to pay taxes on gross income. Tax rate rises from 19% to 24%.

Personal Income Tax

Exit tax deferment is not applicable when relocating to UK, and those who applied for the deferment when moving to UK before 2021 will have to pay the exit tax now.

The period of 2 months to buy again stock shares sold at a loss for this loss to be offset tax-wise is increased to 12 months for shares in the UK stock exchange market.

Tax deferral on mergers, splits and share to share exchange is not applicable when one of the companies is based in the UK.

Wealth Tax

Inheritance and Gift tax as well as Wealth Tax are completely shifted to regional governments in Spain. EU residents are entitled to chose the most favorable legislation among the state law and the law of the region where the property of higher value is located in Spain. Court resolutions extended this right for IGT to anyone independently of its residency, whether within the EU or not, but only EU residents can opt for Wealth Tax. UK residents cannot apply regional law on Wealth Tax but State law.

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