Ignorance is bliss … but only if you’re an ostrich – it won’t work if you’re an expat after 31 December 2020!
If you are an expat who has been blissfully living under the radar in Spain, dodging potential bullets from the Hacienda … the clock is ticking and the expiry date for burying your head in the sand is 31 December 2020!
That doesn’t mean that you have to wave the white flag, or go to the Hacienda and confess your sins, but it does mean that you need to let a professional look at what you have in place and the way you do things now, in order to ensure that you are ready for the end of the transition period irrespective of whether there is a deal or no deal.
Confessing your sins …
I dislike companies who aim to disturb potential new clients to the degree of frightening them into doing business with them. However, on this occasion I am going to STRONGLY advise anyone who has not taken advice from a professional who is qualified in tax planning, with knowledge of the tax system in both Spain and the UK, to contact Speed Financial Solutions as a matter of urgency. There are a number of things that you need to think about and possibly make changes to before 31 December 2020 and we can guide you through the process.
Things to think about …
Green cards for motorists – If you are driving your UK vehicle you will need to obtain a green card if the UK is no longer part of the free circulation area. If you register as a resident or spend longer than 6 months of the year in Spain, you must register your vehicle with the Spanish authorities and you may need to pay some taxes.
Driving licence – the rules will stay the same until 31 December 2020.
If you are resident in Spain, you need to exchange your UK licence for a Spanish one. If you do this before 31 December 2020 you will not need to take a driving test. The full requirements from 1 January 2021 are not yet known, but it is likely that you will need an International Driving Permit to drive in Spain.
You will need a valid residence document to exchange your licence.
Working in Spain – If you are resident in Spain on or before 31 December 2020, your right to work will stay the same, as long as you remain resident in Spain.
Money and tax – The UK has a double taxation agreement with Spain to make sure that you do not pay tax twice on the same income in both countries. Existing double taxation arrangements for UK nationals living in Spain have not changed.
As a Spanish resident, you must declare your global income to the Spanish authorities, no matter which country it came from. If you are not a resident, you will only pay tax on income that came from Spain.
National Insurance – You may be able to pay UK National Insurance while abroad in order to protect your UK State Pension and entitlement to other benefits and allowances.
Declaration of overseas assets – As a Spanish resident you may need to file an annual declaration of overseas assets called a Modelo 720. There are severe penalties if you do not file, or give incorrect or incomplete information.
Travel insurance – check the terms of your travel insurance policy documents.
European Health Insurance Cards (EHIC) – The EHIC entitles individuals to state-provided medical treatment in EEA countries and Switzerland in certain circumstances at a reduced cost or sometimes free. After the end of the transition period, the Government has indicated that the EHIC may not be valid.
If you are registered for public healthcare in Spain and are travelling outside of Spain, you must apply for a Tarjeta Sanitaria Europea (TSE – a Spanish-issued EHIC) online (in Spanish), or go to your nearest social security office (Insitituto Nacional de la Seguridad Social).
Making payments in or to the EEA – You will continue to be able to make payments and cash withdrawals in the EEA, however these may become more expensive and take longer if there is no agreement about what happens after the transition period.
Closure of UK Bank Accounts and Credit Cards – All UK financial institutions, including banks and credit card providers need permission to look after clients in Europe. This is called ‘passporting’. Many financial institutions no longer feel that their business in Europe warrants going through the process of obtaining the appropriate permissions post BREXIT and so have chosen to accept that their passporting rights will end on 31 December 2020. If your provider does not apply for the new permissions your bank account/credit card account will be automatically closed.
Expats with UK Financial Advisers – UK citizens living in the EEA could be affected if they have a UK provider who cannot continue to operate in the EEA after the transition period ends. This is because currently, your UK Financial Adviser should have a ‘passport’ to operate and provide advice in Spain from the UK. At the end of the transition period passporting is no longer valid.
Register as a Resident in Spain – If you are legally resident in Spain before the transition period ends on 31 December 2020, you will be able to stay. You must register as a Spanish resident if you want to stay in Spain for more than 3 months. Children must also be registered with their own residency document.
If you registered as a resident before 6 July 2020, you will have a green A4 certificate or credit card-sized piece of paper from Extranjeria or the police. This is still a valid document and will prove your rights under the Withdrawal Agreement, including after the transition period ends.
You can exchange your paper residence document for the new TIE but you are not obliged to. The green paper residence certificate and the new biometric TIE card will continue to be equally valid in proving your residence status and rights in Spain. But, the Spanish government advises that the biometric card is more durable and may simplify some administrative processes.
If you apply for residency in Spain after 31 December 2020, different immigration requirements will apply, which are not yet known but are likely to include a VISA.
State healthcare: S1 – If you live in Spain and receive a UK State pension, contribution-based Employment Support Allowance (ESA) or another exportable benefit, you may currently be entitled to state healthcare paid for by the UK. You will need to apply for a certificate of entitlement known as an S1 certificate.
Travel from Spain – From 1 January 2021, you will be able to travel to other Schengen area countries for up to 90 days in any 180-day period without a visa for purposes such as tourism. This is a rolling 180-day period.
To stay for longer, to work or study, or for business travel, you will need to meet the entry requirements set out by the country to which you are travelling. This could mean applying for a visa or work permit. You may also need to get a visa if your visit would take you over the 90 days in 180 days limit.
Periods of stay authorised under a visa or permit will not count against the 90-day limit.
Travel to the UK and Ireland will not change.
If you’re concerned about your own situation, speak to Speed Financial Solutions today – and remember that any discussions are completely confidential. We help many expats navigate the Spanish tax system and ensure that their finances are set up in the best way possible, paying the least amount of tax.
If you would like assistance from us contact firstname.lastname@example.org
Speed Financial Solutions are a highly qualified financial services provider looking after clients throughout Spain and the UK. We provide a discreet and comprehensive service to individuals, and our service is tailored to suit your needs taking advantage of tactical opportunities as they arise in respect of your pension planning. We seek innovative solutions for our clients and employ our skills, based on many years of experience, to apply tax legislation to your advantage. Our relationships are built on trust and mutual respect. We are ready to answer your questions, giving you the confidence you want when dealing with a sensitive issue such as discussing your pensions, investments and savings.
Our Principal, Andrea Speed, is a qualified Discretionary Investment Manager specialising in Investment and Risk, Taxation and Trusts, and a qualified Pension Specialist. Andrea is also a Fellow of the Chartered Insurance Institute (CII), which is the world’s largest professional body for insurance and financial services in the world.
Fellowship is the highest qualification awarded by the CII and is universally regarded as the premier qualification. It is a major achievement in the financial industry and demonstrates the acquisition of skills and knowledge at the highest of levels.
Along with a Fellowship, Andrea is a CII Chartered Financial Planner.
Please take a look at our website – www.speedfinancialsolutions.com
For further information contact us on Tel 951 315 271 or 951 318 529
We are happy to discuss your own situation in more detail. One of our advisers would be pleased to spend some time with you either in your home or at our office to review your current savings, investments and pensions, so do call to make an appointment. Our Financial Review is completely free of charge and without obligation. Follow us on Facebook for regular updates.
The contents published are not recommendations or decision aids for your investment decisions and they do not constitute any type of advice. We are not tax advisers and independent tax advice should always be sought.
Andrea J Speed FPFS (DM), M.A.
Principal, Fellow and Chartered Financial Planner
Speed Financial Solutions
28 September 2020