European citizens have the right to live, work and travel freely throughout the EU, this luxury was once enjoyed by British nationals up until Brexit. For UK nationals who are keen to own real estate under the Spanish sun and secure their rights as residents (or even EU citizens in the long term) then the Spanish Golden Visa could be the right option.
Post Brexit leaves a bittersweet aftertaste for UK nationals
On the 1st January 2021, the post-BREXIT transition period ended after a grueling BREXIT negotiation and (eventually) amicable divorce between the UK and the EU. This new dawn of sovereignty for UK nationals also brings home the realization that their right to free movement throughout Europe has extinguished – both for them and their children.
There are chants of victory and bitter cries of mourning for UK nationals on both sides of the BREXIT fence and a mixed aftertaste for both politicians and citizens. Some celebrate the right to dictate their own rules and laws independently and others covet the collaboration and continent-wide collaboration on major issues from research to security, education to travel.
Boris Johnson, UK Prime Minister;
“We are going to open… a new chapter in our national story, striking free trade deals around the world… and reasserting global Britain as a liberal, outward-looking force for good. Detaching ourselves from the EU is only a prelude to the greater task of establishing our new role.” —
Roger Liddle, opposition Labour Party member of the House of Lords;
“Today is a victory for a poisonous nationalistic populism over liberal rules-based internationalism and it’s a very bad, and for me very painful, day.”
For those UK nationals that long for the freedom of living, working and doing business anywhere across the EU though they can have the best of an autonomous Brexit UK and the freedoms and rights an EU passport bestows its holder.
UK nationals with sufficient liquidity to invest in one of the investment migration programmes on offer will in fact be able to have their cake and eat it.
Spain’s Golden Visa Requirements
The Spain Golden Visa grants them the right to reside long term in this Mediterranean paradise without being restricted by needing to leave after 90 days.
For decades, the British have been buying up the Spanish coastline from Barcelona to Mallorca but never has that outbound investment been as significant or valuable as it is now in a post-Brexit era.
Those UK nationals who were legally living and settled in Spain before 30 December 2020 were given protections under the Brexit agreement to continue living in Spain legally. But for those UK nationals that had been contemplating a second home in Span but hadn’t yet made the move, doing so under the Golden Visa scheme could provide them with a route to EU residency and naturalization in the long run.
The EUR 500,000 investment in real estate can be structured across several properties and excludes and taxes/expenses. The capital should be mortgage free but any amounts above the minimum threshold can be financed by a bank etc.
There are a few other investment options for UK nationals though the real estate route is the most common:
- Investment of EUR 500,000 + in Spanish real estate (mortgage free).
- Investment of EUR 1 million + in shares of Spanish companies.
- Investment of EUR 1 million + in bank deposits in Spanish financial institutions.
- Investment of EUR 2 million +in Spanish bonds.
The Spanish Golden Visa allows UK nationals to live and work in Spain, with their families benefiting from the same right. Children are also given access to public schooling though a high caliber of private schooling options exist in English, Spanish and other European languages.
What is the application process like?
The application process is relatively seamless and can be completed within 60-90 days at a Spanish Embassy or Consulate.
Subject to the applicant meeting all necessary requirements, the Golden Visa is granted for an initial period of one year, after which it can be exchanged for a residence permit which is valid for two years and renewable for five-year periods thereafter. This is on the condition that the minimum required investment is maintained.
Read more: Untapped Potential: Spain’s Golden Visa
Spanish Citizenship Route
Spanish Golden Visa holders can also obtain a Spanish passport if they meet the relevant citizenship requirements which do include physical presence in the country.
This can be obtained after uninterrupted residence after 10 years but for those foreign nationals married to a Spanish national the time is reduced to one year. Alternatively, if golden visa holders are from Latin America, Portugal, the Philippines, Equatorial Guinea or Andorra the time is reduced to two years. To obtain citizenship the applicant must demonstrate that they are of good character, have their criminal background checked and also meet an A2 Spanish language test.
The route to citizenship is long-term and best suited to those investors who are truly seeking to invest in Spain and make it their second home.
Otherwise, other golden visa programmes such as Portugal might make more sense ut all depends on the applicant’s needs and circumstances.
Spanish Real Estate Considerations
When investing in Spain there are a few considerations:
- Applicants who spend more than 180 days in their Spanish property will need to consider their fiscal residence
- If a non-resident property owner sells then the buy must withhold 3% of the purchase price and pay this to the Spanish tax authorities
- There are non-resident income taxes payable on rental income generated by foreign (non-EU) nationals which must be declared quarterly
- If the property has no one living in it then there is an annual tax of 24% multiplied by the cadastral value of the property (subject to another multiplier of 1.1% or 2%).
- Moreover, for property owners that have real estate valued at over EUR 700,000 (total portfolio value) there is a wealth tax which is progressive and ranges from 0.2% to 2.5%.
- With inflation and interest rates rising in Europe, buying a property in Spain is an option worth considering because the Euribor base rate is likely to remain negative for several years so mortgage costs should remain affordable for now. If economies start to recover post covid and inflation soars then the Euribor rates might rise in parallel.
- Spain has secured funds from the European Recovery Fund and a proportion of them (EUR 72 billion~) will be structured as grants and loans increasing the liquidity in the market and consequently demand for property.
- Combined with inflation (forecast to be approximately 1.4% this year) – it is possible house prices will rise in Spain in coming years. Q1 2021 reports by Tinsa state that 12 months post pandemic house prices have risen by 0.5%, comparatively stable considering the havoc that has occurred in this period.
For UK nationals looking to settle in Spain, investing in real estate now through the Golden Visa scheme is a viable option to consider if they want to get on the Spanish property ladder and secure their rights and that of their children’s to freely live, reside, study and work across the European Union, as they would have in a pre-Brexit world.
