II.A – Residency in Spain and Brexit
We appreciate that many UK citizens living in Spain will be feeling the uncertainty whilst we wait for negotiations to be concluded on Brexit.
In March 2019 the Spanish government published a special bulletin to outline the country’s commitment to grant rights to British citizens living in Spain.
However, during this waiting period, it’s important to check that all of your Spanish paperwork is up-to-date to ensure there are no surprises whatever the final outcome. We recommend checking your Spanish documentation has not expired and remains valid.
These documents might include the following:
- Padron certificate
- Tax registration
- Social Security registration
- Car registration
- Health Services registration
- NIE number
And if you haven’t already, we highly recommend that you start the residency process before Brexit. The residency application is one of the processes that may change based on the Brexit outcome and could change your rights to live in Spain if you aren’t already registered.
II.B – Spanish Wills and Brexit
What benefits does the Brussels IV regulation offer a British citizen?
The EU Succession Regulation, otherwise known as the Brussels IV, affects any individual who owns assets within an EU Member State. The legislation was put into place in 2012 to protect individuals against laws of succession and forced heirs and to ensure that appropriate advice is always given when assets or an inheritance are involved.
Although the UK, Ireland and Denmark, opted out of the Brussels IV legislation, it’s still relevant to British citizens who own assets in Spain or any other EU Member State.
- The creation of a European Certificate of Succession is applicable to inheritances with or without a testament. However, the legislation does not affect who inherits or what taxes apply.
- All successions are treated under a single law and authority
- As a European citizen you are allowed to choose between law of residency and law of nationality for inheritance and asset tax purposes
- The creation of a European Certificate of Succession
What will happen after Brexit?
The old rules relating to International Private Law forwarding (renvoi) will be back in force.
In which case, under Spanish Law, you may be forced to act under Spanish Law, even as a UK National (this relates to citizens who own just one property which is situated in Spain).
Would a Brussels IV be valid after Brexit?
Yes, as it is a legal will made under applicable law. If you draft a Brussels IV whilst you are still a European Resident, the law respects this and you will be able to use the Brussels IV legislation to apply UK Inheritance law to your succession.
So, the advice is to make a Brussels IV Will before Brexit is finally implemented?
Absolutely, if you are a UK National living permanently in Spain with no assets left in the UK, you should make a Brussels IV Will. Within the will, you must choose the law of nationality, which will ensure that your inheritance is governed by British law and not Spanish regulation, which forces obligatory heirs on your death inheritance.
II.C – Company Subsidiary in Spain
Setting up a company subsidiary or branch is a way of setting up a company here in Spain where the capital is owned by a foreign company.
Brexit may or may not affect your decision to set up a company subsidiary in Spain. Much depends on whether a deal is set in place, or a no-deal scenario is applied. If the UK becomes a third country, tariffs may apply on Uk imports to the UK and setting up a company subsidiary could alleviate problems working between the UK and the EU.
- It involves creating a company with its own legal status.
- The subsidiary is an independent legal entity (with its own shareholders), who are independent of the parent company
- The subsidiary is considered for all intents and purposes be a resident in Spain and is, therefore, subject to local regulations and laws.
- It is a taxpayer of Spanish corporate income tax and must comply with accounting and tax obligations, as well as submitting annual accounts and other corporate transactions in the Commercial Registry.
Benefits of setting up a subsidiary in Spain
- A subsidiary is legally independent from its foreign parent company and is allowed access to both Spanish and European markets and benefits from the freedom of movement of goods, reducing operational and tax costs (thanks to existing treaties in EU).
- It means you will have much better control of your business across the single market
- It will ease further market expansion if you already have an established presence in Europe
- You are able to act as both importer and distributor between countries.
Requirements to set up a subsidiary in Spain
- A subsidiary could be a Private Limited Company (Sociedad Limitada) or a Corporation (Sociedad Anonima).
- Steps and requirements for both types of subsidiary are the same and it takes between four to seven weeks to complete all of them. They include:
- Opening a bank account on behalf of the subsidiary. Capital share is deposited there.
- Articles of Association (Estatutos) of the subsidiary will include: social objective, permanent residence, share capital, terms and conditions of the transfer of shares or the management system.
- The signing of Notary – company title deeds
- Submission of the D1A form to declare foreign investment.
- Registration of notary public deed into the Commercial Registrar
- Obtention of permanent Tax Identification Number.
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