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Johnson will try to call elections if EU agrees to extend the “brexit”

After the last debate in Westminster, the process has now entered in such a technical and complicated phase that even the British do not know where their own rupture lies. Read more

Golden VISA, possible option after The Brexit

After the Brexit referendum many UK nationals are searching for alternatives that will allow them to continue to enjoy unrestricted movement across the European Union and avoid Passport controls when travelling or having to request visas is staying for prolonged periods. Amongst the most popular alternatives is what is known as the Golden Visa (“GV”) also commonly referred to as investor visa. This visa was first introduced in Spain in 2013 and was subsequently modified in 2015 and allows foreign citizens from non-EU countries that meet certain criteria, to enjoy the perks of residency in Spain (including working), even leading to the possibility of obtaining citizenship.

The Golden visa targets affluent foreign citizens and in exchange for their investment offers temporary residency, allowing them to reside, study and work in Spain for an initial period of 1 year.

The administrative process of obtaining the GV normally lasts between 2 and 4 months and consists in presenting, both personally or through a third person, such as Imont Legal Services via power of attorney, the required documentation in the Spanish Consulate of the requester’s home country. Once you have obtained a Golden Visa, you along with your spouse and underage dependants will be able to live, work and study unrestrictedly in Spain as well as travel visa free through Europe. Further to the advantage of GV holders, this visa does not require you to physically live in Spain and therefore you do not have to pay resident taxes unless you reside for an amount of time over the stipulated threshold (183 days).

Similarly, to apply for the Golden Visa it is necessary to comply with some general requirements, among others, not to be irregularly in Spain, to be of legal age and to have a public or private medical insurance.

There are also other more specific requirements for the Golden Visa, the most important being that the applicant accredits the intention or acquisition of the properties. The intention to purchase can be accredited by presenting a preliminary contract with a guarantee for the purchase, by means of a deposit contract or any other means provided for by law and formalised in a notarial public deed.

The acquisition, in turn, can be accredited by means of registry certification of domain and charges issued by the competent Property Registry for the property in question.

In order for foreign nationals to obtain the GV they must meet one of the following criteria:

  • Purchase real estate property, with minimum equity contribution of 500,000
  • Invest 2,000,000 in Spanish treasury bills alternatively invest 1,000,000 in publicly traded shares of Spanish domiciled companies or deposit a minimum of 1,000,000 of funds into a Spanish bank account
  • Invest in a business venture which fulfils either one of the following conditions:
    • Creates meaningful employment as a direct result of the investment.
    • Significant socio-economic impact in the area where the activity will be carried out.
    • Material technological or scientific impact.

 

Golden Visa FAQ

 

Who can apply for a Golden Visa

Any non-European foreign citizen which meets the stipulated criteria and invests:

  • 500,000 of equity in Spanish real estate,
  • 2,000,000 in Spanish Treasury Bonds or 1,000,000 in shares of Spanish companies or 1,000,000 deposit in Spanish bank account and… invests in a business which either creates meaningful employment, significant socio-economic impact or technological or scientific impact.

 

How can you apply for a Golden Visa?

The interested party can physically or through an intermediary, such as Imont Legal Services, present the required documentation in the Spanish Consulate or Embassy of their home country.

 

Can I purchase several properties to be eligible for GV?

Yes, you can purchase as many properties as you like as long as the equity contribution of the combines properties is above the 500,000 threshold.

 

Can I finance the purchase of the properties with mortgage?

Yes, however to be eligible for a GV the mortgage financing of the property must be of the excess of 500,000.

 

Can I apply for a visa if i have not yet purchased the property?

Yes, but in this case it must be proven that a deposit or similar contract has been signed that guarantees the fulfilment of the purchase of the property and that the necessary amount is available for the purchase, including taxes and charges. In this case, the residence permit will be for 6 months until the purchase of the property is accredited.

 

How long does the Golden Visa last?

The initial duration of the GV is 1 year which can be extended another two years and another 5-year extension subsequently.

 

Can I obtain Spanish citizenship through GV?

Yes, GV holders who have resided in Spain for a period of 10 years or more have the option to apply for Spanish citizenship.

 

Do I have to live in Spain to maintain the GV?

No, unlike other visas from other countries, such as the Green Card in the USA, Golden Visa holders are not obligated to reside in Spain for any minimum amount of time. Therefore, if GV holders do not reside in Spain for the minimum stipulated threshold they don´t have to pay resident taxes in Spain.

 

Can my family also be eligible for a GV?

Yes, once you have obtained a GV your partner along with all of your underage depends will also be eligible to obtain a GV.

 

If i buy the property with my spouse and we are in a marital regime or similar, who is considered to have made the investment?

If the investment does not reach €500,000 for each spouse, only one of the spouses will be considered to have made the investment, in order to obtain the visa, however, the other spouse will be able to obtain the residence visa for being a direct family member.

 

Can the investment be made through a company? The investment can be made through a company provided that:

  • The company is not located in a tax haven; and
  • The applicant has a majority of the voting rights in the company and sufficient powers to appoint and remove a majority of the company’s directors.ç

 

Imont Legal Service is a leading law firm with over 15 years of experience helping customers with their legal, conveyancing and tax needs in Spain. We are present in all of the South-East of Spain with four offices in San Javier (Murcia), La Zenia (Alicante), Finestrat (Alicante) and Madrid. If you would like further information of the Golden Visa or any other issue regarding purchasing a property in Spain contact any of our offices and our dedicated experts will be able to help you in English, French, German, Swedish and Spanish.

After “Brexit”, will British people need a Visa to travel to Spain?

“Brexit” surprised both British and foreigners and has left in the air future relations between the United Kingdom and other European Union countries.
Beyond the possible economic impact that we will see in the long term, always depending on the agreement to which, finally, the European Union is reached, in the short term the uncertainty about basic needs, such as traveling, worries British people who wish to visit or reside in Spain; That is why we want to address one of the most raised questions: will a visa be required for British citizens to travel to Spain?

While it is true that there are many questions un answered about what the future will hold for us with “Brexit”, we can confirm that in April 2019, the European Council and Parliament agreed that, after “Brexit”, the citizens of United Kingdom traveling to the countries of the “Schengen” area for a short stay (90 days within 180 days) may enter the territory of the European Union without obtaining a visa.
In accordance to the EU rules, visa exemption is granted on reciprocity terms, as the United Kingdom has also stated, expressly, that it has no intention of applying for visa to EU citizens when traveling to your country for short stays.
However, in the event that the United Kingdom introduces a visa requirement for nationals of any of the EU Member in the future, the existing reciprocity mechanism will apply and the EU institutions and their member will to implement the visa requirement without delay, so the European Commission will monitor the respect of the principle of reciprocity on an ongoing basis and will immediately inform the European Parliament and the Council of any developments that could jeopardize this.
We can confirm that the complexity of the situation requires not to rush things, take time and waiting for the best possible agreements to be reached.

NEW REGULATION OF THE TOURIST APARTMENTS FOR MURCIA REGION

But do we know what the difference is between tourist apartments and houses for tourist use ( alojamientos vacacionales) ?

According to the new decree 174/2018 Tourist apartments will be considered to be the accommodation units offered, by means of a price, for rent on a regular basis and duly equipped with furniture, installations, services and equipment for immediate temporary occupation for holiday or leisure purposes. These tourist apartments are classified in the categories of one, two, three, four and five keys.

And according to article 30 of the previous Decree of 2005, still in force, will not have the legal consideration of tourist apartments, but of vacation accommodations (alojamientos vacacionales), isolated units of apartments, bungalows, villas, chalets and similar, offered for rent by the operating companies or person, for vacation or tourist reasons, and that meet the specified requirements.

The key therefore lies in the number of dwellings belonging to the same owner or operator that are offered for holiday use. If there is only one unit offered, it will be a holiday home regulated by Decree 2005 and if there are several, it will be tourist apartments regulated by the new Decree 174/2018.

Focusing on the holiday homes that are offered by most of our customers, there are no different categories, but there is a single category. However, these “alojamientos vacacionales” share some of the requirements of tourist apartments.

Thus, the operators of  these vacation accommodations will be obliged to:

  1. a) Maintain accommodation facilities in a condition that guarantee its proper functioning.
  2. b) Inform users in advance about the system of services offered in the establishment, the conditions for providing them and their price.
  3. c) Provide users with a contact telephone number of the responsible person.

On the other hand, the price of the accommodation must include the following minimum services and supplies:

  1. a) Permanent cold and hot water.
  2. b) Gas and/or electric energy.
  3. c) Cleaning at the beginning of the stay.
  4. d) Change of linen once a week.
  5. e) Television.
  6. f) Collection of rubbish, or where appropriate, the existence of containers in accordance with municipal ordinances.

As well as the operators of the tourist apartments, the operators of  holiday homes must register all travellers who pass through their home, must have complaint sheets available and announce their existence to the public in a visible manner and expressed in Spanish, English and two languages of their choice.  Owners must have a civil liability insurance and the advertising they develop must specify the type of tourist accommodation to avoid confusion to the customer.

As for the beginning of the activity, the companies operating holiday accommodation must notify the competent Ministry of Tourism prior to the start of the activity. The communication will be accompanied by a responsible statement ( Declaración responsible) and will be accompanied by a series of documents for the purposes of registration of the same in the Register of Companies and Tourist Activities of the Region of Murcia. It is forbidden to offer and market the property without having previously made the communication.

More information about DANA

Dear clients:

We inform you that the Consortium of Insurance Compensation (CCS) will pay for the cold drop at least 92 million in the Valencian Community.

The total estimated cost in this community amounts to 92 million euros, and the most damaged areas have been Orihuela and the rest of the Vega Baja region in Alicante, and Ontinyent and the rest of the Vall de Albaida region in Valencia.

Read more

Action guide to claim damages of DANA

The damage caused by DANA in the Vega Baja of Alicante and Murcia has been many, and very substantial.

We ourselves have been affected by its effects and effected after its passage.

The last floods suffered by the Spanish Levante have focused on Insurance and its tools to alleviate the dramatic situations generated by these phenomena.

For this reason, Imont Legal Services wish to contribute a little to help all our affected neighbors, letting them know of the first steps to take in order to claim against the Insurance Companies and the Consortium of Insurance Compensation for the terrible damage suffered.

The Consortium of Insurance Compensation, has issued an announcement indicating that it will compensate the damages produced to the PEOPLE or in the PROPERTY, indicating the Requirements that must be fulfilled to be able to opt for these compensations.

One of the great virtues of the Consortium is that, in the event of a catastrophe being declared, the risks of the insured property are maximum.

In other words, the Consortium is in solidarity with the most affected areas by the catastrophe, contributing funds from other non-affected areas to support those most affected.

We hope that if it is finally declared a ‘catastrophic zone’, it will give:

– Aid for personal injuries.

– Financial aid to individuals for damage to their habitual residence.

– And aid for basic necessities.

For this reason, it is very important that you document and be able to prove the damage suffered. So, the more graphic information, videos or written evidence or any other type of evidence you are able to provide … the simpler the process will be, and the sooner you will see your claims addressed.

You can download this press release at the end of the article. Here is a summary of these requirements and a series of recommendations, you can find more information on the website of the Compensation Consortium.

Action guide claim damages of DANA

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NEW MORTGAGE LAW

Law 5/19 of 15 March, regulating real estate credit agreements, better known as the new Mortgage Law.

This new law, which came into force on June 17, 2019, seeks greater transparency and clarity for consumers, emphasizing the fact that customers must know in detail the loan they are signing and that they are able to resolve any doubts they may have but … what are the basic points of this new law?

Read more

MAIN LAW CHANGES AFFECTING ALICANTE AND MURCIA DURING 2018

  • NEW DECREE THAT REGULATES THE TURIST APARTMENTS IN THE REGION OF MURICA. During the past month of August 2018 came into the new decree that regulates the tourist apartments in the Region of Murcia (Decree nº 174/2018 of 25th July 2018), which derogates the previous decree from 2005 except in its chapter 5, articles from 30 to 35 in reference to the properties with touristic use which continue to remain enforceable until a new legislation regulating this specific issue comes into force. Both the owners of the properties of touristic use and touristic apartments will have the legal obligation to register every customer who stays there as well make available complaint forms written in Spanish, English and another two languages to be chosen at discretion. The owners will need to have insurance for civil liability and any marketing must reflect the condition of tourist apartment clearly as to not cause any confusion amongst clients.

It is forbidden to offer or rent the property or apartment without having previously done the official Communication to the “Consejería de Turismo”-

  • CHANGES IN THE PAYMENT OF MORTGAGE EXPENSES. The final months of 2018 have been full of changes and controversy surrounding the person who should assume the payment of expenses related to the mortgage, whether the bank or the person who took out the mortgage. The conflict made headlines on all of the media sites in the month of October, when the third chamber of the Supreme Court ruled that the tax on legal documented acts should be payed by the bank.

This ruling brought so much controversy that the own Supreme Court, called a vote in plenary session by which it changed the original ruling, stating that the burden of the tax on legal documented acts derived from mortgages was to be paid by the client and not the bank, as determined by law.

Few days later the Spanish Government approve the Royal Decree 17/2018 establishing that the bank is liable to pay the aforementioned tax, however only for mortgages signed after the decree came into effect, 10th of November 2018.

Hence, after the 10th of November 2018, the banks are liable to assume all expenses related to the signing of a mortgage with the exception of the appraisal which for which the client is till liable. In essence, the bank has the obligation to pay for the cost of the dead, administration and notary, while the client remains liable for the appraisal of the property to be purchased and any copies of the deeds they may request.

  • NEW LAW ON PERSONAL DATA PROTECTION AND GUARANTEE OF DIGITAL RIGHTS (LOPDGDD). The new LOPDGDD in force since 6th of December 2018, counts with ninety seven articles with the objective of integrating into the Spanish legislative system the Regulation (UE) 2016/679 of the European Parliament and Council of the 27th of  April 2016 regulating personal data protection and

complete its provisions.

Among other issues, it gathers the obligations to confidentiality, the need for express consent by the person for the use of personal data, the principle of transparency that falls on the right of the affected to be informed on the use of their data and the right to delete such data at the request of the person.

  • CHANGE IN THE DRIVING REGULATION – CHANGE IN SPEED LIMIT. On the 28th of December 2018, the Royal Decree 1514/2018 was published in the BOE ( Spanish Official Publication), by which it modifies the General Circulation Regulation and with it the speed limits in the following classification: 

o    Vehicles, motorcycles and auto-caravans with a maximum authorized weight below 3500 kg and pick-ups: with a speed limit of 120 km per hour on highway and 90 km per hour on conventional roads.

o    Trucks, tractor trucks, vans, auto-caravans with a maximum authorized weight above 3500 kg, articulated vehicles, vehicles with trailer and the rest of vehicles: with a speed limit of 90 km per hour on highways and 80 km per hour on conventional roads.

o    Buses, vehicles for tourist use and mixed adaptable vehicles: will have a top speed of 100km per hour on highways and 90 km per hour on conventional roads.

  • RENTALS REFORM. The royal law decree 21/2018 of the 14th of December 2018 introduced urgent matters in the issue of leasing which saw implemented a series of changes among which were the Ley de Arrendamientos Urbanos (Law of urban leasing) and Ley de Propiedad Horizontal ( Law that rules the community of owners).

o    In relation to the urban leasing (long term leases), the main changes implemented by the reform are the increase in the duration of the leases (which go from 3 to 5 years or 7 in the cases where the landlord is a company). Limitation of the deposit (up to a maximum of two moths rent), elimination of the payment of the stamp duty tax by the lease holder and an increased protection of eviction for those families considered vulnerable.

People with disabilities and older than 70 years of age will also have increased protection, as the reforms of the properties in terms of adaptability will derive from the reserve fund of the community of owners and will be mandatory of the Public Administration finances 75% of the cost of such.

o    In relation to touristic leases, the Royal Decree has introduced a change in the law of horizontal property, by which the community of owners of such can prohibit the use of touristic leases in such properties by means of an agreement approved with a majority of 3/5 of the owners and quotas, agreement which can never have retroactive effect. Communities will also have the ability to increase the fees for special expenses or common expenses for this type of housing whose destination is tourist rental, with a maximum of 20%.

However, in January 2019 the Congress of Deputies has not validated this Royal Decree 21/2018 by having the vote against the majority of political parties. The validity of the same therefore has been short-lived.

GREAT REDUCTION OF INHERITANCE AND DONATION TAX IN THE REGION OF MURCIA

The Community has introduced reductions in inheritance tax during the last two years. Initially, this tax was reduced to 99% but only for the transfer of family businesses. Subsequently, a 99% exemption was also introduced for inheritance or donations, but only for special large families with more than five children. And finally, by 2018, this 99% reduction will be applied to inheritances and donations, benefiting the spouses of the deceased person and the heirs of the entire ascending and descending line (children, grandchildren, great-grandchildren, parents, grandparents, great-grandparents), leaving out relatives such as siblings, cousins and nephews. 

With this 99% reduction in the tax, many families have had to ask for a loan in order to pay it off or renounce an inheritance that, with great effort and dedication, the deceased obtained in property.

According to calculations managed by the Regional Government, and as an example, for an inheritance of 180,000 euros (amount that according to the Councilor corresponds to the market price of a house), an heir will only have to pay 240 euros, when before 2014 the amount to be paid was 24,000 euros.

But who can benefit from this reduction?

In the case of inheritance, it is necessary for the deceased to have his or her habitual residence in the Region of Murcia in the five years prior to his or her death. Otherwise, the general rule shall apply.

In the case of living donations, the beneficiaries who reside in the Region of Murcia will benefit, even if the donor lives in another autonomous community.

For the rest of the inheritances in which the deceased was not resident in Murcia, or donations received by people who do not reside in Murcia, national rules will apply where the 99% bonus does not exist.

VALUE ADDED TAX AND PERSONAL INCOME TAX (IRPF) ON HOLIDAY HOMES

The proliferation of Internet portals for the rental of holiday homes has meant a new type of business where more and more homeowners are attracted to the Spanish coasts, causing great discomfort in the hotel sector, which has not hesitated to cross out this activity as unfair competition.  Due to pressure from the hotel sector, in 2013 the Spanish Government decided to exclude these accommodations from the Urban Leasehold Act (LAU) and to entrust the matter to the Autonomous Communities, which has generated a great variety of very different laws depending on the autonomous community in which the house is located. However, there is a coincidence in all cases: The owners must pay in Spain the revenue obtained by these tourist rentals.

The Spanish Tax Agency started to monitor the correct inclusion in the annual tax returns of the revenue generated by private rent for short stays of beach/mountain apartments, flats, cottages, etc. To locate part of these leases, the Tax Agency is using computer tools and crossing data with existing Tourist Housing Registries in the autonomous communities, as well as with tourist rental platforms such as Airbnb or Homeaway.

In case that the Spanish Tax Agency understands that a house is being rented, it shall have the right to pay a visit. If the Tax Agency finds out that the owner is not declaring the revenue from the said rental, it may impose a fine of no less than 50% on the non-declared amount plus the interests on arrears.

When renting holiday homes, the owner must take into account two taxes: VAT and Personal Income Tax (IRPF).

VALUE ADDED TAX ON HOME HOLIDAYS

As VAT is concerned, Article 20.1 of the Value Added Tax Law 37/1992 states that certain transactions are exempt from it. In particular, section 23 of the said Article 20.1 stipulates that no VAT shall be charged on transactions related to housing renting and assignment of lease.

However, Part E of the said Article states that VAT exemption shall not be applied on furnished properties where the lessor undertakes the provision of the same complementary services provided by the hotel sector, such as:

  • Cleaning
  • Change of sheets
  • Catering
  • Change of towels

The scope of the law does not cover cleaning and change of sheets and towels services before and after the assignment of lease. According to Article 20.1, these services must be provided during the said assignment, not only before and after it.

Therefore, the aforementioned services shall be deemed as economic activity and VAT shall be charged on them accordingly. For the owner of the property, the consequences of charging VAT are, among others, the following obligations:

  • To incorporate a company, if required, or to register as self-employed.
  • To issue invoices including VAT.
  • To keep accounting ledgers.
  • To submit the VAT return every three months (form 303), as well as the Annual Tax Return on Operations with Third Parties (Form 347), the Annual Summary of VAT Quarterly Returns (Form 390) or the Tax Return on Intra-community Transactions (Form 349).
  • To declare this revenue separately in the Personal Income Tax.

At present, the VAT on holiday rentals transactions is 10%; however, there are different situations to be taken into account depending on the people involved in the assignment of lease:

a) The owner leases the property directly to a third party: If the owner provides complementary services typical of the hotel sector, then he/she shall issue an invoice with 10% VAT included. In case that the said services are otherwise different from those typical of the hotel sector, then the lease shall be deemed exempt from VAT.

b) The owner assigns his/her holiday home to a managing company that shall be in charge of managing the lease. The owner shall issue an invoice including 21% VAT to the said managing company, which at the same time shall issue an invoice to the user including 10% VAT in case that services typical of the hotel sector are provided. If the aforementioned services are not provided, then the lease is exempted from VAT.

c) The owner assigns the property to the final user but a real estate agent, broker or commission agent that is not a managing company gets involved in the transaction: This case is a combination of cases A and B, i.e. the transaction takes place between the owner and the final user but an agent that is not a “managing company” gets involved.The owner shall issue to the final user an invoice including 10% VAT if he/she provides services typical of the hotel sector. At the same time, the real estate agent, broker or commission agent shall issue an invoice to the owner including 21% VAT for their services.  As it happens with the two previous cases, if the owner does not provide services typical of the hotel sector, VAT shall be exempted.

Personal Income Tax on properties with a tourist or holiday purpose

The revenue obtained from the assignment of lease of tourist or holiday homes shall be treated differently depending on whether the owner has a person employed on a full-time basis to perform this economic activity, or whether he/she provides final users with services typical of the hotel sector under the aforementioned terms.

If there is a person employed on a full-time basis and services typical of the hotel sector are provided, then the revenue obtained from this activity shall be deemed as earnings from economic activities, with the corresponding tax obligations it entails. Otherwise, the said revenue shall be deemed as income from real estate assets. 

Considering the most probable assumption, which is the lease of housing without services typical of the hotel sector nor employees, owners shall include their revenue in their Income Tax as income from real estate assets, whether they are residents or non-residents. Whatever the case, the fiscal year shall have two clearly different periods:

a) The period during which the property is leased. During this period, the owner shall declare his/her full revenue and the necessary expenses to lease the property shall be deducted in proportion to the number of days it is leased. This means that the owner’s earnings will have to be included as income from real estate assets in his/her Income Tax. The taxable income shall be the net assets resulting from subtracting the necessary expenses from the revenue. Initially, the following shall be deducted as expenses:

  • Property tax (IBI)
  • Interests (in case of mortgage)
  • Garbage fee
  • Community fees
  • Intermediary agency
  • Supplies
  • Insurances
  • Repayment
  • Etc.

All these expenses will be charged in proportion to the time the property has been leased, except for the expenses of the mediating agency, which will be deducted in full. The expenses arising from the advice and preparation of the lease agreement will also be deductible in full.

In case that expenses exceed income, then the owner shall be able to deduct the difference throughout the next four years.

b) The period during which the property is free and at the owner’s disposal. In this case, earnings shall be declared as imputed income, according to the Spanish Tax Agency rules. This means that 1.1% shall be applied on the cadastral value of the property, which will be later divided by 365 and finally multiplied by the number of days the property has been unoccupied. If the cadastral values were reviewed prior to 1996, then 2% shall be applied.

In view of the complexity of the subject and given the importance of declaring your taxes correctly to avoid penalties, if you have a property in Spain —whether you lease it or you use it to enjoy with your family— and more important, if you get a rent for leasing that property, we strongly recommend you to ask for advice to the members of our Tax and Accounting Department team. Imont Legal Services has a team of tax consultants that represents non-residents clients, providing them with the necessary advice and support to ensure the fulfilment of their tax obligations in Spain.