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Update 09.04.24: An announcement has been made by the leader of the Socialist Government in Spain, that his government plans to amend or repeal the “Golden Visa” legislation. Currently no timetable for these changes has been suggested and there is opposition to any revision. That said, this discourse, that started in May 2023, may result in some material changes. We will endeavour to keep you up to date with these as we are made aware of them and their precise impact.
4th October 2021 is an auspicious day. The day when the amber country travel restrictions were lifted placing travel to Spain on a new footing
From 4.00 am (London time) those “double-vaxer’s” arriving in Spain from the United Kingdom (who are merely obliged to prove their vaccine status on arrival) will be able to return home without a pre-departure PRC test or similar. The impact of this material change after nearly two years of understandable restrictions should be liberating to many.
Several who hail from the UK, keen on purchasing a property in the Marbella region, have confided in me over the last few months that their worries have not centered solely on the travel restrictions. Their plans have stalled for another key reason that has prompted them to seek a solution.
Like the majority of UK’s traveller, do you also hold a British Passport? If so, as of January 2021, you are the holder of a non-EU Passport – thus Brexit was delivered.
The current negative to holding a UK Passport, put simply, is that without some form of formal residency arrangement being in place the holder is limited to a stay in Spain of a maximum of 90 days in any 180 day period.
Golden Visa – an option for you?
For those keen to settle for a limited amount of time in Spain, subject to some provisos outlined below and hold a non-EU passport, the so-called “Golden Visa” may just be the answer to your concerns. This is applicable to Brits and others coming from outside the European Union.
Introduced in 2013 and revised in 2015, Spain’s Investor’s Residency programme, known colloquially as the “Golden Visa”, allows for a renewable residence visa for those who, among other qualifying criteria, and this is not a “one-size fits all” solution, purchase a property for a minimum of €500,000 – aside from any mortgage finance.
Naturally, attractive to those who don’t hail from an EU country, since inception many Golden Visa have been granted to those from Russia, China, South America and South Africa. We have many contacts in the wider world and it seems that this form of residency visa is becoming increasingly attractive particularly to Expat who have spent many years of their working life away from their mother country. Brits who have been involved in the oil and gas booms of the last 20 to 30 years in UAE and those who have blossomed in Singapore, Hong Kong and China in the property markets, may be close to considering slowing down in a warm European country and this offers a very attractive solution.
So how does the Golden Visa work?
Originally conceived to attract foreign investment into Spain post-crisis, initially a 12 month residency visa is granted followed by renewable 2 year residency permit. The deal requires an investment of not less than €500,000 in Spanish real estate. Applications go to either the local Spanish Consulate located in the applicants country or to the Immigration Office in Madrid. In the latter case, if the investor is already in Spain, they may be advantaged by getting a two year residency permit rather than having to progress via an initial residency visa.
There are alternative routes to obtaining a Golden Visa including the investment in Spanish Government stock or on in a recognized Spanish company listed on the Spanish stock market but the rules for this route are outside the scope of this piece.
Now benefitting from an easier bureaucratic process, the holder of the Golden Visa may work in Spain and it also confer residency status on both their children (under 18 unless economically dependent on the applicant), spouses and parents. It is understood that cohabiting couples and those in same-sex relationships may also included in the mechanics of the Golden Visa legislation.
The purchased property may be held by a registered company (other than one located in a tax haven) but the holder of the Golden Visa is obliged to continue to hold the majority of share capital and controlling voting rights in such a company.
Primarily a Visa for convenient and free movement among Schengen Agreement countries, that include the UK, we are told that the Spanish Golden Visa does not require the holder to complete a tax declaration to the Spain Tax authorities of their world-wide income.
While a Golden Visa does not mean that the holder will automatically become a tax resident in Spain there is an important limitation for those seeking to use this route to manage their tax exposure.
I am told, if the holder of the Golden Visa satisfies the requirements to become tax resident in Spain then they will have to submit relevant tax returns to the Spanish Tax authorities as a resident. It is important to note that such return will need to be for all their worldwide incomes and assets. The qualifying criteria for Tax Residency in Spain, we are advised, include: as a result of remaining in Spain for more than 183 days in a year; having material family ties such as children in School in Spain or where Spain is core to the holder’s income generation.
If the holder of Golden Visa is not tax resident in Spain (because they don’t satisfy the criteria to become a tax resident in Spain), they will still have to submit a tax returns in Spain as a non-resident. The precise details of these are outside the scope of this piece but are primarily related to “imputed income tax” declaration on the holder’s property asset.
So, the Golden Visa is attractive to many but to benefit any tax planning strategy the limited residency does pose an issue.
For those for whom these matters are of material concern we would recommend that in addition to the professional advice of their trusted Abogado they should also consult with there appropriately qualified Financial Adviser to ensure that their structuring for tax and other purposes is right for a Golden Visa application.
Not a T.I.E
To be clear the Golden Visa is a not the same as the Tarjeta de Identidad de Extranjero (TIE) – or Foreigner’s Identity Card – which is proof of your permission to live in Spain and is a prime source of identity for you. It contains your NIE details, personal details a photo and your fingerprint. While the TIE is, in effect, a residency visa it is more directed to those who want to live permanently in Spain and be subject to the Spanish Tax authorities and make their returns as a Tax Resident.
Should you be interested in discussing the legal process involved in buying a property in Marbella, we would be delighted to assist you. Our team of bi-lingual, highly experienced and wholly independent Abogados are ready to help you.
Please call me, Mark FR Wilkins, during usual business hours on +34 600 343 917.
Please note that our posts are for general interest. They are no substitute for proper legal advice tailored to your specific circumstances as provided by a qualified Abogado who is experienced in the application of the Spanish Law.
Nothing contained in this article should be seen or taken as the writer or the publisher providing legal or financial advice.
© Mark FR Wilkins 2021 All rights reserved.