The UK press and expat papers in Spain have all carried articles warning that thousands of Brits living in the EU will have their UK bank accounts closed by the end of the year.

In the UK the The Daily Mail, The Guardian, The Times and The Daily Telegraph to name a few, have all detailed how banks including Lloyds, Barclays and even the Queen’s bankers Coutts, will be closing expat accounts and withdrawing services.  The reason for this is the UK’s failure to agree a post-Brexit trade deal to allow cross border Financial Services to continue.

Banks are having to make decisions as to which EU countries to pull out of and which to continue operating in.

The bank, which is Britain’s biggest banking group, started writing to its customers living in these countries since August, telling them that their UK bank accounts would be shut on December 31.

Barclays also confirmed that its banking and credit-card customers living in the EU had started receiving letters.

Why Are UK Banks Closing Accounts & Withdrawing Services for Brits Living in the EU?

Modelo 720 is the form which has to be completed by Spanish residents to declare overseas assets to the Tax Office.  The requirement applies to anyone who lives in Spain, who owns, or is beneficiary to overseas assets worth €50,000 or more.

The Modelo 720 overseas assets reporting requirement, was introduced to clamp down on tax fraud being committed by Spanish residents who have acquired, or intend to acquire, assets, and or hide wealth outside of Spain in order to evade paying tax.  You can read more about this in our article – Overseas Assets Declaration.

The TIE, Tarjeta de Indentidad de Extranjero, is the Spanish identification card for citizens from third countries (non-EU) who reside in Spain.  Since July 2020 British UK nationals moving to Spain have also had to apply for this card, as the UK is no longer in the EU.

If you already have a Spanish residency certificate, you do not have to apply for the TIE, but you can voluntarily exchange your certificate for the card.

Both the Spanish and UK Government websites and their Consulate pages confirm that the green residency certificate, A4 and credit card sized, remain valid for UK nationals and prove the holders residency and retained rights under the withdrawal agreement, having settled in Spain before the UK left the EU.  However considering the issues some have encountered during the recent Covid19 travel restrictions, e.g. multiple incidences of authorities and airlines not understanding the rules and denying certificate holders entry to Spain, it is advisable to get the TIE.

Aside from this the card is a full bio-metric national ID card, therefore so much more useful than the paper certificate.  The card also has the words ARTICULO 50 TUE, a reference to note that the holder was resident in Spain before the end of the transition period and has retained rights.

For a long time private holiday rental regulation in Andalucia was uncontrolled.  This changed at the beginning of 2016, when the regional government, Junta de Andalucia, brought in a host of regulations to conform with changes in national legislation.

Properties under Holiday Rental Regulation in Andalucia

Holiday rental regulation in Andalucia applies to:

• Individual privately owned properties where the complete dwelling is let for holiday purposes.
• Rooms in individually privately owned properties, in which the owner resides, e.g. bed & breakfast, Airbnb.

The maximum capacity, i.e. number of beds/people that can stay in the accommodation is limited by the occupation license, subject to overall maximum of 15 beds for complete dwellings and for bed & breakfast type arrangements – 6 beds, with no more than 4 beds in any one room.

Owners of holiday rental properties that fall into these categories, firstly need to list their property with the Registry of Tourism of Andalusia (RTA), in order to meet the first part of the regulatory requirements; secondly, meet the requirements within a year. During this time owners will not be allowed to host tourists/rent accommodation until fully compliant.

The Requirements of Holiday Rental Regulation in Andalucia

As of January 1st 2018, significant changes to the inheritance tax allowance in Andalucia, came into effect. These changes affect both expats who reside in the region, and non-residents who own assets such as holiday homes here.

The generous move by the regional Government of Andalucia raises the inheritance tax allowance to 1 million euros, where the heirs receiving the assets of a deceased direct family member, are classified as falling into Kinships Groups I and II, i.e. spouses, children, grandchildren and parents.  For this group of beneficiaries, there will be no inheritance tax (Impuesto sobre Sucesiones y Donaciones), when the sum of the assets received does not exceed this new 1 million threshold.

Of all the issues that we provide information about on this site, inheritance law in Spain, is one of the most complex and we strongly advise anyone concerned about their affairs relating to this area to seek professional advice.

In the European Union alone, every member state has different laws in relation to death, inheritance and inheritance tax. They are usually in constant change and are complex. To have to encounter and work with them at the moment of loss of a family member or friend is extremely stressful and you may get lost in a quagmire if you try to do it on your own.

Similarly in making a Will for your self, if you have assets in Spain as well as your country of your nationality, matters can get very complicated.

Some basic information –

Before 2012, inheritance law in Spain stipulated that, in the case of a foreigner deceased, the law to regulate her or his inheritance would be the law of their nationality.

So, in theory, the position was relatively simple: UK inheritance law was used to regulate the inheritance from UK nationals who die owning property in Spain. In the same way, Swiss law is called to regulate the inheritance from a Swiss national who dies owning property in Spain etc.

However there were contradictions in this system, which created confusion and conflicts. For example, UK inheritance law provides that the disposal of immovable assets (land and buildings, household and personal goods) abroad is governed by the law of the country where the property is situated and the disposal in inheritance of movable assets (bank accounts, life insurances, cars, boats/yachts, shares, bonds and other investments), is governed by the law from country of the last domicile.

French law confirms the inheritance law of the country where the deceased had the last domicile or residence. Similarly, Denmark Belgium, Switzerland, Finland, Germany, Sweden, Norway.

Why is it important to identify which inheritance law is applied to the estate?

Because there are critical differences between the Spanish and laws from other countries regarding wills and inheritance. The most important difference is that the Spanish have the figure of the “Compulsory” or “Obligatory Heirs” (Herederos Forzosos), which means that the testator cannot dispose from the full inheritance freely, and in whatever circumstances, he must leave the 66% of his inheritance for determinate persons called Obligatory Heirs (mainly descendants and spouses).

This system of “Obligatory Heirs” is common in countries like France, Belgium, Switzerland, Germany, Norway, Denmark, Sweden, Iceland, Norway, and Russia, in which the testator has the obligation to leave a percentage of their assets to determinate inheritors (usually surviving spouses and children). But, this system is different in the UK and USA.

In this way, for example, UK Inheritance law allows the free disposal of assets, transferring with total freedom the inheritance at the entire wish of the person.  The testator has total freedom to leave whatever he/she wishes, to whomever he/she wishes.

With this system, it could happen that a UK citizen, with two sons owning a property in Spain, can make a Spanish Will leaving their property in Spain to their surviving spouse, and that this last Will cannot be executed because, if Spanish laws are applied, then 50% of that property should be transferred to the spouse, for the other 50%:

• One-third is divided between surviving children in equal shares.
• One-third is reserved for surviving children but can be distributed equally or unequally according to instructions in a will. (The surviving spouse retains a ‘life interest’ (usufruct) in this part of the estate and the children do not inherit until the spouse dies.
• One-third can be disposed of freely in a will.

Current legislation effective since August 2015 offers 2 options:

Option 1: You decide the law which will govern your inheritance.

So, if you are French, British, German, Norwegian, etc., you can decide on your Will or Probate, which the law you want to be applied on your passing.

Option 2: Inheritance by country of permanent residence.

If you have not stipulated in your Will, anything in relation to the law that you wished to regulate your inheritance, then, Option 2 will be applied and defined as country in which you had you residence during the last 5 years.

In cases in which you have been living in different places, and/or the permanent residence is not clear, then, the law will be the one from the country in which you had the strongest connection during all your life – open to subjective interpretation of course.

Recent Change to Inheritance Tax in Andalucia

From the beginning of 2018 the threshold for Inheritance Tax in Andalucia has been set at 1m euros. This is a massive increase on the previous limit, and brings Andalucia in line with the other autonomous regions of Spain. This significant change, opens up estate planning opportunities for individuals who have up until now deliberately kept limited assets in Spain as part of their Inheritance Tax planning strategy.

Read more about this change in our article, Inheritance Tax Threshold Increase in Andalucia