UK nationals with EU homes – important changes from 1 January 2021

Despite the restrictions on travel as a result of Covid-19, over the summer there has been a surge in UK nationals buying homes in mainland Europe (Spain and France in particular) before the Brexit Transition Period comes to an end on 31 December.

Unfortunately for EU home-owners, the Foreign Commonwealth and Development Office has now issued guidance which halves the number of days UK nationals can freely spend in Schengen area countries (EU countries as well as Iceland, Norway, Switzerland and Lichtenstein).

From 1 January 2021, you will be able to travel to other Schengen area countries for up to 90 days in any 180-day period without a visa for purposes such as tourism. This is a rolling 180-day period.

To stay for longer, to work or study, or for business travel, you will need to meet the entry requirements set out by the country to which you are travelling. This could mean applying for a visa or work permit. You may also need to get a visa if your visit would take you over the 90 days in 180 days limit.

This means that should UK nationals wish to spend longer at their EU home in a Schengen country they will be required to either apply for a visa (such as a work or study visa which is unlikely to be relevant for many) or apply for tax residency. It is important to note that the 90 day limit applies to visits to all Schengen area countries in any 180 day period.

An application for tax-residency is likely to involve bureaucracy and delays and therefore should be initiated early. Acquiring dual tax residency will mean filing tax returns in both countries.

The government has confirmed that double taxation agreements and the right to own and rent out property in the EU will not change. However it is likely that the rate of income tax on rental income will be increased once the UK becomes a “third state” to the EU; for example, in Spain non EU residents are subject to an income tax rate of 24% whereas EU residents are subject to a rate of 19%.

Please do not hesitate to get in touch if you require advice about this new restriction in relation to your UK or worldwide assets, estate planning or personal taxes. Ania Chapman, Alison Broadberry or any member of the Private Client team would be happy to assist you.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

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