Archivo de la etiqueta: united kingdom

Will British nationals only be allowed to acquire real estate in the Balearics under military permit?

Real estate investments by British in the Balearics after Brexit

Since the United Kingdom left the European Union, the media filled their front pages with the following headline: The British will only be allowed to acquire property in the Balearics under military permit.

Although the abovementioned statement is true, it is not accurate. Pursuant to the Spanish Law 8/1975, of 12 March 1975, on areas and facilities of interest to the National Defence (hereinafter, the “Law”), in order to safeguard the interests of the National Defence and the security and effectiveness of its organisations and facilities, there are certain areas to which non-EU foreigners have restricted access to ownership.

The regulation implementing this law defines these areas as: islands, Cartagena, the Strait of Gibraltar, the Bay of Cadiz, the border area with Portugal, Galicia, the border area with France and the Spanish territories of North Africa.

In accordance with the Law and its implementing regulation, non-EU foreigners willing to acquire real estate in the areas described below are subject to the requirement of military authorisation. In addition, military authorisation will be required for Spanish companies when their share capital is owned by foreign individuals or legal entities in a proportion of more than 50 per cent, or when, even if this is not the case, the non-EU foreign shareholders have a situation of dominance or prevalence in the company, derived from any circumstance that makes it possible to prove the existence of a decisive influence by them in the management of the company.

Therefore, and contrarily to what might be thought, this restriction cannot be circumvented by the mere incorporation of one or more Spanish and/or foreign companies when their ultimate beneficial owners are, de facto, British.

As per the military authorisation, the applications for the acquisition of estates not exceeding 2,000 square metres in area, their granting will fall to the relevant General Captaincy; however, when it comes to estates exceeding 2,000 square metres in area, the application must be addressed to and will be processed by the Ministry of Defence.

In any case, it should be noted that both regulations provide for an exception to the above restriction. Military authorisation will not be required in the area occupied by existing urban centres or their existing built-up or expansion areas.

Hence, although this restriction affects the whole of the Balearic Islands (Mallorca, Menorca, Ibiza and Formentera), an exception is made, and therefore military authorisation will not be required, when non-EU foreigners acquire property in urban centres and built-up areas. In other words, the permit will only be required when British nationals intend to acquire property on rural land.

At this point, it is convenient to highlight the residence status in Spain that applies to them after the Brexit. Unless they apply for temporary or, where appropriate, permanent residence, British nationals must comply with the entry requirements established in the Schengen Borders Code, which allows them to stay in Spain for 90 days per 180-day period, either on one or several visits, and in which case they must identify themselves with their passport and will be exempt from visa requirements.

As an alternative, a few years ago the Spanish government introduced a special visa to attract foreign investment, which is commonly known as “Golden Visa”. Thus, the Golden Visa is a type of residence visa, suitable for non-EU citizens who undertake a real estate investment in Spain equal to or greater than € 500,000 free of charges or encumbrances, i.e. without mortgaging the property to be acquired. This visa allows both residing and working in Spain and has an initial duration of two years, which can be extended for another two. Moreover, it is possible to extend the visa to the spouse and children under 18 years of age, or children of full age who are objectively incapable of providing for their own needs.

Notwithstanding the above, British nationals may apply for temporary or permanent residence in Spain through the standard procedure. However, it should be borne in mind that, if so, their tax status would be affected, as they would be considered tax residents in Spain and, consequently, would be taxed on certain income in that country. Nevertheless, it should be noted that during their first years of residence in Spain they could benefit from the tax regulations known as the “Beckham Law”, which allows foreigners who move to Spain to be taxed as non-residents for a certain limited number of years.

Anyway, and going back to the subject matter, it is likely that the above-mentioned military regulation applies only for a limited period of time. Currently, citizens of countries that do not belong to the European Union but belong to the countries of the Single European Space or assimilated (Schengen Area), i.e. Iceland, Norway and Switzerland, are fully equated to nationals of EU countries and, accordingly, exempt from the need for military authorisation. It is therefore to be hoped that, in the not-too-distant future, the Spanish government will extend this status to the British and this obsolete regime of restricted access can be forgotten, at least as far as the British are concerned.

Marta Marina

Lawyer specializaing in commercial law and real estate law


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Measures to adapt the UK to the situation of a third country following the end of the transitional period for Brexit

On 30 December last, following the agreement of the Council of Ministers, Royal Decree-Law 38/2020 of 29 December was published in the Official State Gazette (BOE) number 340, adopting measures to adapt the United Kingdom of Great Britain and Northern Ireland to the situation of a third country following the end of the transitional period provided for in the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community of 31 January 2020 (access to BOE regulations, here)

Chapter II of this RD-Law establishes the rules applicable to “Professional and Labour Relations” and is divided into 5 sections:

  • Section 1: “Professions and public service”, regulates access to and exercise of professions, and the rules applicable to access to and maintenance of the status of public employees of United Kingdom nationals in the service of Spanish public administrations.
  • Section 2: “Industrial relations” contains two articles, one on the transitional arrangements applicable to workers temporarily posted in the framework of the provision of services and the other on European Works Councils in Community-scale undertakings or Community-scale groups of undertakings.
  • Section 3: on the exercise of research and innovation activities in a single article, Article 8, which allows United Kingdom nationals, who on 31 December 2020 are exercising these activities in Spain, to continue to do so on the same terms as those under which they are recognized, subject to the application of the Spanish legislation in force, provided that reciprocal treatment is recognized for Spanish nationals by the competent United Kingdom authorities.
  • Section 4: “Social Security”, contains, in a single article, Article 9, the rules for determining the applicable legislation on the same terms as those established prior to the date of the United Kingdom’s withdrawal from the European Union. This will allow Spain to continue to apply these same rules to those persons who are subject to UK social security legislation, provided that the United Kingdom acts reciprocally in respect of those persons who are subject to security legislation Spanish social security system.
  • In Section 5, Article 10 regulates measures to enable United Kingdom nationals to access unemployment benefits for periods of contribution up to 31 December 2020 (end of the transitional period), in any Member State of the European Union including periods of contribution in the United Kingdom, provided that the last contributions were made in Spain and that the right of legal residence in Spain is maintained.

By way of summary, among the measures included in this RD-Law, we highlight the following:

  • Companies established in Spain which on 1 January 2021 had workers temporarily posted to the United Kingdom or Gibraltar must continue to apply the legislation of that country, which transposes Directive 96/71/EC of 16 December, during the period of posting and provided that reciprocal treatment is recognized.
  • Similarly, companies established in the United Kingdom or Gibraltar with workers posted to Spain before 31 December 2020 may remain in Spain from 1 January and continue to provide their services until 31 December. After that, in order to continue the activity, it will be necessary to apply for a residence and work permit.
  • European Union citizens who commute to Gibraltar for work will be eligible for unemployment benefits until 31 December 2022
  • Workers who were posted to provide services will not have to apply for residence and work permits from 1 January 2021 if the planned duration of the posting is not extended
  • Workers posted to Spain as from 1 January 2021 must obtain the visas and/or residence and work permits provided for in Spanish immigration law, without prejudice to the agreements and commitments that may be assumed in a possible agreement between the European Union and the United Kingdom.
  • Access to unemployment benefit or cessation of activity is allowed until 31 December 2022, for citizens of the European Union who travel daily to Gibraltar to work without having to make contributions in Spain last. As from 1 January 2021, provision is made for the reimbursement of benefits paid by Spain to be claimed from the United Kingdom authorities, once an international instrument establishing the mechanisms for collaboration in this area has been agreed.
  • For nationals of EU Member States, periods accredited in the UK social security system up to 31 December 2020 will be considered for the calculation of unemployment benefits or benefits for cessation of activity, when these contributions are made last in Spain and provided that the right to reside legally in Spain is maintained, in accordance with the regulations on the co-ordination of social security systems. UK citizens will have their periods of work in any EU Member State recognized until 31 December for the purpose of calculating their pensions when contributions are made last in Spain.
  • Persons receiving unemployment benefits in Spain who were authorized to export their entitlement before 1 January 2021 may continue to receive them until the end of the initial three-month period for which they were authorized to export.
  • European Works Councils or procedures for consulting workers which have been set up or agreed before 1 January 2021 will be maintained. This measure concerns European companies in which workers or companies from the United Kingdom participate and which have their management centralized in Spain.

From 1 January 2021, the relationship between the United Kingdom and the European Union is based on the “Trade and Co-operation Agreement” which is a major change for citizens, companies and administrations in the EU and the United Kingdom.

The content of this Agreement is divided into four main blocks: the first on Free Trade, which eliminates quotas and tariffs between the UK and the EU and establishes conditions of fair competition. The second establishes a framework for economic, social, environmental and fisheries cooperation which includes provisions to ensure energy and transport connectivity, as well as coordination in areas related to social security. The third regulates a partnership on internal security based on existing mechanisms such as Europol or Eurojust and includes provisions on the surrender of detainees, the fight against money laundering and the fight against the financing of terrorism. Finally, a fourth block establishes a common governance framework with governance underpinned by an institutional framework that includes an “Association Council”, co-chaired by a member of the European Commission and a representative of the British government at ministerial level, which will supervise the implementation of the Agreement and will be assisted by specialized committees and working groups.

The EU wants to define the safety limits on Brexit

We are getting closer to the final moment on Brexit and now it’s up to Europe to define the participation it will have in this matter.
The General Affairs Council, which is made up of Ministers or Secretaries of European Affairs belonging to the member countries of the EU, has marked the lines that will shape the negotiating mandate of Michel Barnier in order to develop the Brexit negotiations. Among these lines, there are no surprises but more details about what the European Union wants and what the European Union will allow in the coming months.
As already reported, EU member states will be willing to allow the UK to negotiate trade agreements with other countries during the 21-month transition period that will be set after the EU exit, ie 21 months from March 29, 2019.
For this to happen, an express permission of the EU will be required.
Now, the problems are concentrated in London, which since the summit of heads of State and Government last December, has barely managed to define what it wants, how it wants it and how it hopes to achieve it before and after the definitive break with the European Union. Although time is running very fast, it can not be said that there will be concrete talks about what is known as the second stage.
At the last summit, they began to discuss issues about the future of business affairs, after confirming that the UK had made sufficient progress on the most worrisome issues for Brussels, such as the rights of citizens after departure. There has also been progressing on the issues that refer to the exit invoice and the jurisdiction of the courts in the future when there would be open cases. We will have to wait until the summit of leaders in March to be able to know what progress we can find.
At the moment, we know that, there will be a transition of 21 months from the exit of the EU and that the UK will continue to be part of the market and will be subject to European standards until December 31, 2020, which means a positive response from Europe before this request from the United Kingdom.
However, the transition period has a cost and this is the acceptance of the new European laws without intervention in the legislative process. This condition can be understood to be mandatory since it is almost impossible for March 30, 2019, to be fully organized for the total separation with the EU.
Europe is not happy either after David Davis’s announcement about continuing the negotiations until the end of the year. However, they are trying to accelerate the process so that he can have something solid to present to the European Parliament before October.

At the moment we have to wait for news about the destination that will take the UK exit from the European Union