Originally Posted by Bircho

That health agreement was to allow Spanish citizens in the UK access to the NHS and in return Spain wouldn't try to regain Gibraltar and also allowed Gibraltar to become part of the EC.

Think you are getting what happens with double taxation rules mixed up. The UK has double taxation rules with virtually the whole western world. Basically, it means that if you are taxed in Spain at one rate, you can deduct the tax you have paid in Spain against your UK tax allowance (and similarly Spanish citizens can do the same from UK earnings). That is nothing to do with the EU. There are no income tax rules within the EU and even if there was, we would still be entitled to opt out. It is in the treatys already.

For a UK tax payer, as it stands, if you rent a property in Spain the allowances you can offset are very similar to that of the UK and in Spain the tax rate is 19%. There are, however, other taxes you can offset as well that you pay in Spain so you can offset the full amount. It gets complex!

At the current time, all let property in the UK is at the basic rate (20%) however, this is changing come next month and the rate you pay is based on your income rate so if you are a higher rate tax payer that is the liability you will have to pay (ie the difference between 40% and 19% in Spain.

When Spain joined the EU in 1986, and various decress since then, the rules became if you rent a property and you are not a citizen of the EU, then you pay 22% of all income. That means you cannot offset the costs against the income - its a huge difference.

I agree that will only affect the 200,000 Brits with property rentals in Spain, but the amounts involved will be significant. I cannot see Spain changing their Laws to suit the Brits to be honest. In fact, the Spainish Government is probably rubbing its hands together ready for a windfall (and if people choose to sell then they will still get their 8.5% property tax (paid by the buyer so they definitely get their money) or if people choose not sell but also not to rent they still get their INIR tax so they won't be bothered).

---------- Post added at 17:56 ---------- Previous post was at 17:54 ----------



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