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The Spanish Royal Decree-Law 38/2020, of December 29th 2020, which was published in the Spanish Official Gazette - Boletín Oficial del Estado (BOE), which adopts measures to adapt to the status of a third State of the United Kingdom of Great Britain and Northern Ireland after the end of the transitional period provided for in the Agreement on withdrawal of the United Kingdom of Great Britain and Northern Ireland of the European Union and the European Atomic Energy Community, of January 31, 2020.

The RDL 38/2020, which entered into force on 1 January 2021, establishes the necessary measures to adapt the Spanish legal regime once the transitional period ended. It includes a specific section dedicated to financial services, which is summarised as follows:

Continuity of contracts

The continuity of financial services contracts (banking, securities, insurance or other financial services) concluded by UK financial entities (mainly including investment firms, credit institutions and insurance companies) before 1 January 2021 will remain valid. The obligations of the parties under such contracts will remain applicable and enforceable.

Licensing requirements

From 1 January 2021, UK authorised entities will be subject to the relevant Spanish legislation and applicable regimes in respect of third country firms. UK entities will have to obtain a new authorisation to operate in Spain in the following cases:

  • to renew existing contracts entered into before 1 January 2021;
  • to amend existing contracts where changes imply provision of new services in Spain or that have an impact on the essential obligations of the parties;
  • when the activities linked to the management of the contracts trigger licensing requirements; and
  • to sign new contracts.

The RDL 38/2020 expressly states that the activities derived of the management of the contracts entered into before 1 January 2021 that are not under the first three cases mentioned above shall not trigger new authorisation. In this regard, UK entities would need to verify carefully whether their business in Spain involves any of those cases in order to take appropriate measures to obtain the corresponding license to operate in this country.

Temporary permission

Authorisation or registration initially granted by the relevant UK competent authority to UK entities shall temporarily maintain its validity until 30 June 2021 with the purpose of carrying out the activities needed to complete the termination or assignment of contracts entered into before 1 January 2021 to an entity duly licensed or passported to provide financial services in Spain and in accordance with the contractual provisions.

In Spain the FX supervisory authority is:

  • the Banco de España (Bank of Spain) authorises and supervises entities providing banking services);

The Bank of Spain will have supervisory powers and may request UK entities to provide documentation and/or information or request certain steps to be taken, if needed.

Penalties

If an entity fails to comply with the requirements imposed by the Bank of Spain, the temporary permission could cease to apply. In that event, the Bank of Spain as appropriate, will inform the UK entity that an activity which triggers a licensing requirement in Spain is being carried and, accordingly, Spanish penalties or sanctions may apply (which can lead to the imposition of very serious sanctions).

What happens next?

The Bank of Spain will adopt measures, as necessary, to ensure the legal certainty and safeguard the interests of financial services clients who could be affected by the withdrawal of the UK from the EU.

UK entities must ensure that: (i) all provisions applicable in Spain are duly complied with and that indications imposed by Bank of Spain are properly followed and that (ii) provision of financial services is only carried out by entities duly authorised or passported in Spain, which must be included in the relevant registries of the Bank of Spain.

Post Brexit Currency Transfers

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Brexit, currency transfers and the law

As we adjust to life post-Brexit there are many things to consider, but if you need to move money abroad there is one particular change that it’s essential to be aware of.

The free movement of services came to an end at the close of the transition period, with service providers instead having to comply with the different rules of the EU member states in order to operate legally.

Of particular note to people making international money transfers is the fact that UK financial service firms lost their financial services passports on 1st January 2021.

What is a financial services passport?

Before Brexit the ‘passporting’ of financial services meant that firms were able to operate in the European Union (EU) and European Economic Area (EEA) under a UK-based licence.

For example, a company authorised by the Financial Conduct Authority (FCA) in the UK could use this licence to work with customers based in any other country in the EEA.

However, as the UK has now lost these passporting rights, any financial services firm (including currency transfer providers) must have a valid EU licence if they want to continue working with customers in the EU/EEA.

The Royal Decree

On 29th December 2020 the Spanish Royal Decree-Law 38/2020 was published.

This Decree outlines measures for the adaption to the status of a third State of the United Kingdom of Great Britain and Northern Ireland after the end of the transition period.

The Royal Decree came into force on 1st January 2021 and includes a specific section about financial services and how firms from that sector can work with customers based in Spain moving forwards.

According to the Royal Decree:

‘From 1st January 2021, UK authorised entities will be subject to the relevant Spanish legislation and applicable regimes in respect of third country firms. UK entities will have to obtain a new authorisation to operate in Spain.’

The Bank of Spain (Banco de España­) is the FX supervisory authority in Spain and can impose penalties on any currency providers who fail to comply with the decree in order to safeguard the interests of customers. 

Understanding equivalence

You may have heard some discussions in the media about ‘equivalence’ – whereby the European Commission can open up market access for some UK-based service providers.

The European Commission can grant a country equivalence if it views the country’s laws as being similar in intent and purpose to the laws of the EU, but it can also withdraw equivalence on 30 days’ notice if the situation changes.

While this is good news for some sectors, financial services are subject to different equivalence regimes and the level of access offered is far narrower than passporting permitted.

It should also be noted that equivalence operates in fewer areas, covers fewer services and is less secure than passporting.

International currency transfers are one of the financial services not covered by equivalence, so the provider you use must still have a valid EU licence if you’re going to continue working with them. 

What do you need to know?

Any currency transfer provider offering their services to customers based in Spain must be regulated by a relevant EU authority.

If they aren’t licenced appropriately and in accordance with the Royal Decree they cannot renew contracts with existing customers or solicit new customers. They must also have concluded working with existing customers based in Spain by 30th June 2021.

If you’re using a currency transfer specialist to move money to or from Spain and they haven’t sent you any communications regarding a change of licencing post-Brexit, get in touch with them to find out whether or not they have a valid EU licence. This is a simple question and something they should be able to answer instantly.

As mentioned previously, this licence must be with a relevant EU-based regulator, like the Bank of Spain (Banco de España), and your provider should be able to tell you their licence number. 

If your provider is only authorised by the FCA they will be unable to continue servicing your requirements from June (and should inform you of that fact) so you will need to find a new currency transfer company in order to ensure the security and continuity of your payments.

When switching providers find a currency company that is licenced to operate in Spain. You may also want to check things like their online reviews, whether or not they’ve won any industry awards and when they were established.

You may find that by moving providers you actually end up working with a company whose customer service and range of products is better suited to your needs, so start looking into your options now.

Residents of Spain choosing a currency exchange company post-Brexit

If you don’t currently have an FX company to work with and you’re a Spanish resident, please ensure you only enter into an FX agreement with an EU regulated FX company. As a Spanish resident you won’t be covered by the FCA or Bank of Spain post-Brexit if you enter into a new contract with a non-EU regulated company.

 

 

Here You have basic information for getting a Mortgage in Spain.

FINANCIAL CONDITIONS

  • Loans up to 70 % of the valuation/purchase price (the lowest value).
  • Mortgage term 25 years  (age limit 70 years)
  • The variable interest is can be as low as 2,25 %  
  • Mortgage opening fee 1%
  • Early redemption 1% (from capital paid off).
  • House/Life insurance to be contracted with the lending bank
  • The mortgages conditions will depend on your incomes, debts and value of the purchase.

REQUIRED DOCUMENTS

  • Passport and NIE number.
  • Personal details (full address, civil status, number of children under 18, contact details, telephone and email address).
  • Professional details (profession, current position, name of the company your work for, what the company does, how long, and any extra information you can provide)
  • Last 3 pay slips
  • Bank statements ( last 3 months that shows pay slips and mortgages payments )
  • Credit report (report that shows, all mortgages and loans in your residence country)
  • Latest full year official , income tax declaration, wages payslips…etc.

PROPERTY Being purchased information

  • Property purchase contract.
  • Land Registration property details.
  • Payments receipts( Last Ibi )

 

All the above is given as a guide and is correct at the above date. All cases are treated individually and on there own merit. This email address is being protected from spambots. You need JavaScript enabled to view it.

For all Britons owning a home in Spain ( European Union) as from 1 st. January 2021 cannot stay for more than 90 days in anyone one period of 180 days. It is also important to realise this does not soley apply to Spain but in fact it applies to all countries in the Schengen area that you may visit. Which means for instance you own a home in Spain but take a 21 day holiday in Italy and a mini break of 3 days to Ireland, those 24 days reduce the time you can spend at your holiday home here in Spain to 66 days in the 180 day period.

Jan 31st. 2021 Anthony Duggan (This email address is being protected from spambots. You need JavaScript enabled to view it.)

(This is correct at the time of posting)

 

Understanding the buying process and the costs of buying your Spanish home

The process for buying Spanish property is uncomplicated, so if you take some time to understand the order in which things happen, and the additional costs before you start of the process of buying a property, hopefully you'll be able to avoid any unexpected expenses.

When preparing your budget for the purchase of a property in Spain, it´s important to consider the total expenditure that will be needed to secure your new home and when you will be expected to pay.

Once you have found your perfect property in Spain and negotiated the sale price with the estate agent, you will be required to sign a reservation contract. This commits both buyer and seller to complete the sale. You will be asked to pay a reservation deposit to secure the property at the price agreed between you and the seller. This is depending on the agreement but ranges from 3.000 € up to 10% of the purchase price and will be deducted from the final sale price upon completion.

The Número de Identidad de Extranjero (NIE)

If you have not done so already, you will need to apply for a Spanish fiscal identification number known as an NIE. You cannot buy a property in Spain without an NIE, and we can apply for an NIE on your behalf even if you are not physically present in Spain.

If a property is to be registered jointly, each person will require their own NIE.

You will also need a bank account in Spain. Applying for a bank account is relatively straight forward and requiring only your residential address, your tax ID from the country you pay tax, and a valid passport to prove your identity.

You will need to appoint a Spanish lawyer who specialises in conveyancing work. Your advisor will work on your behalf to ensure that the essential paperwork is in order, that there are no debts secured on the property, that all appropriate permissions are present, and that everything is in place to allow the sale to proceed without complications either now or in the future.

We can recommend a company who are fully registered and most importantly for the lawyers are registered to the colegio abogados

 

The costs of appointing an advisor to administer your property purchase in Spain varies, but expect to pay around 1.500€

Your advisor will arrange a date for completion of the sale that is suited to both buyer and seller. This meeting usually takes place around 4-6 weeks after the purchase price has been agreed, but it can be sooner or later depending on the individual circumstances of the sale.

The appointment will be arranged at a Notary´s office with both buyer and seller and their representative. In case you are not able to travel and attend the notary appointment, it is advisable to have provide a power of attorney to your lawyer who will then represent and act in your behalf.This also enables them to apply and collect your NIE number/s.

It is at this point that you will be asked to provide the remaining funds to cover the purchase price of the property, either in the form of an electronic bank transfer or in bank draft. In either case, the funds must be transferred in Euro´s and usually payment in other currencies cannot be accepted. Again we can put you in contact with a fully legal and registered to the Bank of Spain money FX company.

As a buyer, you will need to pay a purchase tax called IPT, or Transfer tax. This is paid to the Spanish Tax Office (Agencia Tributaria) subsequent to completion and amounts to 10% of the property´s purchase price in Valencia region and 8% in Murcia. Other regions in Spain vary from 5% to 10% of the purchase price.

Notary

Notary is a registered legal representative of the Spanish government and operates independently of your interests.

The Notary oversees the completion transaction between you and the seller, ensures that the balance of the purchase price and taxes are paid in full, and manages the signing of the deeds (the escritura). Notary fees vary depending on the purchase price of the property, but typically cost from €700 to €1,400.

Once the contract has been concluded the Notary registers your property with the Spanish Land Registry (Registro Catastral) in the new owners name(s). There is a fee payable for registration which is generally half the cost of the fee charged by the Notary.

As a rule of thumb, allow an additional 12-15% above the agreed purchase price to cover additional expenses associated with the purchase of a property in Spain.

  • Conveyancing costs, approximately €1200 plus tax
  • Obtaining an NIE, around €100 per person
  • Property Transfer tax, 10% of the agreed purchase price in Alicante region and 8% for Murcia
  • Notary fees, from €700 to €1,400
  • Property registration fees, about half the cost of Notary fees
  • And sometimes a Power of attorney is the simplest way to conduct the transaction and costs around 75€ in Spain if you can attend in Person otherwise depending on your country of residency can be upto around 500€ for making the power of attorney from your place of residence afterwards.

Costs will differ for new build properties as first registration costs 1.5-2% depending on region, and if you intend to apply for a mortgage you will incur some additional costs also.