Brexit: Ongoing negotiations, and tax issues for those owning property in the EU
Tuesday, 09 February 2021
Despite the Brexit deal in its present form being over 1,000 pages, there are still matters that will require ongoing negotiation and agreement. Furthermore, for those who own property in the EU, tax issues are already coming to light.
- Whilst trade between the UK and EU will not be subject to tariffs and quotas, goods must originate in the UK or EU to benefit from the free trade regime. We have already seen that regulatory red tape and border controls will affect trade and add significant cost to both UK and EU businesses, even when it settles down and works smoothly.
- No agreement was reached for recognising each other’s standards. This could mean two certifications, and may be particularly challenging for agriculture and just-in-time supply chains.
- Level playing field: The EU insisted upon common standards for a fair and open competition to prevent one market undercutting the other. This involves workers’ rights and social and environmental regulations. The UK is not required to adopt identical rules, but I dare say we’ll hear more about this in the future.
- Fishing rights: For some reason, this issue caused a very disproportionate amount of negotiation, bearing in mind that it accounts for 0.1% of the UK’s GDP. Again, a compromise was reached, each side giving a bit. The fishing industry is a vocal lobbyist and I guess we can all sympathise; we wouldn’t want to be without our fish and chips!
- Professional and financial services: The agreement failed to address issues critical to this UK sector, all the more surprising when it accounts for 80% of the UK’s GDP. This will be a huge area requiring negotiation and hopefully agreement. Potentially, organisations will have to establish, qualify and register separate entities in the EU. Watch this space, but already, banks, insurers and investment companies have established themselves in EU cities.
As people review and analyse the agreement there are many matters that will come out of the woodwork. Some will ‘come back and bite’ if we’re not careful. I’ve tried the government online checker tool and I think it’s a very useful tool, both for businesses and private individuals. The checker tool on gov.uk/transition will give you a personalised list of actions you need to take now, or for any further queries, you can make contact with dedicated business support helplines.
Owning property in the EU
At Larking Gowen, we’ve already spotted a couple of areas of concern for people owning property in the EU.
Selling a holiday home in France
UK residents are now required to appoint a tax representative on the sale of their holiday home in France.
Since the UK left the EU, UK nationals not resident in France have ceased to benefit from the exemption to appoint a 'représentant fiscal' on the sale of French real estate. The obligation arises irrespective of whether you make a loss or a gain on the sale of the property. The process is often very opaque and expensive for sellers, who need to be alert to it and to act with caution.
Tax on rents from Spanish property
Gross income in Spain, being taxed at 24% with no relief for expenses, will no doubt spook UK resident owners.
In conclusion, there are still some obstacles, including problems with exporting seafood to Europe; Northern Ireland’s empty supermarket shelves; confiscation of truck drivers’ sandwiches at border control; and the delays at ports. Of course, after 50 years in the EU, it was likely there would be some hurdles after a deal was reached. Thankfully, everyone seems keen to surmount these.
For more information about these or any other Brexit or tax issue, please get in touch with your usual Larking Gowen contact. You can find contact details on the Our People section of the Larking Gowen website. Alternatively, call 0330 024 0888 or email email@example.com.