If you own a holiday home in Europe that you rent out for part of the year, you may have to pay more tax on your European property thanks to Brexit.
Now that the UK has finally left the EU some taxpayers will start to see additional tax costs. One example is where UK residents own holiday homes in EU countries that they rent out for part of the year.
European property owners hit by tax rise
Owners of EU rental properties may now be required to pay more tax in those countries, having previously benefited from a lower rate of tax for EU nationals. Those renting out Spanish properties for example will see the rate of tax they pay in Spain increase from 19% to 24%. There would be double tax credit relief for the overseas tax suffered against the UK tax liability on the rental income, but those who pay UK tax at 20% will see their overall tax bill increase as a result.
Capital tax increases for overseas property owners
The UK leaving the EU may also have the effect of increasing the amount of capital taxes and social security taxes payable by property owners. Capital taxes include IHT and CGT, both of which are effected by your residency and domicile status, so it’s important to get the advice of a professional advisor when considering your tax planning.
The property tax rules vary from country to country, so contact us if you are likely to be affected by these changes.
Do you own an rental holiday home and want to find out how Brexit may effect you? Get in touch and we can help you to make the most tax-efficient choices regarding your properties both in the UK and abroad.