UNCERTAINLY LOOMS OVER THE FUTURE OF GOLDEN VISA IN SPAIN

The Spanish government has announced plans to take action to eliminate the granting of the so-called “Golden Visa.”

The government argues that this policy has fueled speculation and contributed to the rising cost of housing in certain areas of the country. As a result, these measures will affect investments involving the purchase of real estate properties with a minimum value of 500,000 euros.

Currently, the implementation date of these measures is unknown, as it will require modifications to Law 14/2013, of September 27, which supports entrepreneurs and their internationalization, the legislation that regulates the Golden Visa for the acquisition of real estate.

Although the implementation date of these modifications has not been detailed yet, one of the most relevant questions is what will happen with the renewal of visas that have already been issued. There are several alternative routes to obtain this investment visa, which (for now) will remain in force. These include:

• Investment of 2,000,000 euros in Spanish public debt securities.

• Investment of 1,000,000 euros in shares or equity of Spanish capital companies.

• Investment of 1,000,000 euros in investment funds.

• Investment of 1,000,000 euros in bank deposits in Spanish financial institutions.

• Participation in a business project to be carried out in Spain that is considered to be of general interest.

For all foreigners considering the possibility of obtaining this visa for the acquisition of real estate to settle in Spain, please contact us for advice.

To learn more about the requirements and benefits of the Investment Visa, do not hesitate to contact our office.

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SOCIAL SECURITY: INCREASE IN CONTRIBUTION TO MAXIMUM BASES

On April 12, 2024, the Information Note on the implementation of a new solidarity fee in Spain was published, in accordance with RD 322/2024 dated March 26. This fee will affect workers with higher salaries who contribute to the General Social Security Regime and the Sea Workers Regime, including self-employed workers under the latter regime.

What is the solidarity fee?

The solidarity fee is an additional contribution applied to the salary bracket that exceeds the maximum contribution base. This contribution is regulated in article 19 bis and D.T. 42.ª of the LGSS and is developed in article 72 bis of Royal Decree 2064/1995.

Contribution percentages

The fee will be applied gradually from 2025 to 2045, and the percentages vary depending on the excess of earnings over the maximum contribution base. For example, in 2025, for earnings between the maximum base and an additional 10%, the percentage is 0.92%. This percentage increases progressively to reach 7% in 2045 for earnings that exceed an additional 50% of the maximum base.

Contribution responsibilities

The distribution of the solidarity contribution between employer and employee will follow the same proportion as the distribution of the contribution rate for common contingencies (83.39% borne by the employer and 16.61% borne by the worker).

Important considerations:

  • The solidarity contribution does not affect the Special Regime for Self-Employed Workers (RETA).
  • The regulatory deadline for payment of the contribution ends on the last day of the month following that of the earnings.
  • Companies must electronically communicate to the General Treasury of Social Security the data of the affected workers and the corresponding periods and amounts. • The Labor and Social Security Inspection will monitor compliance with these obligations.
  • The General Treasury of Social Security has verification powers over this additional contribution.

Need advice on the new solidarity fee? At Expat Feliu, we can help and provide you with the necessary guidance to understand and comply with these new regulations. Contact us!

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UK MODIFIES NON DOM STATUS: KEY CHANGES IN TAX RULES STARTING 2025

The Non Dom status in UK has been changed with effect from the start of the tax year 2025/26, that is 6th April 2025. The detail has not yet been published, but we share below below a summary of what is expected to be in the regulations.

New arrivals

  • Regardless of domicile status, new arrivals to the UK will be able to benefit from 100% UK tax relief on foreign income and gains (FIG) for the first four tax years that they are UK resident, providing they have had ten consecutive tax years of non-UK residence immediately preceding the year of arrival. For the purposes of the test, treaty non-residence and split year treatment shall have no bearing.
  • Additionally, no UK tax will be payable on FIG arising in those first four years, should it be remitted to the UK.
  • Where a claim is made to be assessed under the FIG regime, taxpayers will lose their entitlement to the personal allowance and capital gains tax annual exempt amount.
  • The claim is to be made each year and taxpayers can opt in or out in each year of eligibility.
  • After four years of UK residence, individuals will be taxed on worldwide income and gains.
  • Overseas workdays relief (OWR), currently available to UK resident non-dom employees for their first three years of UK residence, will continue to be available to those who make a claim to be assessed under the FIG regime. The three-year limit will remain, but relief will be provided even if overseas earnings are remitted to the UK, which is a significant benefit compared to the current rules.
  • If 2023/24 is the first year of eligibility for OWR, taxpayers can continue to claim it for the full three years.

Current UK residents claiming non domicile status.

Existing UK tax residents who will have been resident for fewer than four years from 6 April 2025 are also eligible if they were non-UK resident for ten consecutive years prior to their arrival.

  • Transitional provisions have also been announced for existing UK resident non-doms who have previously benefitted from the remittance basis of taxation:
  • Foreign income arising in the 2025/26 tax year will benefit from a 50% reduction, for those losing access to the remittance basis on 6 April 2025 and not eligible for the FIG regime. There is no equivalent relief for capital gains.
  • Individuals who are neither UK domiciled, nor deemed UK domiciled on 5 April 2025 may elect, on an asset by asset basis, for non-UK situs capital assets to be rebased to their value on 5 April 2019 for disposals taking place from 6 April 2025, providing they were personally owned on 5 April 2019.
  • A ‘temporary repatriation facility’ will allow non-doms previously benefitting from the remittance basis to remit personally received pre-6 April 2025 FIG to the UK at a tax rate of 12%, during the two-year period ending 5 April 2027, providing a particular benefit for those who have already become deemed UK domiciled. There will also be a ‘relaxation’ of the mixed fund ordering rules.
  • Remittances of pre-6 April 2025 income and gains after the two-year window will be taxed at normal rates, but business investment relief is to continue to be available for qualifying investments.

Inheritance Tax (IHT)

The government also announced the intention to transition IHT to a residence-based system. However, acknowledging that introducing such a regime presents different challenges, there will be a consultation on the best way to introduce it.

Offshore Trusts.

Protections for offshore trusts, which currently prevent anti-avoidance rules attributing FIG to UK resident settlors, will be abolished and FIG arising to trusts from 6 April 2025 will be taxable upon settlors who do not make a valid claim to be assessed under the FIG regime.

  • Income arising before 6 April 2025 will not be attributed to the settlor unless distributions or benefits are provided to UK residents who do not benefit from the FIG regime. Modifications will also be made to the ‘onward gift’ rules which currently apply to distributions from trusts which are not immediately taxable but where a UK resident benefits.
  • FIG arising within a trust cannot benefit from the temporary repatriation facility.
  • There is no election to rebase capital assets which are held by a trust on 5 April 2019.
  • While the government will consult more widely on the introduction of a new IHT regime, it was confirmed that non-UK assets settled into an offshore trust by non-UK domiciled individuals prior to 6 April 2025 will retain their ‘excluded property’ status and will not fall within the scope of the new IHT regime.

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RESIDENCE FOR MINORS IN SPAIN

If you’re a foreign parent in Spain, ensuring your minor child’s legal residence is essential for their well-being and security. In this comprehensive guide, we explain step by step how to apply for residency for minors in Spain, ensuring you have all the necessary information for a successful application.

Residence for minors in Spain: what is it and who can apply?

Residence for minors not born in Spain is a vital authorization for those wishing to establish their home in this country. It can be requested by individuals holding legal residence, on behalf of their minor children, and by those who have legal guardianship of minors, on behalf of the latter.

Requirements for applying for residence for minor children in Spain

To apply for residency for a minor child in Spain, you must meet the following requirements:

  1. Demonstrate legal residence of the parents: At least one of the parents must have legal residence in Spain.
  2. Continuous stay of the minor in Spain: The minor must have resided continuously in Spain for at least two years, demonstrable through registration.
  3. Sufficient economic means: Parents must demonstrate sufficient economic means to support the minor, supported by documentary evidence.
  4. Complete documentation: Documents demonstrating the relationship, the minor’s stay in Spain, enrollment in an educational center (if applicable), economic means, and a housing suitability report must be submitted.

Estimated time for response and next steps

The legal resolution period for the application is 90 days; however, in practice, the timeframe can range from 4 to 6 months on average. Once residency authorization is granted, you must apply for the Foreigner Identity Card (TIE) within one month from the notification of the concession. This is done at the corresponding Foreigners Office or Police Station.

In summary, obtaining residence for minors in Spain can be a complex but achievable process with the proper guidance. If you need legal assistance in this process, our team of immigration lawyers at Expat Feliu is here to help. Contact us today!

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Posting of workers abroad: Webinar

Explore the keys of Posting of Workers Abroad in Our Upcoming Webinar!

On november 16th, we invite you to join the webinar hosted by Feliu N&I and Expat Feliu in collaboration with AMEC, focusing on posting of workers abroad and the new social security regulation (ISM/835/2023) which deals with the situation assimilated to social security registration for workers abroad.

In an increasingly globalized world, understanding the migratory, labor, and fiscal aspects is crucial. Are you interested in how the new social security regulation can impact your international operations? Are you wondering about the implications of labor regulations when sending employees abroad? This event is designed to provide answers to these questions and more.

Event Details:

  • Date: november 16th
  • Time: 10:00 AM to 11:30 AM

Montserrat Feliu, Managing Partner of Feliu N&I and Expat Feliu, will lead the event and share her knowledge and expertise on posting workers abroad. You will discover effective strategies to address the challenges of international mobility and gain insights on complying with migration, labor and fiscal regulations.

This event is an invaluable resource for professionals looking to stay informed about current trends and regulations in the field of employee foreign postings.

Register now by clicking on the link below: Registration Form

We look forward to seeing you there!

If you have any questions, please feel free to contact us.

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Digital Nomad Visa: Your Guide to Remote Work in Spain

What is the Digital Nomad Visa?

Due to the changes society has faced and the development of new technologies, companies have been evolving in a digital realm that allows them to attract talent regardless of borders.

The Digital Nomad Visa is a type of visa or temporary residence permit that some countries have implemented to allow remote workers or digital nomads to live and work in their territory for a specified period, usually temporarily.

Who can apply for it?

The visa for international teleworkers, also known as the visa for digital nomads, is limited to teleworkers who are not part of the European Union. Therefore, within the general conditions, we need to consider:

  • The applicant for the digital nomad visa must be a teleworker from a third country (not belonging to the European Union).
  • The company with which the worker has a labor relationship must be located outside Spanish territory.

What Type of Worker Can Apply for This Visa?

Both dependent and independent workers who meet the criteria specified in the relevant regulations can apply for this visa:

  • They must be graduates or postgraduates from a reputable university or business school.
  • They should have the necessary and minimum experience of 3 years in the relevant field.
  • We can also differentiate between employees and self-employed workers:
    • Those working under a labor contract, with a minimum of 1 year of seniority with a company or group of companies. In this case, the company must have a demonstrable and continuous activity for at least one year.
    • Those working as self-employed professionals, with a minimum of 12 months of seniority.

Can I Work in Spain with This Visa?

You can work in Spanish territory depending on the employment status of the worker, as follows:

  • If you are an employee: You cannot work for a company domiciled in Spanish territory.
  • If you are self-employed: You can work for a Spanish company when the work you do is equal to or less than 20% of your total professional activity.

Can I Apply for the Digital Nomad Visa while in Spain?

Yes, you can apply for the visa from both within and outside Spain. Depending on the labor or commercial regime in which the worker falls, they may or may not work for a company established in Spanish territory.

 

While the requirements are specific in both the law and subsequent instructions that have been issued, it’s important to begin the process with experts who can review all the documentation in detail.

Are you a self-employed or employed worker who wants to experience remote work in Spain? At Expat Feliu, we provide comprehensive assistance to help you meet all the legal requirements. Contact us.

You can reach us by email at info@expatfeliu.com, or you can call us at +34 938 75 46 60.

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THE SUPREME COURT DELIMITS MORTGAGE CHARGES DEDUCTIBLE BY NON-RESIDENTS

In the recent ruling 167/2013, of 13 February, the Supreme Court (SC) establishes that non-residents who own real estate located in Spain can only deduct from Wealth Tax (IP), and therefore, in the Temporary Solidarity Tax of Great Fortunes (ITSGF), the mortgages constituted for the acquisition or refurbishment of said real estate.

The Supreme Court stresses that in the case of taxpayers under real obligation, the delimitation of the taxable base of the tax is linked to the property and/or right located in Spain itself, so that the deductible debts are limited to the mortgage charges incurred to acquire or reform the property.

Consequently, if the taxpayer subsequently grants a loan secured by a mortgage on the property located in Spain (i.e. the loan is not linked to the acquisition or refurbishment), it will not be deductible, since, although the two debts are secured by the same property, the mortgage taken out to acquire or refurbish the property is a security interest, whereas a mortgage taken out subsequently and not used for the acquisition or refurbishment of the property is a personal debt secured by a mortgage on the property itself.

Therefore, non-resident taxpayers owning real estate located in Spanish territory must take this ruling into account in their investment and indebtedness strategies on real estate they own located in Spanish territory.

Expatfeliu can advise and support you in analysing the tax impact of your investment and debt strategies on your property located in Spain.

 

NEW SYSTEM FOR THE RECOGNITION OF OFFICIAL FOREIGN DEGREES

On 8 November 2022, Royal Decree number 889/2022 of 18 October came into force, which introduced a new “express” system of recognition and declaration of equivalence of officially valid degrees or diplomas obtained in the framework of foreign higher education systems.

Prior to this law, the procedure for recognition of foreign degrees could take up to 2 years, but now, following this reform, the public administration is obliged to issue a decision within a maximum period of 6 months from the receipt of the application (hence the name “express”).

If the homologation and equivalence procedures were initiated under the provisions of the previous Law, Royal Decree 967/2014, of 21 November, it will be possible to submit a new application as provided for in the reform, provided that you have not yet been notified of the hearing procedure in the previous file and that the new application includes a request for withdrawal of the previous procedure.

In these cases, it will not be necessary to pay the corresponding administrative fees again, provided that the previous fees have been paid correctly.

Finally, it is important to note that this Law only applies to official university degrees that correspond to studies already completed and that it only covers those professions regulated in Spain and contained in the annex of the Law itself.

If you need more information about the new “express” recognition and declaration of equivalence procedure, do not hesitate to contact us!

MEXICO: REFORM TO THE FEDERAL LABOR LAW REGARDING VACATIONS

On January 1, 2023 in Mexico, the reform of Articles 76 and 78 of the Federal Labor Law, published in the Official Gazette of the Federation on December 27, 2022, called “Dignified Vacations” in the draft reform initiative, has entered into force.

  • The reform of Article 76 implies a significant increase in the number of vacation days to which employees are entitled, which in the first year of the contract increases from 6 to 12 days. The vacation period will increase by two days every year until it reaches twenty, and from the sixth year onwards, it will increase by two days every five years.

 

  • Article 78 establishes that the employee must enjoy at least twelve continuous vacation days, however, if he/she wishes, he/she may distribute his/her vacation days as he/she deems necessary.

This reform is applicable on the effective date to all employment contracts in force at that date, provided that it is more favorable to the employees.

Companies must establish a clear procedure for the request and authorization of vacations and the way in which vacations will be accrued for the time worked in 2022, in addition to considering the economic implications of the reform.

 

If you need more information on the Reform of Articles 76 and 78 of the Federal Labor Law in Mexico, please do not hesitate to contact us, our experts in the field will inform and advise you on the new reforms.