Tax changes which will follow the UK's withdrawal from the European Union are likely to have an important effect on the property sector on the Costa del Sol, about 50 per cent of which depends on the British market.
Unless an agreement can be reached to the contrary, from next year Brexit will result in fiscal modifications which will affect British citizens who live in the UK and earn money from renting out properties they own in the EU.
Around 50 per cent of the properties sold on the Costa del Sol, especially in Marbella, Mijas and Estepona, are bought by British people as holiday homes and are rented out during the times the owners are not using them.
The tax changes which will come into force after the transition period, if there is no specific agreement between the UK and Spain beforehand, will have a significant impact. At present EU citizens, although they are not resident in Spain, have to pay 19 per cent tax on the rental income they receive, after deducting related expenses including the commissions charged by holiday rental platforms.
This has to be paid quarterly after registering as non-resident owners of properties, and the tenants are listed as subsidiary payers.
Once the Brexit transition period has ended, because these owners will be residents of a non-EU country, they will have to pay 24 per cent tax on the gross rental income and will not be able to deduct any type of associated expenses.
This was explained in Marbella on Tuesday by economist Santiago Lapausa, who was one of the speakers at the 'Brexit ¿Y ahora?' conference organised by the Centro de Iniciativas Turísticas (CIT) Marbella, together with lawyer Ricardo Bocanegra and the British Consul in Andalucía, Charmaine Arbouin.
This change in tax on rental income could have direct consequences on the property market, because many of the British citizens who buy properties on the Costa del Sol do so not just with their own holidays in mind but with the idea of earning income to help them make the mortgage payments.
Many estate agencies in the Marbella area, as well as property management companies, earn part of their income from handling the rentals of these properties.