Consequences of Brexit in Spain
Following the confirmation of the UK exiting the European Union on 31 January 2020, a transition period has been established until 31 December 2020. The main goal of this transition is to allow the adaptations and negotiations between involved parties, which can be extended if an express request is filled before july 1st 2020.
ESCURA has prepared the following article to answer some of the inquiries regarding the consequences of Brexit in Spain:
Successions and wills
It is advisable for those British citizens who have properties in Spain to review by 31 December 2020 any wills they have signed, in order to check which provisions will remain valid and which not, once the EU laws cease to apply on British citizens.
If a will has not been made, it is advisable to do so before 31 December 2020, since up to said date there may be some aspects regarding goods in Spain that the European laws allow and facilitate.
During the transition period, British citizens and their families from third countries residing in Spain will maintain all their rights under EU law (with the exception of active and passive suffrage in elections to the EU Parliament and the exercise of the EU Citizen Legislative Initiative). Following the end of the transitional period, the Withdrawal Agreement provides that the rights of residence, work, studies and Social Security will be maintained for those already residing in Spain.
In order to prove the legal residence in Spain, the certificate of registration (green certificate) and EU citizens family card must be obtained before the end of the transitional period.
To those British citizens and their families moving into Spain after 31 December 2020 the eventual agreement governing the future relationship between the United Kingdom and the EU will be applicable. In the eventuality that no agreement is reached, and no extension requested to the transition period, then the general Spanish regimen for foreigners shall apply.
The General Data Protection Regulation (GDPR) will continue to apply during the transition period until 31 December 2020. After this transition period the GDPR will no longer be directly applicable to the UK, however, formally the UK will continue complying with the obligations established in the Regulation since the internal Data Protection Act (DPA) was adapted to the GDPR and even foresees the post-Brexit scenario.
However, the exit of the UK from the EU means that the former becomes a third country. According to the GDPR, the international transfer of personal data to third countries and international organizations is only allowed in certain circumstances, consequently most UK organizations that provide goods or services to EU residents will be required to make international transfer of personal data under the conditions established in the GDPR, as well as appoint a representative in the EU, since there is currently no agreement on international transfers for a post-Brexit scenario.
With regard to the Social Security regime, the current situation will continue throughout the transitional period, or until the signing of an international bilateral agreement between the European Union and the United Kingdom (or until 31 December 2021 maximum period: 21 months after withdrawal). Some aspects to consider regarding social security are as follows:
- All UK employees working in Spain must register as residents of the European Union under the EU Settlement Scheme in order to continue their residence in the EU Member State in which they are located.
- Regarding Spain's future contributory pensions, for workers currently paying social security contribution in the United Kingdom, the periods of time paid in the United Kingdom shall, in principle, be taken into account, at least until the end of the transitional period (31 December 2020/21). If, on that date, the Spanish worker continues to pay contributions in the United Kingdom, the periods shall also be calculated, according to the future international bilateral agreement between the European Union and the United Kingdom.
- EU citizens residing in the UK will have access to health care in the UK under the same conditions as British nationals until 31 December 2020, regardless of whether or not they are registered with the EU Settlement Scheme. The same would be the case for those workers in the United Kingdom who provide their services in the Spanish state.
- If, after the end of the transitional period, the EU citizen loses his employment, it will be entitled to unemployment benefits in the country concerned and may export those benefits to its country of origin.
It is recommended that, all contracts in which either party is British to expressly stipulate both the law and the jurisdiction applicable to the contract, thereby avoiding problems of applicable law and jurisdiction after 31 December 2020.
It is also recommended that, all contracts applying or referring to European legislation to be reviewed in order to determine whether such legislation will continue to apply by 31 December 2020.
Litigation and Arbitration
After 31 December 2020 Regulation (EU) 1215/2012 will no longer apply, affecting the following aspects:
- Competition for contractual and non-contractual obligations if the respondent resides in the United Kingdom.
- The acknowledgment of contracts and judicial resolutions as the Regulation will not be applicable, they will not be directly enforceable. Therefore, selection of applicable jurisdiction in contracts is advised.
Will also cease to apply the Regulation (EC) 1393/2007 on judicial and extrajudicial documents in civil or commercial matters and Regulation 1206/2001 on cooperation between the courts of the EU Member States in the taking of evidence in civil or commercial matters. Therefore, the procedures will be more complex.
Trades of purchase and sale merchandise with the United Kingdom
During the transitional period, EU legislation referred to the internal market and customs union will continue to apply in the UK. It will therefore continue to be treated as a member state of the EU regarding declarations of intra-Community operations. In other words, companies will not have to carry out customs formalities, and no tariffs or other levies will be paid.
Once the transitional period ends, for VAT purposes, deliveries to the United Kingdom will no longer be considered as intra-Community deliveries and will be considered exports to a third country, and an export declaration will therefore have to be submitted. In the specific case of deliveries of goods subjected to Especial Taxes, after the transitional period, said deliveries shall be made using the procedure provided for exports in the Especial taxes Law.
For more details, please contact Escura