Now that we have a plan for the gradual lifting of lockdown, we can start to plan holidays to our favourite destinations once more. Some of you may be fortunate enough to have a holiday home in a favourite country in Europe. Here’s what you should know about visiting your holiday home now that the UK is no longer a member of the EU.
How long can I spend in my holiday home?
The first thing to remember is that UK citizens can only spend 90 days in a rolling 180-day period in the Schengen zone which, broadly includes most of the European and EEA countries. Bulgaria, Croatia, Cyprus and Romania form a separate bloc with another combined 90-day limit and visits to these countries will not impact on your 90-day limit in the Schengen area.
When you wish to enter the Schengen zone you need to look at the last 180 days and establish whether you were present in the zone for more than 90 days. Your visit is counted from the date of first entry into the zone and your days of arrival and departure count as full days.
Essentially, you need to have been absent from the zone for an uninterrupted 90-day period to qualify for another 90 day stay.
For example, let’s assume that you have a holiday home in Portugal and you prefer to spend most of the winter there, if you arrived 1 January and stayed until 31 March you have reached your limit of 90 days. You need to spend 90 days in a non-Schengen country, the earliest you can return to your home in Portugal is 30 June. You could stay until 27 September (another 90 days) the earliest you could return would be 27 December. In this example you have spent all your days in Portugal. It is possible for you to take a holiday in another country in the zone but your combined days in the zone cannot exceed the 90-day limit in a rolling 180-day period. If you have family that are permanently located in the country, you will need to consider family occasions and plan your visits and day counts accordingly.
If you want to stay longer in the country you will need to apply for an appropriate visa.
There is not a common policy for Schengen Member States, but each state applies different types of penalties if you exceed your days in the zone.
You can be fined or deported back to the UK and may find that future entry is banned for an appointed period of time.
If you want to spend more that 90 consecutive days in your holiday home, you will need to apply for a long term-visa that lasts for up to a year or apply for residency in the country in which it is situated. The requirements and processes vary in each country. More information can be obtained form the relevant country’s consulate or embassy in the UK.
If you spend 183 days or more in the tax year in the UK, you are considered automatically UK tax resident. There are no EU-wide rules on tax residence but in general you will be considered tax resident in a country if you spend 6 months or more there. The country where you are tax resident can tax you on your worldwide income and gains.
If you end up as dual resident the double tax treaties between the UK and most countries will prevent you form paying tax twice but there may be other associated charges which you cannot offset.
Letting your holiday home
Check that you are allowed to let your property. You should also check the conditions of your insurance policy as you may need to arrange for someone to check on your property when you are away now that you can only spend limited time in the Schengen area.
You may find that, because the UK is now a ‘third country’ as far as Europe is concerned, you may pay a higher rate of tax on rental income in the country where your holiday home is located. As long as you are still UK resident you will also be taxed on your foreign rent in the UK but will be able to claim credit for some, or all of the foreign tax suffered under the terms of the available double taxation treaties.
European Travel Information and Authorisation System (ETIAS)
This is a new system which should come online in late 2022 and will be mandatory from 2023. The scheme is being introduced to register visitors from visa-exempt non-EU nations. You will need to complete an online application. You will be asked to provide your personal and passport details and answer questions about health and security to obtain an approved ETIAS visa waiver which will be sent electronically.
The authorisation will be valid for 3 years or the expiry of the passport if this is earlier. A fee will be payable.
If you drive in Europe check the requirements of the countries you will be driving through to see if you need a green card, extra insurance and an International Driving Permit. If you take your own car to Europe remember to take your log book (V5C). There is conflicting information about GB stickers, err on the side of caution and display a GB sticker even if your number plate shows GB and the union flag.
Ensure that you have adequate health insurance cover in case you are taken ill whilst abroad.
For advice on visas, letting foreign property and UK tax compliance, please contact our Private Wealth Team.
Denise Baugh Tax & Trust Executive – Private Wealth & Tax
T:+44 (0)20 7201 3575