Consider Moving Your UK Business to Spain’s EU Wide Market

Businesses in the United Kingdom have recently had to deal with two seismic shifts to their environments.

The covid pandemic has had multiple implications for businesses at all levels. The phasing in of more and more of the Brexit regulations and procedures has also changed the landscape for businesses both large and small.

Some sectors have faced a shortage of labour recently. In some cases, this has been down to travel restrictions imposed by the pandemic or by EU citizens choosing to move back home post Brexit as the exchange rate for money earned in the UK becomes less appealing. With the way the world has now moved many people are also reassessing their personal priorities and making career shifts and geographical moves.

Another people related result of the pandemic has been the enforced move to working from home for businesses where this is possible. This has had the result of opening up a global labour pool for those that are able to do it. An increase in the amount of outsourcing of work that is not a company’s core specialism has also resulted. This means that location can be less of a factor in choosing where to headquarter a commercial venture.

Now that there is no longer seamless movement of goods and services between the EU and the UK there is no longer such an easy access to the EU market for UK based companies. In fact, the BBC recently reported that United Kingdom food and drink exports to the EU halved in the first quarter of 2021 as can be seen in the report here. The BBC also reported that even before Brexit was implemented a third of IOD members were considering relocating to the EU.

Considering all the above it is only good sense for UK based businesses to at least consider and investigate the option of moving operations into an EU member state. This is something that there is evidence of happening already. When talking to Miguel Ramos from Javea Estate Agent he reported that “Since just before Brexit there has been a huge increase in interest in our commercial properties. In fact, transactions in our commercial side have more than doubled in the past three years and a lot of the buyers have come from outside Spain.”

It is critical to enlist specialist advice in terms of the legalities and tax position for example and this article is in no way meant to be a replacement for professional input however there are several interesting factors to consider.

Relocating a business from the UK to Spain gives the immediate advantage of direct access to the 500 plus million market of EU citizens if that is appropriate for your business model.

If you can either provide your services remotely or hire staff that add value to your business by remote working, then limits of location are less of a concern.

There are various schemes set up by the Spanish government that may be advantageous. As an example, it may be worth engaging legal advice around the options for paying tax as a non-resident or for setting up an efficient investment vehicle for your tax liabilities.

There are specialist companies that will help with the move and then as well as the commercial benefits you will be able to tap into the joys of Spain which include:

  • A gorgeous climate
  • World class health services
  • An affordable cost of living
  • Beautiful coast, countryside, and mountain terrain
  • Enviable all-round quality of life

Thinking of Relocating To, or Visiting Spain? 

I work at and have lived in Spain since relocating from the UK in 2006. Here is a selection of tips that I hope will be helpful if you are choosing to move to Spain or if you will be visiting Spain in 2021.

  1. Although a lot of people speak the English language in Spain nowadays, it is vital that you try and pick up some of the language so that you are more appreciated by those who live within the country, and will be able to integrate into your local community with less difficulty than those who do not make an effort to learn.
  2. It is advisable to accept that Spain has a slower way of life than in other countries. Be prepared to take your time over activities such as dinner and be patient when waiting in queues. You may be surprised that some small shops have seats – it is because you might be there a while waiting for your turn!
  3. Learn the laws in Spain so that you do not run into any problems. Ignorance of the law is not taken as an excuse if you offend in Spain.

A selection of tips for individuals who are travelling to Spain:

1.The sun is very bright in Spain, so it is a good idea to invest in a high-quality pair of sunglasses. If you do not do this, you will be squinting a lot of the time and may have sore eyes by the end of your trip.

2.Choose natural fibre clothes that are loose-fitting so that you do not become overheated. It can be an excellent idea to get glammed up in the evenings but remember that it is always sweltering in Spain during the summer months.

3.Choose a nice quality pair of sandals to wear throughout the day as your feet may become sore and swollen if you do not invest in a pair of open footwear that you find comfortable.

My top three cities to visit in Spain:

  1. Alicante is a beautiful location that is described as a city but feels more like a village. Many places of interest are within walking distance of each other, and the site has a wonderful waterfront.
  2. Barcelona is a bustling city that has a wide range of attractions. It is also filled with exciting places to go, and you will always find someone something new. There are tourist buses that offer a hop on and off service, or you can hire a bike at a low cost to tour the city.
  3. Cartagena is a location that dates to Roman times and has a lot of history relating to the Spanish Civil War. This city has a wide selection of museums and attractions to enjoy.


Are 100% UK Mortgages Still Possible?

During the property boom, 100% mortgages were available. With falling house prices and negative equity, first-time buyers are finding that 25% house deposits are normal.

Things were very different just a few years ago: Rising house prices quickly created equity, loan defaults were low, and house repossession rates were minimal. In those times, lenders were happy to allow borrowers to take out a 100% mortgage. The world is now a very different place.

One of the biggest obstacles a first-time buyer faces, in terms of getting a foot on the property ladder, is raising a sufficient house deposit. The 100% mortgage helped many first-time buyers get round this problem, but this is no longer an option in the current economic climate.

Falling House Prices and Negative Equity

Falling house prices and the risk of negative equity have led to 100% mortgages being withdrawn from the market, which gives most owners less chance of selling your home. Northern Rock got into massive financial trouble by over-exposing itself to property. They created a mountain of bad debt by offering 125% mortgages to borrowers. Loan default problems set in when the inevitable effects of house price falls and negative equity set in.

According to a report by Standard and Poor; falling house prices were plunging 60,000 people a month into negative equity.

The Availability of 100% Mortgages

There aren’t currently many financial institutions providing 100% mortgages without collateral. However, it is possible for a first-time buyer to get a 100% mortgage, provided that they have a guarantor. A guarantor is normally a parent or friend who uses their own home as collateral in the event of loan default.Although the 100% mortgage is no longer feasible for many first-time buyers, it is still possible to get a 90% mortgage. However, those seeking a 90% LTV can expect to pay a higher APR, due to the higher risk of negative equity and loan default.

Most first-time buyers require a house deposit of 25%. However, there are some 90% and 95% mortgage deals available, for those with good credit and employment prospects. Whether a first-time buyer should be considering buying without a large house deposit, is a matter of some conjecture.Those seeking the best mortgage deal should also consider utilising the services of a mortgage broker, to help reduce mortgage repayments.