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CARS

Spain’s car industry is back on track (but could be derailed by Brexit)

Spain's production of automobiles climbed 5.6 percent in 2016 to 2.89 million vehicles, returning to levels only seen just before a devastating economic crisis, the Anfac carmaker association said on Tuesday.

Spain's car industry is back on track (but could be derailed by Brexit)
Cars on the production line at Seat. Archive Photo: AFP

But it warned that “the devaluation of certain currencies and the emergence of protectionist phenomena in various countries that Spain exports to” had impacted production in the second half of the year, pointing for instance to Britain post-Brexit.

Domestic sales also slowed during this period after state subsidies to buy new, less-polluting cars ended in July.   

Exports account for more than 84 percent of Spanish production, and did well in 2016, rising seven percent to 2.43 million units – more than in 2007 before the crisis erupted, according to Anfac.

But the association said that some countries had shown signs of weariness, such as Britain, one of the biggest markets for Spanish-made vehicles, as the pound has dropped in value since it voted to leave the European Union.   

Anfac said exports to Britain had been dropping around 16 percent monthly since September.

“It's also the case in Algeria, where protectionist measures have contributed to exports from Spain dropping 72 percent, with nearly 20,000 less units sent to the country,” the association said.   

All big European carmakers have factories in Spain, where the auto industry accounts for more than 10 percent of economic output.    

The sector suffered its worst moment in 2008-09 as the global credit crunch hurt demand for new cars across Europe.    

But production has since picked up and it is now one of the motors of the nation's economic recovery along with tourism and agriculture and food.

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BREXIT

BREXIT: Premium Bond holders in Spain may have to cash in if no UK bank account

British residents of Spain have flagged up the latest Brexit consequence that could affect not just them, but also UK nationals living in other EU countries. Holders of Premium Bonds have been warned they may have to cash in their investments if they can no longer hold a bank account in their home country. 

BREXIT: Premium Bond holders in Spain may have to cash in if no UK bank account

The news has been shared on Facebook groups by people affected, after they were sent a letter from the state-owned UK savings bank NS&I (National Savings & Investments) warning them that a UK bank or building society account is an essential requirement for holders of their products. 

Premium Bonds are a type of lottery run by NS&I. Britons or UK residents can invest an amount ranging from £25 to £50,000 (€29 to €58,300+) in the bonds, with a number assigned to each pound invested.

Winning numbers are drawn each month awarding tax-free prizes. The amount invested is completely safe. As much as £1 million is on offer in the monthly draws, with the lowest prize coming in at £25.

NS&I also offers a range of other investment products, such as Income Bonds – which pay regular interest to holders – and Direct ISAs, which are a tax-free savings account. 

According to NS&I, which was responding to questions from The Local, all of their products are affected by this change.

The reason for the warning to customers is the fact that some UK banks have been closing the accounts of their customers based in the EU, given that these lenders no longer have the licence necessary to maintain them after Brexit. 

Judy Filmer has lived on the Costa del Sol for 21 years, and is among the NS&I customers to receive the letter, as did her 95-year old mother, who is also a resident of Spain.

“For many older folks this will be another upheaval to negotiate in the storm left by Brexit,” she told The Local.

“NS&I and Premium Bonds are cosy ways of saving, and pensioners find them easy to use.”

Lloyds Bank, Barclays and Coutts are among the lenders who have been closing accounts of their UK customers resident in the EU.

Other banks, however, including HSBC, Santander and NatWest, are currently taking no such action for clients that fall into this category. 

The letter sent earlier this year by NS&I stated that “some banks and building societies in the UK have told their customers living in certain EU countries that they will no longer be permitted to hold their UK-based accounts” since the Brexit transition.

“As you live in one of those countries,” the missive continues, “we realise that this could affect your ability to continue holding your NS&I Premium Bonds and Income Bonds account(s). This is because you need to have a UK bank or building society account to continue to operate an account with NS&I.”

The communication from NS&I goes on to warn holders of its products that they will have to provide details of another UK account held, or if “you don’t have access to another UK account in your name, you will need to close your NS&I account.” 

Speaking to The Local, NS&I clarified that “it would be impractical and against NS&I’s Customer Agreement (terms and conditions) for [these customers] to continue holding NS&I products. NS&I’s Customer Agreement requires customers to keep a UK bank or building society account open in order to operate its accounts.”

However, all is not lost. NS&I confirmed to The Local that “any UK bank or building society account that can receive BACS payments” will be accepted for holders of its products living in the EU. 

premium bonds

HSBC, Santander, NatWest and other banks are currently taking no action against clients abroad regarding Premium Bonds. (Photo by ADRIAN DENNIS / AFP)

London-based financial technology company Wise (formerly TransferWise) does offer such an account.

“British nationals living in the EU can open a Wise Account to get their own personal UK account details, which supports payments made by BACS transfer,” the firm told The Local. “This means UK citizens living in the EU can get a personal UK account number with the Wise Account.”

In practice this means that anyone who holds NS&I products, and is facing having their UK account closed by their lender due to Brexit, can open a substitute account with Wise or a similar firm that supports BACS payments and accepts UK nationals resident in the EU as customers. 

Providing, of course, no more ‘Brexit benefits’ arrive…

Breakout box: Tax on Premium Bonds

While winnings from Premium Bonds are tax free in the United Kingdom, it’s a different story if you are living in Spain.

The Local spoke to Spain-based financial adviser Chris Burke, who explained that the rules of each individual country determine whether tax is due on prizes from the product.

“In Spain, each year you must declare any monies received from these whether you access this or not, and pay the tax liable,” he explained.

“This would be savings/capital gains tax starting from 19 percent [for amounts up to €6,000] and rising up to 26 percent [for anything over €200,001].”

So be warned: while you might take home a tidy million pounds in the UK if your Premium Bonds number comes up, in Spain you’ll have to share it out with the Tax Agency.

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