Retiring to Spain

The most popular destination for retiring Britons, Spain is still attracting retirees, despite the uncertainties of Brexit. It has a high standard of living and reliable sunshine.

The following are brief extracts from a new book and website, ‘Retiring To Europe’.

Spain has a reputation for high taxation, but this is not always true. With the right advice you may find you could pay less tax than you would in the UK.

It is important to understand where you are tax resident. In Spain, you are considered to be a tax resident if you spend more than 183 days during the Spanish calendar year, or if your family, main professional activity or most of your assets are based in Spain.

If you are a Spanish resident, you will be liable for tax on your worldwide income and gains. Non-residents of Spain will be liable for Spanish income tax only on Spanish-sourced income and capital gains.

 

Cost of living

The cost of living in Spain remains significantly lower than in the UK in many areas. Travel is far cheaper, including the cost of petrol, train tickets and public transport. So is drinking – there are still many places where you can buy a glass of wine or a small beer for €1.

If you are eating out at Michelin-starred restaurants or fashionable beachfront places, then you would expect to pay the highest prices. But the ‘menu del día’ is widely available across Spain and it’s the way the Spanish get to enjoy a two- or three-course meal for €10 or less.

 

Property

After years of recession, 2015 marked a turning point for the Spanish economy and property market. Estate agents had been forecasting the bottom of the market for a few years, but it seemed there was always a little further to fall. But 2015 saw greater economic growth than the EU average and, in some areas, a return to more positive levels of property sales, mortgage approvals and new construction.

Prices fell dramatically – by up to 50% on the Costa del Sol and Costa Blanca – after the 2008 global crisis, and the number of empty properties was believed to have hit one million.

But in some areas, there is a sense of business as usual with overseas property buyers back in the market and movement in the domestic market, with the increased availability of mortgages.

 

Healthcare

Emergency cover in Spain is available to anyone, whether you are an EU or non-EU citizen. To qualify, you will need to register on your local town hall’s census (padrón), which brings a variety of other benefits including discounts on your IBI tax (which is similar to the UK’s council tax), the right to vote and free or discounted access to municipal services such as sports centres and libraries.

If you live in Spain and receive a UK state pension or long-term incapacity benefit, you may be entitled to state healthcare paid for by the UK. You will need a Form S1, which must be obtained in the UK and certifies that you are of retirement age and have paid all the necessary social security taxes in the UK. You will then be entitled to the same benefits as a Spanish national.

If you do not qualify for free state healthcare you can take out private health insurance, or pay the full cost of any medical treatment. AXA International quote €6,600 per person per annum for comprehensive cover with no excess and inclusive of taxes, based on a couple aged 65 in good health.

Another option is the Spanish health scheme called the convenio especial. If you have been registered on the padrón at your town hall for a year, then you can participate in a state insurance scheme for a basic monthly fee (about €60).

 

  • You can find much more information on retiring to Spain and other European destinations by going to retiringtoeurope.com. There you can download the complete 276-page guide.