Explore the Considerations and Requirements for Retiring to Spain from the UK!
Spain has long been a dream destination for British retirees, and one of the most popular retirement destinations in Europe.
With its sun-soaked Mediterranean coastline, rich cultural heritage, and affordable cost of living, it's no surprise that a small percentage of the 8.7 million expats from around the world choose to spend their golden years in Spain.
In 2024, more than 130,000 British nationals have chosen to retire in Spain for those wishing to expand their social circles easily and gain a Mediterranean climate. However, following the UK's exit from the EU, there are now many considerations to go through for UK citizens looking to retire in Spain.
In this blog, we'll go through the different considerations and specific requirements, allowing you to begin your Spanish retirement plans, the Easy way.
Table of Contents:
Why Do People Retire to Spain?
The most obvious reason to retire in Spain, is of course, the Mediterranean climate and the slower pace of life that comes with it. Spain has been a magnet for British retirees for decades, compared to the often unpredictable and wet weather in the UK, Spain's year-round warm temperatures make it ideal for outdoor activities, whether that's lounging on the beach, playing golf, or simply enjoying a walk regularly.
Another major draw is Spain's affordability, especially compared to the UK. For many retirees, the cost of housing in Spain can be significantly lower, particularly outside of the major Spanish cities.
Coastal regions like the Costa Blanca and smaller Andalusian towns such as Malaga, Marbella, or Nerja perfectly combine the benefits of affordable property options with proximity to stunning beaches and breathtaking views.
Furthermore, Spain's healthcare system ranks among the best in Europe, and many British retirees find that they can access high-quality medical care at a lower cost than the UK. Especially when taking advantage of Spain's public healthcare system through agreements like the S1 scheme for UK pensioners. We cover this in more depth a bit further down!
Can People from the UK Still Retire to Spain? (A Look at Visas and Financial Requirements)
The short answer is yes, UK citizens can still retire to Spain from the UK, however, since Brexit, all British citizens are now treated as non-EU nationals. This means UK retirees now need a visa to stay in Spain long-term.
Residency Permits and the 90-Day Rule
If you are a British citizen who was living in Spain before the 1st of January 2023, the Withdrawal Agreement guarantees your right to continue living in Spain. However, if you have not already, you will need to apply for a Tarjeta de Indentidad de Extranjero (TIE) - otherwise known as a Spanish Foreign Identity Card - to formalise your residency status.
For new arrivals post-Brexit, the process is more complex.
UK retirees now have to meet more stringent financial requirements, secure health insurance, and apply for a type of long-term residence visa.
UK citizens are now treated as third-country nationals, subject to the Schengen visa rules. This means that without a residency permit, British nationals can only stay in Spain for up to 90 days within 180 days.
Therefore, if you are looking to retire in Spain from the UK, applying for a visa is essential.
The most popular option for retirees is the Non-Lucrative Visa, which allows people from the UK to reside in Spain but prohibits them from working or conducting professional activities.
One of the key requirements for the Non-Lucrative Visa is providing sufficient financial means to support yourself without relying on Spanish welfare. The specific financial requirements are as follows:
- Individual Applicants: Individual retirees must prove that they can have an annual income of at least 400% of the Spanish IPREM (Indicator Publico de Renta de Efectos Multiples). As of 2024, this equates to roughly €30,240 per year.
- Additional family members: For multiple applicants, or family members joining, an additional 100% of the IPREM is required, or approximately €7,560 per year.
This income can come from pensions, savings, investments or rental income.
Applicants are typically asked to provide bank statements and pension proof showing regular income to qualify for the Non-Lucrative Visa to stay in Spain. The funds must be available in a bank account for at least the past six months.
If you're looking at buying property in Spain as part of your retirement plans, our blog goes through the ins and outs of how Brexit has had an impact.
Main Considerations for Retiring to Spain from the UK
What is the cost of living in Spain?
Most British retirees find that Spain is more affordable than the UK, particularly regarding housing, groceries, and healthcare. The cost of living in Spain varies depending on the region. More urban areas like Madrid and Barcelona tend to be more expensive, while coastal towns, rural areas, and smaller cities offer a lower cost of living overall.
Healthcare Costs as a Retiree in Spain
Although Spain offers excellent healthcare, British retirees need to understand the costs involved.
UK state pensioners who qualify can access Spain's public healthcare system via the S1 form, which the UK government continues to offer even post-Brexit.
However, many expats choose to purchase private health insurance to avoid long waiting times in the public system.
For retirees who do not qualify for the S1 form (usually those who aren't of state pension age, which is 66 years and 2 months), obtaining private healthcare is a requirement to secure a visa, and premiums vary depending on age and health condition.
Budgeting for private healthcare is a crucial consideration for those looking to retire in Spain.
Tax Requirements for British Retirees in Spain
Tax Residency
Once you move to Spain and spend more than 183 days per year there, you will become a tax resident.
As a tax resident, you are subject to Spanish taxes on your worldwide income, which includes pensions, savings, investments, and rental income from the UK.
Double Taxation Agreement
Fortunately, the UK and Spain have a double taxation treaty, meaning you won't be taxed twice on the same income. The treaty dictates which country has the right to tax various types of income:
- UK Pensions: Generally, private pensions from the UK are taxed in Spain if you are a Spanish tax resident. State pensions are only taxable in the UK.
Other things to consider regarding Pensions:
- UK state pensions continue to be uprated in Spain, meaning you will still receive annual increases.
- Transferring UK private pensions to Spain is possible through the Qualifying Recognised Overseas Pension Scheme (QROPS), but seek professional advice as tax implications can be complex. - Rental Income: If you have a rental property in the UK, you'll need to pay tax on that income in the UK, but you must also declare it in Spain. You can claim a credit in Spain for the tax paid in the UK, avoiding double taxation.
- Investment Income: Dividends, interest, and capital gains earned from UK investments are taxable in Spain.
A Look at Spanish Tax Rates
Spanish tax rates are progressive, ranging from 19% to 47% on income depending on your income bracket.
Spain also levies a wealth tax on individuals whose global assets exceed certain thresholds (currently €700,000, although regional variations apply). We advise those looking to retire in Spain from the UK to plan and gain support to become as efficient as possible with their taxes to avoid unexpected financial burdens once in Spain.
Property Taxes in Spain
If you own a property in Spain, you'll be subject to local property taxes, including:
- Impuesto sobre Bienes Inmuebles (IBI): A property tax based on the cadastral value of your home.
- Pluslavia: A local tax on the increase in land value when selling a property.
For those renting out a property in Spain, income from rental must also be declared on your Spanish tax return, with tax rates on rental income ranging from 19% for EU citizens and slightly higher for non-EU nationals.
Summary of Practical Steps to Retire to Spain from the UK
Apply for a Visa
For those retiring post-Brexit, the first step in the process is applying for a long-term visa to stay in Spain, this can be done at the nearest Spanish consulate. The application process typically involves providing proof of financial resources, health insurance, and a clean criminal record.
Make Sure to Secure Healthcare
Depending on your eligibility for the S1 scheme, you can apply for this through the NHS or alternatively purchase comprehensive private health insurance before you make the move to Spain.
Open a Spanish Bank Account
You'll need a local bank account to handle day-to-day transactions, pay bills, and manage finances in Spain.
Plan Your Tax Strategy
Consult with tax professionals to understand how to best manage your pension, investment income, and other financial matters, taking into account Spanish tax laws and the UK-Spain double taxation treaty.
Understand Local Spanish Property Laws
Whether you plan to rent or buy property in Spain as a non-resident/retiree, it's important to understand local property laws, taxes, and the potential financial implications.
Manage Foreign Exchange Impact, with EasyFX
Once you've moved to Spain and have a local Spanish bank account opened it'll be important to consider the various ways to transfer money to Spain from your bank account in the UK, especially if you have rental income from the UK.
A lot of people don't consider the high fees and poor exchange rates offered by popular banks in the UK, and therefore lose out, where they don't need to!
At EasyFX, we are experts in foreign exchange and regularly help retirees abroad move and manage their money across borders. We are regulated and authorised by the FCA, meaning customer funds are always safe and secure in segregated accounts.
Our goal is to make transferring money internationally, Easy, and affordable.
We do this by offering competitive, fair, exchange rates and do not add on any transfer fees for any international transactions to Spain.
If you need to make regular international transactions to Spain from the UK for your retirement plans, then please get in touch with our team of experts today who will be able to support and help you.
Need to Send Money to Spain, or back to the UK? We Can Help.
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If you'd like to receive a free transfer quote, please contact our team today!
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