Why not retire to Spain?

It’s a time that people look forward to. The time when they no longer have to jump to the alarm and can wake up at their leisure and set the agenda for the day. But what if you want more from your retirement?  The answer could be to retire to Spain.

Retirement may be much anticipated and longed for, but it can also bring with it a sense of loss. For many people, work becomes part of their identity. ‘What do you do?’ is a natural part of the conversation on meeting someone new and we have all practiced and perfected our response. Having spent so many years wishing that the weekend could be longer and every day a bank holiday it can come as something of a shock when it arrives.

For some people it leads to thinking again about the future. And for some, making the decision to retire to Spain.

Why Spain?

The competition is tough, but Spain is a favourite retirement destination and with good cause. The weather is such that you can expect most days to be sunny and clear, even when it’s winter. Temperatures for most of the year are more than agreeable and allow you to take plenty of outdoor exercise, enjoy your mealtimes in the fresh air and take pleasant evening strolls.

The cost of living is relatively low. There is plenty of property here that compares favourably with other European countries. Spain is within a few hours flight time of most European countries and has a fascinating history, culture and architecture that means you can spend your next years travelling and exploring its rich and diverse towns, cities and countryside.

How can you retire to Spain?

So, if you’ve set your heart on coming here, what do you have to do to make it happen? Of course, much depends on your country of origin. It’s your passport that determines which documents and information you will have to share to make this your retirement home. If you are a national of an EU country then it is relatively easy to retire to Spain. However, there are alternative ways in which you can move to Spain if you’re a national of a non-EU country.

Retire to Spain: non-EU country

In order to apply for a Spanish visa if you are a national of a non-EU country, you will need:

• Proof of your financial status
• Private medical insurance
• A criminal record check
• A medical certificate
• A marriage certificate (to apply as a married couple)
• A birth certificate (for minors)

Firstly, you will need to prove that you have enough income to support yourself without receiving income from a Spanish job. The current figure is just over 27,000€ a year. For each additional family member you need to have 6,778€ income to retire to Spain. This could come from a savings account, pension, or dividends.

If you receive a British pension you are entitled to state healthcare in Spain paid for by the UK. You can obtain it through submitting an S1 form. However, if you have retired early then your private pension will not enable this as an alternative and you will need private medical insurance. If you are moving before you retire, then similarly, you will need a private medical insurance.

Tax implications once you’re in Spain

How much tax you might have to pay varies according to your individual circumstances and you should take advice to ensure that you make the right decisions about which assets to keep in the UK once you have moved to Spain.

Be aware that Spanish foreign residents must complete a 720 asset declaration form once they are resident in Spain before the end of March for the previous tax year.  A pension lump sum is fully taxable in Spain so you might want to take yours before you leave the UK if you are able.

A Government service pension is only liable to UK tax and is not directly taxable in Spain. However, it is taken into account and when added to any other income you may have it can raise the rate at which you will be taxed overall.

If you are a resident in Spain then UK occupational and state pensions are taxed only in Spain. The state retirement pension is sent as a gross amount and you will need to pay income tax on it depending upon any additional income you receive.

Next steps to retire to Spain

If you feel this is the right move for you and you have the financial wherewithal to do it then what’s your next step? Firstly, you need to take some individual advice. Each case is different and it would be useful to speak to a specialist who can help you with your application. 

Secondly, you should start to consider whereabouts you might like to retire in Spain. You might already have a property here as a holiday home, in which case this isn’t an issue. If you don’t, some people prefer to rent a property initially. This helps them in finding out what suits them best and ensuring that they have what’s needed to live here permanently.

If you rent, just be aware that once you sell your property in your home country then you may be liable for paying capital gains tax on it. This is not the case if you sell your property before becoming a tax resident in Spain. Again, it is best to take advice before making any significant decisions such as this.

Take plenty of time to talk with family and friends about your plans to retire to Spain. It’s a very big decision and people will have different views about it, that you will want to listen to. There are also many sources of information from people who have already made the move themselves. In most cases these will be very positive. The opportunities to enjoy a healthy and fulfilling later life here are extensive.

You will also hear stories about mistakes made and from those for whom it wasn’t the right move. In most cases, these will be the result of a misunderstanding about what to expect once you’re here. This is why it’s so important that you do your research, spend some time visiting different locations and keep in mind all the pros and cons of this momentous move before you retire to Spain. With this in the bag you could find your retirement opening up a whole series of exciting new experiences and adventures that will see you recording these days as some of the best of your life.