Retiring Abroad: Spain
Here are just some of the things to consider when you retire to Spain. It’s not an exhaustive list and you should spend time finding out as much as you can about the country before you make a final decision and, where you can, access expert advice on the subject.
Healthcare
If you’re retiring to Spain and receiving a UK State Pension, long-term Incapacity Benefit or Bereavement Benefit, you’re covered for state-run health care in Spain.
You need to register for this by applying for an S1 form (previously E121) from the International Pension Centre.
If you are an early retiree in Spain you can apply for an S1 form (previously E106). The length of time you’ll be covered depends on your National Insurance contribution record in the UK, but with a full record cover will normally last up to two and a half years from the day you stop work. During this time you’ll also be entitled to access NHS care in the UK (but you need to use your UK EHIC if you need health care when visiting another EU country). After this period, if you don’t qualify for an S1 form (previously E121), you should arrange private health insurance or explore what other options might be available to you.
Income tax
You need to look at your tax position carefully. You should seek expert advice on this subject to understand the implications for you.
However, generally, if you are moving to Spain to retire permanently, you will pay income tax on your pension in Spain as Spain has a double taxation agreement with the UK to avoid you paying tax in both countries.
Spanish rates of income tax are:
Tax rates: 2013
Income (EUR) | Tax (%) |
|---|---|
| 1-17, 707 | 24.75 |
| 17,707 - 33,007 | 30.00 |
| 33,007 - 53,407 | 40.00 |
| 53,407-120,000 | 47.00 |
| 120,000 - 175,000 | 49.00 |
| 175,000 - 300,000 | 51.00 |
| 300,000 + | 52.00 |
Personal allowances in Spain are:
Personal allowances: 2013
Age | Allowance (EUR) |
|---|---|
| Under 65 | 5,151 |
| 65 and over | 6,069 |
| 75 and over | 7,191 |
Buying and selling property
The total cost of buying and selling property is around 12%. This includes the Property Transfer Tax (6% or 7% depending on the autonomous region) and the real estate agent’s commission, which is around 2.5% to 3%. It is based on a property purchase price of €250,000.
For new properties, VAT is imposed instead of transfer tax. VAT for vacant land is 16%, while VAT is 7% for new houses, plus stamp duty. It is advisable to buy land with a house under construction or finished to minimize tax liability (source: Global Property Guide).
Please note that these figures are only an indication of the likely fees commonly payable and should be taken as a guide only.
Average house prices
Average house prices are:
Country | Average house price (EUR) |
|---|---|
| England / Wales | 252,197 |
| Spain | 266,000 |
Source: Land Registry (28.10.2011), Spanish House Price Index, Q3 2010 (kyero.com)
Care needs to be exercised with these numbers. What you might be able to buy in Spain could be much bigger than a comparably priced property in England and Wales (though this may vary considerably depending on where you choose to live).
UK State Pension
Your UK state pension will continue to be paid if you move to Spain and you will automatically receive any annual increases.
Warning
This content is general, high level information only and should not be interpreted as individual advice. Because the circumstances of each person will be different and are not known to us we recommend that advice, tailored to your specific circumstances, is sought.
Whilst we have made every effort to ensure that the information shown is accurate and up to date please be aware that legislation and tax laws do change.