Retiring abroad: Spain

If you dream of retiring abroad like many UK pensioners, it's a big decision that can affect your pensions. In a poll carried out in 2006, the majority of Britons, 53%, would consider emigrating. Indeed, more than 300,000 individuals leave the UK each year to start a new life overseas.

Estimates suggest that up to 5.5 million British nationals now live abroad.

Spain is the largest expat destination for Britons who choose to live abroad in Europe. According to Padrón de Familias census records from town halls across the country, the number stood at 313,975 in 2021. This is followed by Ireland and France.

As of 2016, the Department for Work and Pensions data shows there are 108,433 Britons in receipt of a UK state pension in Spain.

Ranking British expats by country

• Australia
• USA
• Canada
• Spain
• Ireland
• New Zealand
• France
• South Africa
• Germany
• Italy

 

Retiring abroad Spain: post Brexit - non-lucrative visa Spain

You have two options:

Firstly, living in both the UK and Spain and only staying in Spain for a maximum of 90 days at a time. This is what many retirees are doing at present who can afford the upkeep of two properties. Spain incidentally, is set to lobby the EU over this rule that limits British tourists to 90 day visits.

Secondly, a non-lucrative visa in Spain is the easiest way to retire to Spain. Although you have to fulfil some requirements. A non-lucrative residence visa is a type of residency permit for non-EU citizens who intend to live in Spain. 

This residence permit is non-lucrative. You will not be permitted to engage in any economic in Spain. Ideal for a UK pensioner who does not want to purchase a property in Spain.

You can show that you have enough money in different ways; here are some ways:

• You have sufficient funds in your bank accounts
• You have a pension
• You receive dividends
• You receive rent from a property

If you have €15.000 in savings and receive a €15.000 per year pension, you can apply for the NLV from any of the above.

Retiring abroad Spain: Golden visa

A second but more expensive option is the golden visa, which was launched in 2013. A € 500,000 investment in a Spanish property will gain family residency. 

The golden visa provides the investor and their family with the right to live and work in Spain. After living in the country for five years, it is possible to apply for permanent residency in Spain.

Retiring abroad Spain: Pension advice

The problem for most UK nationals. Is that, most UK advisers are not regulated to advise EU residents. These went with Brexit. 

Unless they are regulated in the EU, they should not be advising you.

Even if the UK firm has taken the appropriate steps to advise EU residents. They may not be aware of the complexity of the Spanish tax.

Although Regulated Advice cannot help here. You will need to find an advisory firm that is regulated in both the UK and Spain.  Together with knowledge of UK pension regulations. The firm would also require knowledge of both UK and Spanish taxation and the interaction between them.

Retiring abroad Spain: taxation advice

If you move abroad, you don't have to transfer your UK pension pot. You can choose to leave it in the UK.  You can then take an income from it in the UK. 

As a Spanish resident, your UK state pension is only taxed in the UK. Any income derived from any other retirement funds will be subject to taxation in Spain.

It is important to note that Spain has no 'tax-free lump sum'. If you have not moved to Spain yet and want a lump sum. Taking it while you are still a UK resident will save you tax.

Qualifying Recognised Overseas Pensions Scheme (QROPS)

Currency risk can be managed by setting up a foreign exchange account. You can then transfer money into Euros from a UK bank account as needed.

Alternatively, expats often consider transferring their pensions to a QROPS. Therefore, avoiding currency transfer risks.

Retiring abroad:  Australia | New Zealand | USA | Canada | Spain | Portugal | Italy | France | Germany | Ireland