So, you’re considering retiring abroad. Now, you have several options when you want to do this and Spain might just be one of the best. It’s the largest country in southern Europe with a low population density, a stable government, a modern and dependable infrastructure, and a secure banking system. And that’s not even mentioning its colorful culture, exquisite Mediterranean cuisine, and sunny weather.

With that in mind, let’s look at if Spain is the ideal option for your retirement.

Why Retire in Spain?

Spain provides several options when you want to retire there. You can choose to live on the Mediterranean coast or even inland. Either way, you’ll get to enjoy Spain’s laidback lifestyle, favorable climate, and excellent Spanish cuisine. In addition, Spain offers low property prices, a low cost of living, and high quality of life. It’s no wonder that Spain is considered to be one of the most popular places to retire in entire Europe.

The Benefits of Spain Golden Visa Program

Like many other countries, Spain Golden Visa program, which was established in 2013, gives you the opportunity to obtain residency in Spain by investing in a property. In this case, the minimum investment required is at least €500,000. There are also other investment options like buying shares, depositing money into a Spanish bank account, or buying government debt.

Unlike many other countries, however, Spain has no requirement that you stay in the country. You only need to renew your residency after the first year and then every two years thereafter. After five years, you’ll be able to apply for permanent residency.

Cost of Living in Spain

According to International Living’s Global Retirement Index, Spain has the second lowest cost of living in Europe with only Portugal being lower. For example, food prices are reasonable and you can expect to pay about $100 a week for groceries. Likewise, utilities range from anything between $70 to $200 per month and mobile and WiFi plans are also reasonably affordable. Also, public transport in Spain is cheaper than in many other places in Europe and around the world.

This, ultimately means that you’ll be able to retire comfortably in Spain on about $25,000 per year. This means you can retire on just over $2000 a month. Keep in mind that, however, this amount is only a rough estimate and it depends, to a large extent, on where you want to stay. For example, in Madrid and Barcelona rent is much higher and you’ll need a bigger budget.

Taxes in Spain

If you’re considered a tax resident of Spain, you’ll have to pay income tax. This means, that if you spend more than 183 days in Spain during any calendar year, you’ll be liable for income tax. When it comes to tax, Spain, like many other countries, uses a progressive tax system where you pay more tax the more money you earn. Here, the income tax rate varies between 19% and 48%.

You’ll also pay an included sales tax of 21% on any consumer goods you buy. Moreover, Spain also imposes a wealth tax annually. This tax is calculated as a percentage of your worldwide assets and income and the rate varies between .2% and 2.5% depending on the region you’re staying in. When calculating this tax, you’re entitled to a deduction for your assets and for your main residence. This deduction varies between different regions.

Infrastructure in Spain

When comes to infrastructure, Spain provides everything that you wish for. For example, it provides clean, drinkable water and paved, well-maintained roads. In fact, Spain has the largest network of highways in Europe. The major cities also have extensive and efficient public transportation systems including underground metros and buses, and there are a variety of supermarkets, fitness facilities, and various other amenities.

Healthcare in Spain

Spain has an excellent healthcare system that was ranked eighth best in the world in 2017. To put that into perspective, the United States was ranked 35th on the same ranking. Since 2017, Spain has consistently ranked as one of the top 10 healthcare systems in the world and, in terms of International Living’s Global Retirement Index, Spain’s healthcare system achieved 85 out of a possible 100 points.

If you’re considered a resident of Spain, you’ll be entitled to free basic healthcare and you also have the option to obtain private healthcare. However, as a retiree, this position could differ. For example, if you’ve reached the retirement age in your home country and are a resident of the EU, EEA, or Switzerland, you’ll be entitled to healthcare. Keep in mind, though, that you’ll need to pay for medication depending on the level of your income.

If your home country is outside the EU or EEU, you’ll need to obtain and provide proof of private health insurance when you apply for your visa. This insurance costs about $200 a month for full coverage. Then once you’ve stayed in the country for more than five years, you’ll be able to apply for permanent residency which will then give you access to the same basic healthcare as any other Spanish citizen.

Spain’s Quality of Living

Simply put, Spain offers an excellent quality of living. As such, it offers several historic landmarks that are still intact after World War II, and a wealth of cathedrals, Moorish palaces, castles, and more that you can visit.

In Spain, socialising is more important than work and sleep, so it also offers a wide variety of bars, cafes, and restaurants and has a vibrant nightlife. And here, you’ll find good food and wine. And don’t forget the daily siesta. In addition, Spain is also, generally, a safe place to live with low crime rates and you can have peace of mind knowing that you’re safe, no matter what time of day.

Pensions in Spain

If you’re considering retiring in Spain, it’s important to consider the options you have when it comes to pension. In terms of Spanish law, to qualify for a minimum state pension, you should have made social security contributions for at least 15 years. Likewise, to qualify for a full pension, you should have made Social Security contributions for at least 37 years.

This means, ultimately, that, as a retiree, you will likely not be entitled to receive a state pension. Thus, you’ll need to consider other options including transferring your pension to Spain.

How to Transfer Pensions to Spain

When retiring in Spain, it might be possible for you to transfer your pension from your home country. However, this depends on whether your home country has an agreement with Spain. Also, there are several tax implications you’ll also need to consider. As a result, it’s important that you seek professional advice before you make this decision.

If you’re successful in transferring your pension to Spain, it’s also important to remember that your pension income will be taxed under Spanish law. As mentioned earlier, Spain uses a progressive tax system that defines tax rates based on your income. Thus, if you’re considered a resident of Spain for tax purposes, your pension income will be taxed in line with the percentages mentioned earlier.

If, however, you’re a non-resident, the tax you pay on your pension income will vary based on the type of pension you have and the terms of the agreement that your home country has with Spain.

Conclusion

Hopefully, this post gave you some insights into possible retirement in Spain and some of the aspects you need to take into account when considering it. To learn more about immigration, golden visa programs, and our range of services visit Smart Citizenship’s website for more details.

FAQ

Apart from the information above, we’ve also compiled a list of frequently asked questions that people often have when it comes to retirement in Spain.

Who can retire in Spain?

If you’re a resident of the EU or EEA, it’s relatively simple to retire in Spain because you don’t need a visa or residence permit to live in the country. If you’re a non-EU citizen, however, you would need a non-lucrative residence visa.

Another option is to make use of the Spanish Golden Visa. In terms of this visa, you’ll need to invest €500,000 in real estate, buy €1 million of shares in a Spanish company or fund, deposit at least €1 million in a Spanish bank account, or buy €2 million worth of Spanish government debt.

In return, this visa allows you to live freely in Spain and travel without restrictions to any other EU or EEA country.

What documents do I need to apply?

If you’re a non-EU/EEA citizen, there are several documents you need when you apply for a visa. These documents typically include:

• A passport from your home country that is valid for at least another year.
• Proof of your income or other financial means.
• Proof that you’ve obtained private medical insurance.
• A medical certificate.
• A criminal record check.