Retiring to Spain From the UK: A Comprehensive Checklist

Retiring in Spain offers a complete lifestyle change, with many choosing Spain as their preferred retirement destination over any other country due to the warm climate, delicious cuisines, rich culture and the diverse variety of cities, coastlines and rural towns.

While moving overseas to enjoy a relaxed retirement is undoubtedly something to look forward to, it’s also essential to plan, research and understand the formalities of buying a home, applying for a visa and relocating your assets and pension to Spain.

Let’s look at some key areas to consider, beginning by assessing your eligibility for Spanish residency and evaluating whether you have sufficient financial means to fund your desired retirement lifestyle.

Spanish Visas and Permanent Residency Options for Retirees

Step one is to consider the visa you might apply for. As with every EU country, British citizens can travel visa-free to Spain for up to 90 days within any 180-day period. After that, you will require a visa granted by the Spanish authorities.

As general guidance, a UK retiree will normally apply for:

• A long-stay visa, called a visado nacionale followed by
• A residence visa, known as a visado residencia.

One option is the non-lucrative visa – this visa is available to British citizens who are moving to Spain without any intention of engaging in employment or work. It carries specific financial requirements since applicants must prove they have the income to finance all living costs for themselves and any dependents.

An alternative is the Spanish golden visa, which grants residency to non-EU citizens who invest at least €500,000 (£427,000) in a qualifying property. Successful applicants are granted a residence permit valid for two years, renewable every five years. In most cases, you can apply for permanent residency after five years and Spanish citizenship after ten years, subject to further conditions.

Your choice of Spanish retirement visa may depend on your position, finances and long-term plans. Visa routes commonly require a criminal record check, a verified medical certificate, proof of private health insurance, and a minimum validity period remaining on your UK passport.

Organising Your Finances and Ongoing Tax Obligations

Understanding your tax obligations is key since the tax system in Spain works differently from that in the UK. Those planning a retirement in Spain should seek professional financial advice to review every aspect of their assets, investments and income, including:

• Private pensions – they might opt to withdraw a lump sum to help with the costs of purchasing a property, transfer pension assets to an approved overseas scheme, or retain their pension in the UK in a tax-efficient structure.
• Access to the UK State Pension – most British citizens will continue to receive their entitlement but must inform HMRC of their relocation plans.
• Investments and assets – if you plan to live in Spain permanently, all your worldwide income and assets will usually be subject to Spanish taxation. Many expats living in Spain have restructured their assets to maximise the tax efficiencies available.
• Income sources – if you receive an income, including interest, pension benefits, dividends or other revenues, from the UK or any other location, these should be factored into your plans.

Alongside advising HMRC of your move, you will need to apply for a Número de Identificación de Extranjero (NIE) once in Spain – you’ll need this number to open a bank account, set up direct debits and pay bills. You’ll also require a local bank account in Spain since many local utility providers will only accept direct debits from a domestic bank account.

In terms of tax planning, retirees relocating to Spain should be conscious of their exposure to Spanish wealth tax, levied annually, and the tax deductions they should anticipate from their pension earnings and other income sources.

Making Decisions Around Property Ownership and Worldwide Assets

Many British citizens who opt to retire to Spain own a property in their home country and must choose whether to sell or keep that asset as an investment or rental property. They also need to decide whether to purchase a permanent home in Spain – which may be an obvious decision if you intend to apply for the Spanish golden visa.

Like every country throughout the European Union, real estate prices are considerably higher in high-demand cities such as Barcelona and Madrid. Other popular regions, such as the Costa del Sol, also command premium property prices for homes within luxury developments.

The average price per square metre for a home in some of the well-known destinations is below – many present an attractive cost in comparison with UK property prices:

Deciding to keep a UK residence as a rental property will normally mean exposure to the non-resident landlord scheme in Britain. It may also impact your tax residency status. The Statutory Residence Test, which determines the jurisdiction in which you are a tax resident, looks at criteria such as the amount of time you spend in each location and where your primary home is based.

Should you become a resident in Spain for tax purposes, you will be subject to tax charges against your worldwide income and assets – often necessitating a claim through the double tax treaty to avoid paying tax obligations in both the UK and EU.

Calculating Living Costs and Long-Term Healthcare Coverage

When you have selected your visa route, budgeted for tax liabilities, sourced accommodation and managed your banking, pensions and finances, it remains wise to consider the ongoing costs of living in Spain following your relocation.

Consumer prices in Spain are roughly 25% lower than in the UK, with comparable outgoings as below – depending, of course, on where you live since living costs vary considerably between major cities and quieter regions.

If you intend to live permanently in Spain, you must also consider healthcare costs. The Spanish public healthcare system is well-developed. Although permanent residents and retirees over 65 who are legal residents in Spain may be eligible, most expats opt for private insurance beyond the terms of their visa rather than relying on accessing healthcare through the state system.

Average costs will depend on your medical history and whether you require ongoing therapies or medications, but coverage normally costs approximately €50 to €200 (£43 to £171) per month, per person.

Please get in touch with Chase Buchanan for more information about retiring to Spain from the UK, applying for a visa, assessing your finances, or preparing a long-term budget. Our Spanish offices are based in Javea, Marbella, and Tenerife within the Canary Islands. You can also download our free Residency Guide for Expats in Spain.

*Information correct as at February 2024