Sunny Spain is still one of the most popular countries for people to retire to. From the idyllic Balearic and Canary islands to the relaxing Costas in Andalusia, there are countless places where you can live in Spain after you reach retirement age, but how do you do it and what are the things you have to know before you can retire to Spain?
Why retire to Spain?
Spain is such an attractive destination for international retirees largely thanks to its temperate climate all year round and the comparatively good cost of living. What’s more, property prices in many parts of Spain are lower than the average in most of Europe, so buying a house in Spain can be relatively affordable option. Many retired expats in Spain never look back once they get here, or at least spend the winter months in their second home here.
Where’s the best place to live in Spain?
Undoubtedly some of the cheapest locations with the best quality of life are on the Spanish coast:
These locations have many private residential estates (known in Spanish as urbanizaciones) which serve as retirement communities in Spain, complete with their own shops, golf courses and leisure facilities. Have a look at some more of the best places to retire in Spain.
Who can retire in Spain?
The legal retirement age in Spain is 65 for both men and women, who can earn a full pension from the Spanish government if they have worked and paid into a pension fund in the country for more than 36 years, or a partial pension if they’ve paid at least 15-years’ worth of Spanish social security contributions.
Even if you’ve paid your pension contributions in another EU country, it still counts towards the pension amount you can get in Spain. The Spanish government even has special agreements with the USA, Canada and Australia to allow residents from these countries to retire there.
As for British citizens, there shouldn’t be too many changes in the rules for retiring to Spain post Brexit as Brits make up the single largest nationality group of expats living in Spain and represent a significant income for the Spanish economy. UK pensioners in Spain often use a Qualifying Recognised Overseas Pension Scheme (QROPS) to transfer private pensions and avoid extra charges.
Foreign nationals who have worked for any amount of time in Spain, and thus have pension plans from two or more countries, must consult the Spanish National Institute for Social Security (Instituto Nacional de la Seguridad Social or INSS). You can find more information about claiming a Spanish pension for expats here.
Retirement tax in Spain
Everyone who is eligible must pay income tax on their earnings, and this includes any money earnt from pension funds. All private pensions collected in Spain are subject to taxation there. In the case of public pensions, these taxes are often paid in the country of residence. The rules for German and UK citizens living in Spain are slightly different, however, and the IRPF income tax on public pensions must be paid in Spain.
Healthcare in Spain
The Spanish National Health Service is renowned for its excellent quality care and professionalism, providing free healthcare to foreign nationals from EU countries and Spanish citizens alike. Nonetheless, EU citizens are still advised to carry their EHIC European Health Insurance Card with them when they are in Spain.
Non-EU citizens are strongly advised to get private health insurance as they will not be covered by the free Spanish seguridad social system until they have their Spanish residency, and could end up paying through the nose for any medical assistance they receive in Spain. In any case, having health insurance is a requirement of getting a Spanish visa.
Inheritance in Spain
If you own property in Spain or have been resident there for more than 5 years, you may want to think about making a will there. Non-residents are free to choose whether the laws and taxation from their home country or those in Spain are applied to their bequeathed assets.
Spanish inheritance laws dictate that widows, children and parents must be given a part of the estate, regardless of what is specified in the will. This will also be automatically enforced if the deceased doesn’t leave a will.Both residents and non-residents who inherit assets in Spain are treated the same with regard to inheritance tax (Impuesto sobre Sucesiones y Donaciones or ISD), being taxed progressively depending on the value they are left. There are certain dispensations and exceptions to this banding for minors, people with disabilities and other mitigating factors. It should be pointed out that these rules apply on a national level, but there may be local laws in the region of Spain where you live that differ from this. For example, inheritance tax in Andalusia has been practically abolished. For this reason, you are always advised to consult a specialist lawyer to help you.
If you’re thinking about retiring in Spain, keep this advice in mind for a smooth transition so you can enjoy some well-deserved rest in the sun!