Spanish tax

andys15

Hi. 

I have searched the forums on this subject but the latest post I can find is 2011. 

Is there anyone in here with experience of Spanish tax for people who want to get residency. 

I am due to retire to Spain at 50 and cannot access my pension until I am 57. 

I was hoping to take a lump sum at 57 of £250k but it seems I will be taxed in Spain. My only option appears to be the 90 day rule which is absolutely gutting. 

I have read about Beckham law which could be a possibility. 

I assume I will have to sell my UK home before I become a resident of Spain or I will be liable for CGT. 

Marcon

andys15 said:

Hi. 

I have searched the forums on this subject but the latest post I can find is 2011. 

Is there anyone in here with experience of Spanish tax for people who want to get residency. 

I am due to retire to Spain at 50 and cannot access my pension until I am 57. 

I was hoping to take a lump sum at 57 of £250k but it seems I will be taxed in Spain. My only option appears to be the 90 day rule which is absolutely gutting. 

I have read about Beckham law which could be a possibility. 

I assume I will have to sell my UK home before I become a resident of Spain or I will be liable for CGT. 

I wonder if you've tried this link: https://www.gov.uk/guidance/living-in-spain#tax

andys15

Yes I have. There could be options though. One being living in Malta/Cyprus for 90 days too. 

It’s not ideal but hoping there is other options to explore. 

Boat_to_Bolivia

I know a couple who moved/retired to Spain, pre Brexit, got residency, then realised when they sold their property in the UK and claimed a lump sum pension, they would be liable to pay taxes in Spain on the sale/lump sum.

They duly returned to the UK and waited until their Spanish residency expired. I'm sure you can guess the rest;  yep, they sold their property in the UK, took the lump sum, then moved back to Spain, having more than enough means in which to re-apply for residency ie. money.

andys15

Thanks Boat. Do you know how long they had to give up residency before they were able to reapply again. 

I will be selling my UK home before I move out at 50. Then would want to revoke it whilst I claim my lump sum at 57. 

Boat_to_Bolivia

andys15 said:

Thanks Boat. Do you know how long they had to give up residency before they were able to reapply again. 

I will be selling my UK home before I move out at 50. Then would want to revoke it whilst I claim my lump sum at 57. 

I don't know for certain, but I would think their initial residency was granted for 5 years.
They lived in Spain for maybe 3 years before returning to the UK and selling in the UK etc, once their Spanish residency had expired.

I don't know how long after selling the UK property they could re-apply for residency, but I can't see why it couldn't be almost immediately...but as I say, that is just my thought.

JoeCrystal

andys15 said:

Thanks Boat. Do you know how long they had to give up residency before they were able to reapply again. 

I will be selling my UK home before I move out at 50. Then would want to revoke it whilst I claim my lump sum at 57. 

Mind you, the example highlighted by Boat_to_Bolivia is pre-Brexit. I assumed you could meet the minimum income requirements and all other requirements to live in Spain? There are lot more hoops to jump through, unfortunately.  

andys15

Cheers Joe. 

For the first 7 years I will just be living off my savings, so no income. . We have purchased a villa in Spain with no mortgage. I think that is enough to apply for residency, but this tax on my lump sum in 7 years will be a deal breaker. 

Helenochka

Very similar issues arise in France where I live. Money withdrawn from UK ISAs and personal pensions is not treated as tax-free if the recipient is tax-resident in France. 

Have you tried posting questions in the Spanish section of BritishExpats.com? There are some very knowledgeable contributors on the forum and there are bound to be lots of people in the same boat as yourself.  

Are you sure owning a house mortgage-free is sufficient grounds for Spanish residency? It certainly isn’t for France. Even substantial savings aren’t generally considered acceptable by the French immigration authorities - they really want to see proof of regular income.  
Every country has its own rules, though (no EU-wide arrangements in this area) and I have no idea what the system is in Spain. Good luck! 

Helenochka

Presumably you’ve done your research re. post-Brexit Spanish residency requirements but a quick Google search produced this:

What is a non-lucrative visa?

The non-lucrative visa is for non-EU nationals who wish to reside in Spain but not undertake any work or professional activity in Spain.

The non-lucrative visa can also be considered to be a retirement residency visa and therefore ideal for retirees.

With the non-lucrative visa, you only need to make sure that you have sufficient on-going financial means to support yourself and your family while living in Spain.

The Spanish government want to know that you will not become a financial burden on the state.

You will only need to prove that you have a consistent guaranteed income to satisfy the residency requirements.

Who is the non-lucrative visa for?

- People retiring to live in Spain
- Those who want to live in Spain for a period of one year without work and then apply for a work visa.

What are the rules of a non-lucrative visa?

The main rules and benefits are:
- After the first year, the visa can be renewed for a period of 2 years and then for a further 2 years until you reach 5 years at which time you will be eligible for permanent residency.
- After the first year, you will be able to apply for one of the work visas.
- You may study or take a paid internship in Spain as this is classed as ‘education’.
- No need to make any form of large investment into Spain.
- Free movement within the 26 Schengen countries.
- You may bring your spouse and dependent children with you.

Minimum Income for Spanish Residency 2023 for the non-lucrative visa

The income requirements are calculated using a formula which is known as the IPREM (Indicador Público de Rentas de Efectos Múltiples). The following figures are for 2023. To demonstrate that you have sufficient means to support yourself and any dependants you will need to supply proof of the following minimum income levels:

For the non-lucrative visa, you must prove that you have 400% of the IPREM received annually into your bank account. For 2023, the IPREM is €600 per month. This means that an individual would need a regular guaranteed monthly income of €2,400 or €28,800 yearly.

For each additional family member, 100% of the IPREM is required, which in 2023 amounts to €600 per month or its equivalent in the foreign currency.

Helenochka

Alternatively, it seems you can also qualify if you show a certain amount of savings for each renewal period (12 months). 

What would the tax liability be on your lump sum? Maybe it’s still worth it, if you really want to move to Spain?

Hopefully you’ll find useful info on the Spanish forum. I didn’t realise until I started reading some of the posts that there’s no procedure for swapping UK driving licences, meaning that Brits wishing to live and drive in Spain will in future have to sit the Spanish driving test.