Time spent living where you truly want is irreplaceable. Credit: saiko3p / Shutterstock
Spain consistently ranks amongst the best places to live in Europe. It is no surprise that so many people decide to make it their home. However, when I speak to clients considering the move, the conversation often stalls at tax.
Some believe other countries offer more attractive tax regimes, and fear that by choosing Spain, they may be sacrificing financial security for lifestyle. However, with proper planning, many clients are in a better financial position after moving to Spain.
Recently, I worked with a couple in their early sixties who, after decades of holidaying in Spain and wanting to retire here, hesitated due to concerns about better tax options elsewhere. They consulted me to understand what the move entailed.
The timeline for our agreed plan began before they became Spanish tax residents. First, they were able to sell their UK home free of capital gains tax because it was their primary residence. Next, we withdrew the savings from their ISAs, which would not retain the same tax advantages once living in Spain. Finally, we reviewed their pensions; both were able to withdraw their 25 per cent tax-free lump sums before establishing Spanish residency. The result was transformational.
The couple had sufficient free capital to purchase their dream home in Andalucía outright and make it their own. Since they would be over 65 if they sold the Spanish home, they would be exempt from capital gains tax. We restructured their remaining cash into a Spanish-compliant investment to ensure steady growth, avoiding annual taxes from bank interest or ISAs. We could control their annual income to keep tax exposure low while maintaining flexibility. When we reviewed their inheritance position, we showed their children would inherit nearly tax-free under Andalucia’s rules, a better long-term position than the UK. Overall, their finances were arranged so that tax is applied only where needed and at low levels, ensuring full access to their wealth.
Many couples hold back from their ideal location due to fears of taxes, but taxes can often be managed through careful structuring. Time spent living where you truly want is irreplaceable. For many, it’s a life decision, not just about taxes.
Our approach is simple: Lifestyle first, tax second.
Prioritise your lifestyle and structure finances accordingly; when done right, both tend to fall into place.
As a Chartered Wealth Manager in Spain, I assist British expatriates seeking clarity before big decisions. Whether you’re contemplating a move or already relocated and uncertain about your arrangements, I’m happy to have an initial chat. A timely review can make a real difference.
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Jett Parker-Holland
+34 677124364
Jett.parker-holland@spectrum-ifa.com
