Many UK citizens reaching pensionable age are considering Spain as a retirement haven.
With almost year-round sunshine and a relatively lower cost of living than the rest of Europe, many individuals are wanting the slower pace of life and outdoors lifestyle that Spain has to offer.
There are certain things to consider when making this decision.
Accessing your pension -
State pension
• You could arrange for your UK state pension to be paid into your Spanish bank account in Euros. Any conversion charges are minimal.
• Or you could simply draw your pension from your UK account monthly which would incur high conversion costs.
Private pensions
• You need to check with your pension fund as some will pay your pension into an EU account whilst others will only pay into a UK account.
• It might be a viable option to transfer your pension into a QROPS (Qualified recognised overseas pension plan) where you have more access to your funds, and you can withdraw funds from 55yrs. – Post No Deal Brexit could have restrictions on paying out of UK pensions to residents in other EU countries.
Tax implications
This is probably one of the most important factors to consider when retiring abroad.
Tax in Spain is about the same as in the UK if you add everything up.
Although your state pension is tax-free in the UK, you might be taxed on it in Spain depending on your tax residency status.
Any income earned whilst in Spain will be taxed. The double taxation treaty with the UK might alleviate any double tax imposed by both countries.
Transferring your private or company pension into a QROPS could help mitigate your tax liability, but it depends on your personal situation.
Benefits of retiring in Spain
• Lower cost of living – your pension will go further
• Slower pace
• Sunshine and outdoor living
• Property prices are cheaper whether renting or buying
It is advisable to speak to your deVere adviser regarding your tax implications and how to possibly mitigate tax; [email protected]
Make sure you do thorough research on all aspects of your move including, finances, housing, cost of living and taxation before you move, and you could soon be enjoying a siesta on the patio of your Spanish villa.