Moving to Spain? get our top FX tips

Spain as a Popular Destination for European Expats

Spain is a highly favoured destination for European expats, especially the British. With over 5.5 million expats residing in Spain, a third of them are British, including more than 300,000 pensioners. The average age of British expats, often referred to as 'swallows,' is 54, which is higher than most other nationalities. However, many younger people also move to Spain for work, cultural experiences, and adventure, attracted by affordable living costs, such as the average price of a pint of beer at €1.50.

Brexit and Its Impact

The United Kingdom officially left the European Union in January 2020, entering an eleven-month transition period that ended on December 31, 2020. Post-Brexit, the UK became a “third country,” no longer a member of the EU, EEA, EFTA, or the Schengen area. During the transition period, many UK residents moved to Spain, while others sold their properties due to uncertainty about their future stay, increased taxes, and stricter income requirements.

Residency Requirements Post-Brexit

- Living in Spain for Over Five Years: You must apply for indefinite stay permission, which needs periodic renewal.
- Living in Spain for Less Than Five Years: You need to stay in Spain until you complete five years of residency to apply for permanent residency.
- Short Stays: Currently, visas are not required for stays under three months, but after May 2023, an ETIAS visa waiver will be required for all third-country residents. Visas are also necessary for students studying in Spain for more than ninety days.
- Short Stays in the Schengen Area: Third-country visitors are allowed to stay for no more than 90 out of every 180 days without a visa and must show proof of funds.

Navigating Residency and Bureaucratic Hurdles

Spain has a relaxed lifestyle, but relocating involves navigating bureaucratic processes. Establishing residency requires proof of funds or income and health insurance eligibility. You will also need a Spanish driving license.

- For Employees: Your employer's global mobility team can help with paperwork.
- For Freelancers and Digital Nomads: You must provide proof of funds or income.

Spain's Start-up and Digital Nomad Visas

In 2021, Spain proposed a framework to develop its entrepreneurial ecosystem, attracting international talent and financing for start-ups. The proposed law, known as the Startup Act, is expected to take effect in 2025. It offers tax incentives and favorable terms for non-residents moving to Spain for work, including special visas for digital nomads and employees of foreign companies working remotely from Spain. These visas offer non-resident income tax benefits for up to five years.

Considerations for Buying Property

Falling in love with a property in Spain is just the beginning. Here are some important steps:

- Legal Advice: Hire an independent solicitor and/or notary to verify property ownership and ensure there are no encumbrances. 
- Property Inspection: Always conduct a thorough inspection.
- Financial Planning: Compare the sale price, appraisal value, and tax valuation to understand property tax implications.
- Tax Consultation: Consult a tax specialist to understand the tax implications if you are earning money in Spain but maintaining a UK residence or receiving a UK pension.
- Occupancy Plans: Determine if you will occupy the property full-time or rent it out, as tax structures vary.
-Financing: If selling property to buy in Spain or using equity from your current home, consult your banker or mortgage holder. If financing in Spain, engage a local mortgage broker and be prepared for a longer process than cash deals, requiring a substantial down payment.

Managing Cross-Border Financial Obligations

Buying a home abroad and managing cross-border financial obligations can be complex. Here are some tips:

- Currency Exchange: Bank-to-bank transfers can be expensive due to fees and variable exchange rates. A currency broker or foreign exchange specialist can offer competitive transaction fees, favourable exchange rates, and multi-currency facilities.
- Regulation: Ensure the chosen company is fully regulated and has a global footprint. Use comparison sites to understand rates, fees, and processes.
- Exchange Rate Management: Track exchange rates and consider using rate orders or forward contracts to lock in favourable rates.

Handling Ongoing and Incidental Expenses

If you regularly receive funds from a UK pension or an employer while living in Spain, an FX specialist can simplify these transactions and save on conversions.

- Local Bank Accounts: Opening a bank account in Spain requires proof of income, passport, residential permit, and other documentation. Be aware of monthly charges and maintenance fees.
- Home Country Bank Accounts: Maintain a local bank account at home for expenses like property maintenance, mortgage payments, or tuition. An FX broker can exchange euros to pounds or other currencies and manage these payments.

Final Tips

Take your time and do thorough research. An FX provider can assist in navigating the payment process, simplifying international money transactions, and potentially saving you money by reducing currency fluctuation surprises.