Prior to embarking upon a trip to the sunny bliss of Spain, it would benefit you to develop a list of necessities you must ponder. One of the most important considerations to include in such a list is achieving financial security during your stay in an intelligent and organized manner. Performing such a task will support your move from the very start, creating financial security from the very beginning of the entire span of your stay in Spain.
It’s obvious that you must open a Spanish bank account to purchase a property in Spain. Be sure you have this account funded appropriately to satisfy the costs that will occur immediately when you arrive in Spain to pay your utilities, and any other expenses that may be incurred. Prepare for expenses you don’t anticipate. Be sure to have an extra cushion in your account, just in case. Ask your bank what options they have available with regard to accounts with no fees. Consider, though, that these account types generally require your account’s minimum balance to be at least 700€, which must be funded regularly.
It isn’t necessary to close United Kingdom bank accounts you have open, because maintaining at least a single account can be useful if you visit relatives and friends back in the United Kingdom, or to fund any United Kingdom payments, as interest rates in both countries are very low right now. It would behoove you to maintain a current deposit account in both countries for a significant period of time if for any reason you intend to return to the United Kingdom. Keep your options open just in case.
Do you plan to secure Spanish residency?
Both options assume implications, both to remain a United Kingdom resident or to become a Spanish resident. It’s legally required to become a fiscal, tax paying resident of Spain if you spend over 183 days per year located in Spain. This is the same if you move to mainland Spain or buy a property in the Balearic Islands. However, you are only required to pay taxes in one of the two countries. Keep in mind, though, that the HMRC closely works with Hacienda, which is the Spanish tax office. The two countries collaborate in locating those who don’t declare their assets and income in either of the two countries.
If you plan to remain in Spain, permanently, it’s necessary to notify your local tax office in the United Kingdom that you have moved or plan to move, providing your Spanish address. You should also notify your bank in the United Kingdom of your move, as well as any other financial services you employ. When you are a Spanish resident, opportunities extend to you that are not available for those who are not Spanish residents. For example, you may have certain accounts advantages extended you that are otherwise unavailable.
Whether you become a resident or you don’t, you will be issued a NIE number when you buy a property. This allows telecommunication and utility companies to identify you. They will ask you for this number to begin service. Additionally, this number will be used by banks and other businesses, who will ask you to tell them this number to verify your identity.
On the subject of taxes, those who are not residents of Spain are required to provide an income tax declaration in Spain. This is required even if no income is declared. A gestor can provide the service of declaring your income or lack thereof for you. If you rent a property, it’s required that you pay taxes on any earnings you acquire from the rental, either in Spain or in the United Kingdom. You will additionally be responsible for the local taxes that must be covered yearly in Spain as an owner of a Spanish property. Be certain that you have adequate funds in your Spanish account to make these required payments, because they will be directly removed from your account, whether you are located in Spain at that time or you are located elsewhere.
One of the most effective methods of making these payments, is to arrive at a regular payment plan, using a currency exchange company. A good example of a company of this type is Smart Currency Exchange, which will generally charge a small fee or no fee at all for dispatching a fixed amount with regularity to Spain. You even have the option of safeguarding this amount dispatched with regularity from exchange rate fluctuations when you employ a forward contract. Contacting a company of this type is a smart choice. They can provide you with further details and discuss your unique circumstances with you.
As a Spanish resident, using a currency exchange company is also smart. An obstacle encountered by all is the fluctuation in currency values. Presently, the pound is going strong against the Euro, but methods are available to reduce issues if the Sterling’s value maintains a dropping trend. A currency expert company will provide you with the most current and desirable advice on how to obtain this result. It’s smart to establish an account with a company of this time well in advance before you arrive in Spain.
Foreign residents and those of Spain are required to make a declaration of their global assets to the tax authorities in Spain. Once this has been accomplished, it’s only necessary to repeat the process if your assets elevate by an excess of over 20,000€ per year. Though this sounds like an abundance of money, due to the Sterling being so high at this time, the value will quickly climb when calculation occurs from pounds to the Euro. Additionally, you will need to perform a yearly income tax return. Be mindful that your pension, if you have one, is considered as income in Spain, and is not exempt from tax. However, your tax payment depends on your total income level.
Have you considered insurance?
It’s necessary to cancel the majority of United Kingdom arrangements you have established with regard to insurance, and enter into new policies for Spain. Legally, it’s required that you insure your Spanish property. You can insure your contents optionally, which is advisable and smart, but it’s at your discretion. Car insurance is a legal requirement, additionally. However, if your vehicle is relatively new, or you are going to purchase a vehicle in Spain, a comprehensive policy is a desirable choice.
You also need to consider medical insurance. When employed in Spain, a payment is required on a monthly basis that lets you take full advantage of the Sistema Nacional de Salud (SNS), which is the Spanish National Health System. Those who live off a pension as a Spanish resident are covered under the SNS, but health care is free for them. However, a small payment is necessary to cover medication costs. Unemployed Spanish residents and non-residents, who are not at the age where they are able to receive a pension, are required to pay for their own health care needs, or they will need to open a medical insurance policy to pay for their costs incurred for medical needs.