Early Retire to Spain

[explanade]

They don't have to.

I guess people who stand to pay tens of thousands of Euros in wealth taxes (annually?) would have to decide accordingly if it would be worth paying that kind of money to live in Spain.

 

[audreyh1]

I guess for Spain we would have to not be residents and not own property. So just long vacations I guess.

 

[Totoro]

Why do you think paying taxes should give you the right to vote? We lived and paid taxes in the USA for 11 years but could not vote until we were citizens. I would think that situation is the norm.

Here's my voting situation as an expat within Europe:

• I can vote at the municipal level
• I can vote at the province level and semi-government entities
• I can't vote at the national level here, but must for my home country (get a fine if I don't), unless I don't register
• I can choose to vote at European level, either:
  • I choose for the expat country list
  • I choose for the home country list, and must vote

Taxes are paid in fiscal country of residence typically, salaries are paid where you earned it. Many sets of rules .. none of them make sense as a whole. Rules are still very much designed for 1 person, 1 nationality, 1 country. Sometimes you end up paying double taxes, sometimes none at all.

And then you have the US doing this worldwide tax thing ..

The Spain wealth tax by and far isn't an issue for Brits. Most aren't that wealthy in terms of taxable assets. Not to mention quite a few aren't actually residents, just seasonal (and some commit fraud).

 

[BigNick]

If you’re trying to live off assets you might be in for a real hurt. My understanding is that if you’re a resident, wealth tax applies to all global assets in excess of 700k euros (1.4m for a couple). For a couple with a 3m euro portfolio, not uncommon on this board, you’re looking at 30k euros in wealth taxes, a full 25% off the 4% rule. Plus applicable income tax on top of that.

Spanish wealth tax is not as bad as all that.

First, the allowance is 700K per person, plus another up to 300K for your primary residence, if you own that. So that's 2 million out of the way.

Second, the rate starts below 1% after deducting the allowance. If you have 3 million you would probably be paying more like 6K a year.

Third, the tax is regional. In Madrid it currently isn't levied at all. (But in Catalonia the allowance is only 500K!)

Fourth, it only applies to readily available wealth. If you put some of your money into life assurance schemes that can't be touched for 5 years, that can be excluded from the count. I'm guessing that someone with 3 million can probably put 500K in a long-term freeze like that.

Fifth, there is a rule that your income tax plus wealth tax can't exceed 60% of your taxable income. So if you live mostly by making occasional sales of capital assets which are invested in growth funds, and hence don't have much in the way of taxable income from interest or dividends, your wealth tax payment will also be limited as a result.

 

[explanade]

Spanish wealth tax is not as bad as all that.

First, the allowance is 700K per person, plus another up to 300K for your primary residence, if you own that. So that's 2 million out of the way.

Second, the rate starts below 1% after deducting the allowance. If you have 3 million you would probably be paying more like 6K a year.

Third, the tax is regional. In Madrid it currently isn't levied at all. (But in Catalonia the allowance is only 500K!)

Fourth, it only applies to readily available wealth. If you put some of your money into life assurance schemes that can't be touched for 5 years, that can be excluded from the count. I'm guessing that someone with 3 million can probably put 500K in a long-term freeze like that.

Fifth, there is a rule that your income tax plus wealth tax can't exceed 60% of your taxable income. So if you live mostly by making occasional sales of capital assets which are invested in growth funds, and hence don't have much in the way of taxable income from interest or dividends, your wealth tax payment will also be limited as a result.

Still a lot of money to be able to stay beyond a typical tourist visa waiver period of 90 days for non EU people.

 

[audreyh1]

Wow, complicated!

So Madrid does not levy it at all? It’s not a national tax?

 

[BigNick]

It's a national tax at base, but the implementation is left to each regional government.

It was actually abolished many years ago, but then brought back "temporarily" after the 2008 financial crisis. From time to time it's "going to be abolished next year", but the Rajoy government didn't get rid of it, so I'd be surprised if Sánchez were to do so.

France more or less got rid of its wealth tax in 2017, in that it now only applies to real estate. I'm really pleased about that; this year I finished the 5-year grace period holiday that is granted when you become fiscally resident (I've lived in France since 1990 but my tax situation has always been a bit special), so I'm avoiding 5K a year or so that I would otherwise have been liable to pay.

 

[Bamaman]

The Schengen Agreement almost makes you think that the countries of the European Union don't want us Yankees moving there to (1) overwhelm their national healthcare systems and (2) run their home prices to the stratosphere.

Our niece was living in a very luxurious London suburb when she discovered with uterine cancer, and the NHR protocol was insufficient. We buried her a year later. English (and many countries') healthcare is not up to U.S. standards.

Home prices in most very desirable cities are already much too high. Europe has gone from a rental housing market to an owner market after our condo laws were copied. Many B&Bs were worth more sold as condos than as small hotels. And prices of homes would skyrocket with any large influx of foreigners with big cash.

 

[BigNick]

Still a lot of money to be able to stay beyond a typical tourist visa waiver period of 90 days for non EU people.

You only become fiscally resident if you spend 183 days out of 365 in Spain. At that point, the idea is that you won't be paying taxes anywhere else (because most other countries apply the same more-than-six-months rule).

Americans will of course still have Federal income taxes to pay, but I presume that Spain allows you to deduct those from your local income taxes (most EU countries have double taxation treaties with the US).

 

[BigNick]

The Schengen Agreement almost makes you think that the countries of the European Union don't want us Yankees moving there to (1) overwhelm their national healthcare systems and (2) run their home prices to the stratosphere.

Schengen just creates a common visa area, so that people who need a visa to visit one Schengen member state (a) automatically get a visa that's valid for all of the member states, and (b) can get it from any member state's consulate. It has nothing to say about long-term residence.

Currently, no EU countries require US passport holders to obtain a visa for tourism visits.

For stays longer than 90 days, there is no EU-wide policy; every country makes its own immigration arrangement for non-EU residents.

 

[Totoro]

Europe has gone from a rental housing market to an owner market after our condo laws were copied.

? Home ownership is dropping in Europe.

https://tradingeconomics.com/european-union/home-ownership-rate

Big regional differences, too.