Early Retire to Spain

[JakeinChina]

I've been thinking about doing this for about a year now, but finally had a serious conversation last week with the wifey, and she agreed, that we will move to Valencia Spain next June, after my daughter's school year is over. We will spend at least two years there, maybe more, who knows.

Work has been brutal the last 2 years, with a almost completely new executive team and things are just not fun nor challenging anymore at work. Next year when we move, I'll be 40 years old, same as my wife, and our daughter will be 6 by then. We will learn Spanish, educate ourselves on the culture, people and history of Spain, and enjoy each other and our time as a family.

Our assets and the incomes generated from those assets are rather simple. We have 2.2 Mill USD, which breaks down as follows

1.5 mill in rental properties - Which generates 5,500 USD each month
700k USD in stocks/funds

We will live off the rental income and hope to never touch the stocks, as hopefully add to them every couple of months if we don't spend the entire 5,500 usd.

I'd like to travel with my wife and daughter to other cities in Spain as well as other countries in Europe. We'll create a strict budget, but Spain is not too expensive. Rent is around 1k Euro's for a nice 3 bedroom in downtown Valencia, and school, living expenses and health insurance can easily fit under the 5500 USD.

It's a big move, and although I'm passing up great income from my salary, my heart is just not into my work right now. I'm not saying I'm never going to go back to work. But I need to change, and this seems like a great opportunity. Eventually we will move back to the U.S. so our daughter can go to school near my family in either New Jersey or PA. I feel like once we move back to the U.S. we will never get this opportunity again.

Anyway, thought I might share my story and if anyone has ANY info on Valencia I'd be happy to hear from you. I've done tons of research and we're visiting in Oct and then again in Feb before we apply for our residence visas to then move there in June of 2019.

Exciting but at the same time a little nervous.....ha.

 

[Human]

Congrats! Sounds like a wonderful adventure.

I don't have any info for you, but having visited Spain, I can certainly understand why you and your wife decided to move there

 

[daylatedollarshort]

We always liked the house hunter shows and were amazed at the low housing prices in Spain and especially Valencia. It sounds like an exciting move!

 

[davebarnes]

Bon voyage.

 

[Bryan Barnfellow]

Sunny Spain! Good choice. Here are a few thoughts:

1. Will you be able to get a residence permit that doesn't include working as a pre-requisite?
2. If you are a "US person" (defined by the US IRS), you will have to file US as well as (presumably) Spanish tax declarations. The US will give you some, not all, credit for foreign taxes paid.
3. Learning a foreign language is hard stuff, if you really want to become proficient. Start now (kids as well).

Yours is a great idea, which is fantastic for your children (and you and your spouse, of course). I know someone who did that for two years in Florence, Italy so that the two kids could have the experience. She told me it was a very good decision.

You may decide to stay! My wife and I did in our adopted country.

-BB

 

[Totoro]

I'm guessing you won't mind the summer warmth, that would be my hiccup

 

[orangehairfella]

We looked at this as well. Since you’re planning to become a resident how does the wealth tax factor in? I recall wealth tax adding around $15k/year on a $2M portfolio. I’m not sure how the rental income plays out, do they want a chunk of that too?

 

[DFDubb]

I lived in Barcelona on a student Visa for a year. I would like to retire to Spain as well. Are you a US citizen? How are you going to obtain a visa/residency status? I'm not super well versed on the matter, but from my time there, it was explained to me many times over that immigrating to Spain from the US is not an easy task.

 

[Mdlerth]

Migrate in haste, repent at leisure

I've read your OP multiple times, and I keep getting the impression that your next visit to Valencia will also be your first.

So, in the absence of firsthand experience, what prompted your decision to yank up stakes and relocate there?

 

[Throwdownmyaceinthehole]

Valencia!!!! Las Fallas!!! Check out that festival. So much fun, the wine, the food, the beautiful countryside. Sigh, I want to go back.

 

[kcowan]

Have a look at this site:
https://www.expatistan.com/cost-of-living/comparison/valencia-spain/vancouver
just replace vancouver with your current city.

We have a good friend from Monterey CA who moved to Antequera for 3 years to let their kids speak Spanish. They loved it.

 

[JakeinChina]

Sunny Spain! Good choice. Here are a few thoughts:

1. Will you be able to get a residence permit that doesn't include working as a pre-requisite?
2. If you are a "US person" (defined by the US IRS), you will have to file US as well as (presumably) Spanish tax declarations. The US will give you some, not all, credit for foreign taxes paid.
3. Learning a foreign language is hard stuff, if you really want to become proficient. Start now (kids as well).

Yours is a great idea, which is fantastic for your children (and you and your spouse, of course). I know someone who did that for two years in Florence, Italy so that the two kids could have the experience. She told me it was a very good decision.

You may decide to stay! My wife and I did in our adopted country.

-BB

Thanks Brian

Yes, I'm an American, and I've been an expat mostly in China for the last 17 years. I've done a ton of research on the visa issue, and Spain (and Portugal) offer non-EU nationals a non-working residence visa if you meet the minimum monthly income requirements, which is around 2k Euro's, but depends on how many children your bringing with you, then that 2K increases. A working visa is a totally different situation, and that is not that easy to get, but I'm not totally educated on the process for working visas.
We vacation in Ireland often to get out of China and have a change of scenery. Ireland has made it VERY difficult for Non-EU nationals to live there. You need 50K Euro's of monthly income per person, and then requirements to prove that income are very difficult. They do not accept rental income, bank statements or stocks/dividends as proof of income. They want a person to have a pension or a steady income stream. Also, Ireland will not give you any benefits at all as you'd be on Stamp 0, which is a temp visa that allows you to receiving nothing ie public schools or healthcare.
The U.S. taxation issue I'm not worried about. IRS gives you up to roughly 100K USD in tax free income. The Spain tax policy is what I need to look into more. All of my money will come from overseas, which I can manage how much will actually be sent into my local Spain bank account. If they want to tax a portion of my overseas income, I'm fine with that. Taxes are unavoidable for most of us, and esp if my daughter is going to a public school, and we are going to receive healthcare (we will also purchase private healthcare) I feel I should pay taxes to my new home country. We are in fact using the roads, schools, hospitals and other resources, unlike America which I never use and still have to file and pay a small portion of tax.
I'm 40, as is my wife. Are we going to become fluent Spanish speakers and mingle with the locals like were the Gatsby's on Long Island in the 20's? Probably not. But if my daughter can become fluent at 6 years old, and we study it to be respectful of the locals and able to speak basic conversational Spanish, then I think I'm totally fine with that.
The weather is great there, and where we live, in Guangzhou China, wherever we go it will be an upgrade from the hot, humid and horrible weather of southern China.

 

[JakeinChina]

I've read your OP multiple times, and I keep getting the impression that your next visit to Valencia will also be your first.

So, in the absence of firsthand experience, what prompted your decision to yank up stakes and relocate there?

I'm a long time expat, and we are not ready to move back to the U.S. right now. My wife is from China, and although we want to settle in the U.S. eventually as we both feel the U.S. is the best "deal" in terms of family life and education, I want to experience living full time in Europe.

We explored the idea of an investor visa for Portugal first. Warm weather, inexpensive, Western Europe with access to other countries, but then we started to think about Spain. We first decided the investor visa was not for us. We aren't really looking to move to Spain and live there forever. We like the U.S. and my family is there, but we have this opportunity to live somewhere else, and I want to take it. I know once we settle down in the U.S. and my daughter gets older, were never going to be able to live in Europe again.

The investor visa has many many costs connected to it. Yes, its much faster to get permanent residency if you do the investor visa. But investing 500k Euro's in an apartment, then paying almost 100k Euro's in legal /real estate and gov't fees, its just felt like a lot of money to put up, when we already know we will move back to the U.S.

I picked Valencia because I've seen so many foreigners move there. Its almost half the price for COL compared to Madrid and Barcelona for rent in good locations downtown, and Valencia still has many resources for kids and families. Its the 3rd largest city in Spain, close to the ocean, and better access to the rest of Europe when you compare it to Portugal.

Madrid was our first choice, but paying 2k Euro's on rent would be tough to swallow, given how our goal is to live under 3500 Euro's each month.

 

[NW-Bound]

... Ireland has made it VERY difficult for Non-EU nationals to live there. You need 50K Euro's of monthly income per person, and then requirements to prove that income are very difficult. They do not accept rental income, bank statements or stocks/dividends as proof of income...

That seems high, and I suspected you had a typo. So I double-checked, and it is really annual income, not monthly ( €100K annual/couple).

 

[CaliKid]

We spent a nice chunk of time in Spain during a sabbatical. It gave me a new lease on life. They have a good way about them. So much more relaxed than here in the states. We want to go back. Enjoy!

 

[JakeinChina]

That seems high, and I suspected you had a typo. So I double-checked, and it is really annual income, not monthly ( €100K annual/couple).

Sorry yeah, 50K Euro's per year for Ireland not month haha. 100K Euro's per husband and wife, which IMO is a lot when you get nothing out of it, except to pay Irish taxes on your worldwide income.

 

[kramer]

Thanks for your post. It's timely for me as I am headed for a 5 week long vacation in Spain starting next month (but not Valencia so I won't be able to report to you on that) and I also speak decent Spanish. It's my first visit to Spain.

Can you explain the Spain residence visa requirements in a bit more detail? You mentioned you need 2K in income... so is it 2000 Euros per month income, and it doesn't have to be a pension? As a young retiree, this was always my stumbling block on many resident visa requirements ... I won't have a pension until I am 70 via US Social Security. Do they accept US tax returns or brokerages statements as enough evidence of income? I also wonder if for a passive stock and bonds portfolio if capital gains would count as income or only dividends.

Spain does tax foreign residents' international income ... but I have no idea how it works or if it works in a special way via a tax treaty with the US. For those interested, there is a good chart on the wikipedia page for international taxation listed by various countries:

https://en.wikipedia.org/wiki/International_taxation

The column for taxation of foreign residents international income is the second from the right. I am resident in the Philippines and they do not tax international income of foreign residents. In other countries, this just seems to be ignored ... most expats in Mexico are supposed to file Mexican income taxes on their US income but no one seems to do it. I do wonder if some day this will be more widely enforced, especially with more extensive information sharing.

 

[flintnational]

If you stay in Spain long enough, when your children are 16 you can send them to the wine store to pick up Rioja for mom and dad. (don't ask how I know)

 

[audreyh1]

That seems high, and I suspected you had a typo. So I double-checked, and it is really annual income, not monthly ( €100K annual/couple).

Yeah - that €50K per month really made my eyes bug out!

$125K income per year is still high, but more in the ballpark of a retiree here, although probably not so many getting that as pension income alone.

Sorry yeah, 50K Euro's per year for Ireland not month haha. 100K Euro's per husband and wife, which IMO is a lot when you get nothing out of it, except to pay Irish taxes on your worldwide income.

The inheritance/estate taxation laws on residents are pretty wild as well.

Also heading to Spain for a visit soon. And I do already speak Spanish although my ear is not as tuned to the Spain accents.

 

[Newventurer]

After having seen a recent episode on HGTV of a family moving to Barcelona I have become fascinated with the architecture especially - Sagrada Familia cathedral, designed by Antoni Gaudi, hope you get to see it. Amazes me what humans can do when they put their mind to it. Best wishes for a great life ahead.

 

[JakeinChina]

Thanks for your post. It's timely for me as I am headed for a 5 week long vacation in Spain starting next month (but not Valencia so I won't be able to report to you on that) and I also speak decent Spanish. It's my first visit to Spain.

Can you explain the Spain residence visa requirements in a bit more detail? You mentioned you need 2K in income... so is it 2000 Euros per month income, and it doesn't have to be a pension? As a young retiree, this was always my stumbling block on many resident visa requirements ... I won't have a pension until I am 70 via US Social Security. Do they accept US tax returns or brokerages statements as enough evidence of income? I also wonder if for a passive stock and bonds portfolio if capital gains would count as income or only dividends.

Spain does tax foreign residents' international income ... but I have no idea how it works or if it works in a special way via a tax treaty with the US. For those interested, there is a good chart on the wikipedia page for international taxation listed by various countries:

https://en.wikipedia.org/wiki/International_taxation

The column for taxation of foreign residents international income is the second from the right. I am resident in the Philippines and they do not tax international income of foreign residents. In other countries, this just seems to be ignored ... most expats in Mexico are supposed to file Mexican income taxes on their US income but no one seems to do it. I do wonder if some day this will be more widely enforced, especially with more extensive information sharing.

Hey Kramer,

Below is one of many sites that provide the non-lucrative (non-working) residency visa for Spain. There are a number of steps to then receive permanent residency and after 10 years you can apply for citizenship.

The income requirement isn't very specific (unlike Ireland) but they are looking for a steady stream of income.

Many people are actually doing this non-lucrative visa in Spain these days, as the government is positive on the idea of Non-EU residence spending money and paying income tax in the country, but not taking jobs away.

You certainly would have to pay income tax to any income produced inside or outside the country, but the rate and deductibles offered I'm not 100% certain on. I will use a local accountant in Spain for the first year living there.

 

[JakeinChina]

Hey Kramer,

Below is one of many sites that provide the non-lucrative (non-working) residency visa for Spain. There are a number of steps to then receive permanent residency and after 10 years you can apply for citizenship.

The income requirement isn't very specific (unlike Ireland) but they are looking for a steady stream of income.

Many people are actually doing this non-lucrative visa in Spain these days, as the government is positive on the idea of Non-EU residence spending money and paying income tax in the country, but not taking jobs away.

You certainly would have to pay income tax to any income produced inside or outside the country, but the rate and deductibles offered I'm not 100% certain on. I will use a local accountant in Spain for the first year living there.

Residence Visa (Non-Lucrative)

 

[kramer]

Hey Kramer,

Below is one of many sites that provide the non-lucrative (non-working) residency visa for Spain. There are a number of steps to then receive permanent residency and after 10 years you can apply for citizenship.

The income requirement isn't very specific (unlike Ireland) but they are looking for a steady stream of income.

Many people are actually doing this non-lucrative visa in Spain these days, as the government is positive on the idea of Non-EU residence spending money and paying income tax in the country, but not taking jobs away.

You certainly would have to pay income tax to any income produced inside or outside the country, but the rate and deductibles offered I'm not 100% certain on. I will use a local accountant in Spain for the first year living there.

Thanks, Jake, I found the forms very useful. You are right, they are not very specific on income/savings requirements, so you probably have to go by people posting about their experiences, it seems like a combo of income and savings might qualify ... I would definitely research tax details before you make the move ... if they are going to tax your dividends at a flat 40%, for example, that might be a non-starter for some people (for instance, I am paying 0% under the US tax regime). Same goes if there is an international wealth tax like I understand they have in France after a certain residency period.

I had to get an FBI criminal record document and then get it appostilized (sp?) by the Philippines embassy in the US for my Philippines visa ... 1 week to get my actual (non) criminal record after getting fingerprinted at a sheriff's office ... it took just over a month for the FBI to officially certify it (!) even though the web site said it would be much faster and then another month (!) for the embassy to appostilize it ... very time consuming and must be done in order non-concurrently.

I didn't read all the health insurance info, but it would really be a pain to have to get zero-deductible full coverage health and evacuation insurance in Spain with an approved company before you even applied for residency, which seems to be a requirement, but it is what it is. Even the instructions say this can be difficult.

10. Documentation proving economic funds sufficient for the duration of residence or proof of a minimum reoccurring monthly income. The minimum amount will increase for every additional member of the family. There must be proof of significant savings and proof of re-occuring, non-working income. Original, photo copy and translation into spanish. (Kramer note, the required support income is about 2150 Euros plus 540 Euros for each additional family member)

 

[Alan]

Hi Jake, best of luck with your plans, they sound great.

You mentioned that the US will not tax the first $100k of your income, but I think that is earned income and you said that you wouldn’t be working. Our son is a US expat in England and his earned income is excluded from taxes using the FEIE, but I am retired here in England and the US fully taxes my pensions, both US and foreign.

The US tax treaty with Spain may be different than the one with the UK but you should check it out first to avoid surprises.

 

[bmcgonig]

With respect to retiring in Ireland and the onerous conditions like 50k/person, the Irish government is offering a deal to Trump that Ireland will provide easy visas to US persons in exchange for a good deal for the 10000-15000 undocumented Irish in US. According to this article Trump is interested. So might be easy to retire in Ireland soon. Who knows how these things end up of course.

( Of course weather wise I'd wayyyyy pick Valencia [emoji41][emoji41] )

https://www.irishcentral.com/news/politics/donald-trump-ireland-bilateral-visa-agreement