The Money Mustache Community
General Discussion => Post-FIRE => Topic started by: MrSnow on August 25, 2019, 03:15:53 AM
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Me and my family just moved abroad to the small Spanish island of Mallorca to start our new FIRE-based lives. We have already identified a large number of challenges and are interested in others with experiences from FIRE-based lives abroad, particularly in Spain. We have of course started a small blog to share our experiences as well, but we want to learn from other persons/familys experiences. We greatly appreciate any blogs, tips or experiences!
Cheers!
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PTF. This is my Dream.
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Nice!
Would I be right that you're living there under the non-lucrative visa program? Anything about that process you'd like to tell us about?
Here's a writeup from another member of the community: https://frugalvagabond.com/get-non-lucrative-residence-visa-spain/
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PTF. This is my Dream.
It was ours as well for almost ten years... and now we are here! There are a lot of things to deal with, not the least Spanish bureaucracy which is something out of scary movie. Aside from that, its all that we could dream of so far... one month in. ;-)
What is your plan/dream exactly?
Ps. You can see our (so far) very thin blog at palmaonfire.com if you wish. Ds.
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Nice!
Would I be right that you're living there under the non-lucrative visa program? Anything about that process you'd like to tell us about?
Here's a writeup from another member of the community: https://frugalvagabond.com/get-non-lucrative-residence-visa-spain/
Sorry to disappoint you, we are actually Swedish so we are under the "freedom of movement" rights in the EU. We basically need to show that we can "take care of/fund ourselves". Then there are a huge bunch of messy things you need to do by the way of bureaucracy to get in place, but that's a different story than a VISA.
Thanks for the link though, I´ll read it through anyway!
Regards,
Mr Snow
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Ah, lucky you!
I guess that link will have to suffice with us poor US citizens who are stuck with only one country to choose from. At least it's a big country with lots of options.
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Ah, lucky you!
I guess that link will have to suffice with us poor US citizens who are stuck with only one country to choose from. At least it's a big country with lots of options.
I realise after reading the link that you provided that it corresponds quite well to the necessary paper work we have to do as well! The only real difference is that we are more difficult to kick out of the country. ;-)
A typical spanish thing btw, the law is nice but its only something you follow when you feel like it. Ex. Spain is bound by EU legislation to accept documents without apostilles since Jan 2019 (they had 3 years to implement it before), but its not like the agencies here care. "Translate you docs or get lost" is one of the most common sentences i hear...
Thats what i love about the US, from a nature standpoint you pretty much have everything gathered on the same land mass! Not extremely necessary to travel that much away from that. Culture wise, its a different question though.
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Moving abroad when I quit my job is also our plan, it will probably be Portugal for us but a lot of the same stuff will apply. I'm a European citizen and my wife is an American so as the timeline draws nearer (max 3 years but i feel it'll be sooner) we will have to figure it out.
Excited to follow this thread as well as your blog!
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We have been kicking around ideas about Spain and Portugal for further down the line as well. (Currently FIREd in North America)
We both have the EU residency thing covered, so that's not an issue.
May I ask, how you are dealing with the tax side of living in Spain?
I know a lot depends on what kind of income classes you have, but last time I looked into this (and from what I heard from friends, who live in Spain most of the year, but try very hard to avoid becoming tax residents), it seemed the way typical Retiree income options are taxed makes Spain residency difficult.
I may not be up to date, it's been a while since I looked into it, but it sounded Portugal was a better choice for tax reasons.
We both speak Spanish though and if someone figured out a way to stay in Spain, I'd prefer that.
I'll go check your blog as well, but if you have any insight on that, I'd love to hear more.
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We are also contemplating the same idea. I am originally from Colombia so I speak Spanish and share many cultural aspects. However, I wonder if there are a lot of volunteer opportunities there or ways to spend your free time?
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Hey Mr. Snow. Excited to follow your blog. Would you mind sharing your financials, i.e. expected spending, withdrawal rate etc, what is your stash made of, how you plan your taxes etc. Asking since there aren't that many European FIREees here and especially not with kids. So I am very curious to hear from someone who's already done it.
I often wonder how applicable the rules here are to us, as on the one hand, you most definitely need way less money in total, but it's also way harder to plan to pay little to no tax on anything that is remotely liveable.
We are also Swedish (well sorta, the rest of my family is, I wasn't born there but by now I qualify for a passport and the funny thing is that since we live in Luxembourg now, for us Sweden = cheap place to go retire to).
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Posting mostly to follow, and also because we have also talked about retiring to Spain.
Right now we both have US passports, but my other half is eligible for Italian citizenship, so we are working on that route towards EU passports. We both like Italy and can imagine ourselves settling in northern Italy for a few years, but Spain or Portugal are the ultimate goal for us. We may end up slow traveling.
Thank you for starting this thread!
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I'd be interested to learn more about Spain costs as well.. I haven't done much research yet; as an American I think the process is much more difficult to go anywhere in Europe.
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PTF - thinking about Northern Spain (not quite as hot, and lots of water!)
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We have been kicking around ideas about Spain and Portugal for further down the line as well. (Currently FIREd in North America)
We both have the EU residency thing covered, so that's not an issue.
May I ask, how you are dealing with the tax side of living in Spain?
I know a lot depends on what kind of income classes you have, but last time I looked into this (and from what I heard from friends, who live in Spain most of the year, but try very hard to avoid becoming tax residents), it seemed the way typical Retiree income options are taxed makes Spain residency difficult.
I may not be up to date, it's been a while since I looked into it, but it sounded Portugal was a better choice for tax reasons.
We both speak Spanish though and if someone figured out a way to stay in Spain, I'd prefer that.
I'll go check your blog as well, but if you have any insight on that, I'd love to hear more.
Short answer is, we haven't taxplanned fully yet. We entered spain in July and if we leave before the end of June next year we are not "resident" and applicable for taxes here. To avoid being taxed you need to stay less than 184 days per calendar year. This is our "trial year" and if everyone in the family wants to, we will stay.
Another important thing is that we are coming from Sweden, the black belt country of ridiculous taxes, so whatever happens it can only become better. ;-)
Yes, Portugal is as far as I know a lot better from a tax point of view. Spain has average taxes in the EU. I´d guess your pension would be taxed with 20-something percent, but i am no expert.
From an investment perspective there are several options that i know of, where one is that you open an "managed investment account(endowment insurance?)" in for example Luxemburg. These are excepted from tax in Spain. I´d recommend to talk to a financial advisor when planning how to handle your investments.
As your friends mentioned that avoid becoming "residents" is very very(!) common, but that entails a lot of "cheating" and is illegal. Its basically keeping yourself under the radar of the government and it works as the Spanish government is somewhat incapable of control. ;-) I know of a lot of Swedes who has been living here more than 10+ years without being "residents"...
I have planned (and to some extent started) to write some posts in the future on these subjects when i get a little more time. Its been quite hectic this first month! :-D
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We are also contemplating the same idea. I am originally from Colombia so I speak Spanish and share many cultural aspects. However, I wonder if there are a lot of volunteer opportunities there or ways to spend your free time?
Yes, there are lots of volunteering opportunities here! And spending time in Mallorca is sort of what the entire island is about. Or where you thinking about Spain in general?
A volunteering post on the blog is also planned but that we be sometime before christmas when we learned more. Got a friend here who is already involved in charity and volunteering.
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Hey Mr. Snow. Excited to follow your blog. Would you mind sharing your financials, i.e. expected spending, withdrawal rate etc, what is your stash made of, how you plan your taxes etc. Asking since there aren't that many European FIREees here and especially not with kids. So I am very curious to hear from someone who's already done it.
I often wonder how applicable the rules here are to us, as on the one hand, you most definitely need way less money in total, but it's also way harder to plan to pay little to no tax on anything that is remotely liveable.
We are also Swedish (well sorta, the rest of my family is, I wasn't born there but by now I qualify for a passport and the funny thing is that since we live in Luxembourg now, for us Sweden = cheap place to go retire to).
Hej Havregryn! I definitely will, i have drafts for posts on those subjects but haven't had the time to complete them because of administrative work and entertaining the children at the same time! I agree, we tend to need less money, but i think the Swedish "Kapitalförsäkring" is a really neat thing. There are international versions of those that you can use which are exempted from tax in Spain. Not the Swedish "Kapitalförsäkring" though bear in mind.
Luxemburg - high salaries, low taxes, good banking options. Sounds like a great place to build your stash. :-)
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PTF - thinking about Northern Spain (not quite as hot, and lots of water!)
Awesome place! We love northern Spain as well! The food is great and quite different from the south coast paella and tapas. Visiting crowded bars and eating Pintxos and drinking Txakoli all night works for me. Amazing hiking in "Picos de Europa", nice and friendly locals. Only got superlatives for that part of Spain. :-)
FIREing in San Sabastian is not a really frugal choice though, most expensive area in Spain.
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Congrats on the move @MrSnow . We join the hordes who have also contemplated this move. You mention children (I think), will they attend local schools?
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Congrats on the move @MrSnow . We join the hordes who have also contemplated this move. You mention children (I think), will they attend local schools?
Thanks Pennycounter, so far all good!
We have planned this with a "backup" both from a family and financial point of view. The children will not attend spanish school during our "trial year". This was one of the things that we have been discussing for years, so it wasn't an easy choice. If we choose to stay after our "trial year" they will attend spanish school though. It felt a little rough (we are weak by heart) to force them into a new language and culture IF we only do this for one year.
From a frugal standpoint its also not advisable to continue this road, private schools cost approx 500€(600$)/child and month here . There are some interesting middle choices as well, but those are hard to get in too. I´ll develop that further in a planned blog post, as soon as i get some more time (basically when school starts in a week). :-)
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I occasionally check in on this blog https://wagonersabroad.com/blog/ (https://wagonersabroad.com/blog/). They're an American family who moved to southern Spain for a year to give their children a chance to learn Spanish really well. They ended up loving it so much they stayed. Their most recent post is about passing their 7 year anniversary in Spain.
They aren't exactly FIREd, but they seem to have come up with hustles to pay the bills while living frugally. They make some money helping Americans go through all the paperwork and red tape to become residents, and they sometimes get sponsors to cover the costs of their vacations. I think they also set up a website for their town. They have shared their annual budget before to show people how to become expats. https://wagonersabroad.com/destinations/get-started-expat-living/ (https://wagonersabroad.com/destinations/get-started-expat-living/)
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Sounds fun. My impression is that Mallorca is expensive. How are you doing it cheaply? Or is it just less expensive than the place you currently live?
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I occasionally check in on this blog https://wagonersabroad.com/blog/ (https://wagonersabroad.com/blog/). They're an American family who moved to southern Spain for a year to give their children a chance to learn Spanish really well. They ended up loving it so much they stayed. Their most recent post is about passing their 7 year anniversary in Spain.
They aren't exactly FIREd, but they seem to have come up with hustles to pay the bills while living frugally. They make some money helping Americans go through all the paperwork and red tape to become residents, and they sometimes get sponsors to cover the costs of their vacations. I think they also set up a website for their town. They have shared their annual budget before to show people how to become expats. https://wagonersabroad.com/destinations/get-started-expat-living/ (https://wagonersabroad.com/destinations/get-started-expat-living/)
Awesome, i am already on it! We're hoping for the "ended up staying" as well! Thank you so much for the tip! :-)
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Sounds fun. My impression is that Mallorca is expensive. How are you doing it cheaply? Or is it just less expensive than the place you currently live?
So far, extremely fun! "Normal" life starts next week after a long, but intensive, vacation here in Palma. Lets see in a month or two if we still are equally happy with our move. ;-)
Thats a really good question, and the best answer to that is both yes and no! For foreigners/tourists its ridiculously expensive (see https://palmaonfire.com/blog/2019/08/mi-casa-es-su-casa/) but there is a whole different story to living in Palma and Mallorca. Just consider the fact that the average salary here is, depending a little on the source, between 800-1200€/month after taxes. If you can survive and live on 800€/month then there is obviously a "hidden" world for the rest of us outsiders who can easily spend 4000€/month. This is something that we have the intention to investigate throughly, is it possible to live here on those types of local incomes and still live the life that we want? I believe so and that would make a frugal FIRE very comfortable here. I will document our experiences and progress on the blog. In less than a year we will know! :-D
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Hi MrSnow
We’re on a pretty similar path to you as we moved out to a Spanish island just over a year ago with our two girls and have recently started to feel settled. We’re in a slightly different place from you as we’re in the Canaries, but much of the cultural and legal situation will I”m sure be very similar.
One thing we have done the same as you is to start our girls in an English speaking school for the first year, which I think was the right decision. I guess this is always very individual, but certainly for our eldest I think the additional complication of a new language from the outset would have been a lot to deal with. We’re now just getting ready to start at our new school which is a Spanish language concertado (state supported but with more autonomy, and we pay a top up fee albeit much less than for a private school; maybe a little like a charter school for the American readers) very close to our house.
We were pretty wary about the disruption of changing schools again after just a year but so far touch wood it feels like the right move. The girls have picked up enough Spanish at the private school to be able to at least get by - at ours pretty much all of the kids were Spanish whose parents want them to grow up bilingual, so there is still a lot of Spanish spoken in the playground. We just had a month of summer school at their new school, all in Spanish, and they had a great time. Of course starting full on school will be more difficult than that but fingers crossed they will adapt quickly. I guess age also plays a factor; our eldest is 6, while friends who moved with a 9 year old have found learning the language more of an adjustment.
I look forward to following your adventures and feel free to PM if you have any questions about how we have got on so far!
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Just consider the fact that the average salary here is, depending a little on the source, between 800-1200€/month after taxes. If you can survive and live on 800€/month then there is obviously a "hidden" world for the rest of us outsiders who can easily spend 4000€/month. This is something that we have the intention to investigate throughly, is it possible to live here on those types of local incomes and still live the life that we want? I believe so and that would make a frugal FIRE very comfortable here. I will document our experiences and progress on the blog. In less than a year we will know! :-D
The salary figures are similar here in Italy and the way most people make it work is by relying on family. Family provides a free place to live (either living with parents or an inherited apartment), family provides vacation accommodation (a house in the ancestral village or a communal apartment near the beach), family looks after your kids, family provides food to some extent like olive oil or wine from the ancestral village. Life is much more expensive when you don't get family help as in our case.
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I will document our experiences and progress on the blog. In less than a year we will know! :-D
Please do. Looking forward to reading about it.
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To the Americans who are daydreaming about this I think it is actually very doable. As British citizens we were able to move here under EU freedom of movement, but don’t know what terms we will be under post brexit. To get a feel for the worst case I researched what we would have to do to be able to live here as a non EU citizen such as an American, and there are few routes to look at. For example I’m currently resident as an autonomo, effectively self employed, and there are visas available to self employed as well as entrepreneurs, either of which could suit someone with a side hustle.
There is also a non lucrative visa which doesn’t allow you to do paid work, but for which you basically have to prove that you have the resources to support yourself, and that you have private health insurance - but as this is Europe think in the region of EUR100-200 a month for insurance for a family of 4. The level of support seems deliberately vague but shouldn’t be a stretch for most mustachians, and as far as I can tell they are usually happy to see enough cash in a bank account to cover 12 months of expected expenditure.
Taxes wise Spain is certainly not as low tax as the US, but also far from the highest in Europe. Generally speaking the income tax brackets are pretty similar to the UK, although the higher rates kick in at lower levels of income than the Uk and there are less generous exemptions.
Another factor that we thought would be a deal breaker for Spain is that there is a wealth tax on assets above EUR 700k per adult, with a separate exemption for a family home. However there are a lot of exemptions to this, for example pension accounts dont seem to be counted, and investment property is counted at the original purchase price rather than current valuation. Overall this means that the wealth tax seems to be less of a concern for even a moderately mustachian stache.
All of that said if you are looking for somewhere nice in Europe to set up home and are otherwise undecided between Spain & Portugal, it might be well worth taking a look at Portugal. As I understand it they have a pretty advantageous tax treatment for newcomers whose assets are mostly outside of Portugal. But for us there were a number of specific factors such as location, and for kids to learn a more internationally useful language that made the trade off for Spain worthwhile for now.
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Just consider the fact that the average salary here is, depending a little on the source, between 800-1200€/month after taxes. If you can survive and live on 800€/month then there is obviously a "hidden" world for the rest of us outsiders who can easily spend 4000€/month. This is something that we have the intention to investigate throughly, is it possible to live here on those types of local incomes and still live the life that we want? I believe so and that would make a frugal FIRE very comfortable here. I will document our experiences and progress on the blog. In less than a year we will know! :-D
The salary figures are similar here in Italy and the way most people make it work is by relying on family. Family provides a free place to live (either living with parents or an inherited apartment), family provides vacation accommodation (a house in the ancestral village or a communal apartment near the beach), family looks after your kids, family provides food to some extent like olive oil or wine from the ancestral village. Life is much more expensive when you don't get family help as in our case.
MrSnow that was exactly our thinking coming to Spain also. I think what Hula Hoop says is certainly part of the story, also that many of the ordinary working people here simply have less material goods, international travel etc than we in more wealthy countries have become used to. But if a simpler style of life is part of what you are looking for I think that goes a way to bridging the gap; as would being FIRE so having time to deal with things, and having a paid off home.
So far we are still working to get our expenses down to quite the level we want them to be, thanks to a combination of costs related to setting ourselves up, and limited time since we are both still working at the moment.
One of the big areas for cost savings we have seen so far is that buying groceries from the smaller stores in areas with tourists are always expensive, while larger out of town supermarkets are much more reasonable. We’re trying to use a combination of weekly bulk shops via car or even online delivery, with top ups from local stores to reduce the cost of our groceries.
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We just spent a week in Spain, not the same as moving there of course, but both our kids wound up in urgent care for one reason or the other. I’m an anti-Trump moderate, but the hours we spent in the waiting room for a life-threatening situation made me question socialized health care...Maybe it’s just because Spain is still a bit of an economic basket case, but I’m glad that we made it out of there alive.
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Just consider the fact that the average salary here is, depending a little on the source, between 800-1200€/month after taxes. If you can survive and live on 800€/month then there is obviously a "hidden" world for the rest of us outsiders who can easily spend 4000€/month. This is something that we have the intention to investigate throughly, is it possible to live here on those types of local incomes and still live the life that we want? I believe so and that would make a frugal FIRE very comfortable here. I will document our experiences and progress on the blog. In less than a year we will know! :-D
The salary figures are similar here in Italy and the way most people make it work is by relying on family. Family provides a free place to live (either living with parents or an inherited apartment), family provides vacation accommodation (a house in the ancestral village or a communal apartment near the beach), family looks after your kids, family provides food to some extent like olive oil or wine from the ancestral village. Life is much more expensive when you don't get family help as in our case.
I often wonder about this too.
I am from Croatia, so similar setting to Italy and Spain, just even poorer.
But my impression too is that people who are living something that remotely resembles what we consider normal life in the developed world either have a significant advantage in form of inherited real estate (not only to live in but also to rent out to tourists for a lot of money) or have two above average salaries for the region, landing their total income at 2-3000€ per month. Because that is what normal lifestyle would seem to cost around there.
But we could manage to live off of this in Sweden too (or probably any European country other than Switzerland, Norway and Luxembourg), so I don't really get these "cheaper" places.
Living in a poorer neighborhood in Split in Croatia means living in some major misery. Living in a cheaper arrangement in Stockholm is just living with more non-white people around you or commuting 40 min on a high speed train. So to me in Croatia you are actually more vulnerable to not having "enough" money than in Stockholm. Things you're gonna miss out on in Stockholm are just snobbery. In Croatia, you will be risking your health and wellbeing.
Most people on local incomes simply don't live what is considered remotely "normal" in the West.
We're not even talking amount of international travel or organic food, people have radically different expectations of everything. This pops up a lot on housing topics. We live in a 2 bedroom 90m2 apartment with what is soon going to become three kids because Luxembourg is inhumanely expensive and I am not willing to exchange our long term FIRE potential for more comfortable living arrangements while the kids are so small they prefer to co-sleep with us anyway, but most people here think this is horrible (and we wouldn't be able to rent a similar property, but we own this little gold nugget of Lux real estate so we can sleep on the couch if we want to) whereas most people from Croatia think we live in luxury.
There 50-60m2 is much more of a norm for a family with two kids and often you will have 3 generations living in the same apartment (so parents kids + at least one grandparent).
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We just spent a week in Spain, not the same as moving there of course, but both our kids wound up in urgent care for one reason or the other. I’m an anti-Trump moderate, but the hours we spent in the waiting room for a life-threatening situation made me question socialized health care...Maybe it’s just because Spain is still a bit of an economic basket case, but I’m glad that we made it out of there alive.
Emergency rooms are always a shitshow in July/August. Everyone is on vacation, doing things outside, getting injured. Including medical staff.
You were likely prioritized like everyone else, and whatever your life-threatening injury was, someone had it worse that day.
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There 50-60m2 is much more of a norm for a family with two kids and often you will have 3 generations living in the same apartment (so parents kids + at least one grandparent).
I think that's the difference between Northern Europe and Southern Europe. 50-60 sq meters would be a normal family apartment here in Italy too. Maybe slightly on the snug side for a family of 4. People's ideas about privacy and family are completely different here from in the US and I assume in Northern European countries like Luxembourg. It's also completely normal to live with your parents and siblings in your tiny apartment well into your 30s or 40s.
@smoghat I've waited hours and hours in the ER in the US too and then got charged $$$$ for it on top of that. This is nothing to do with "socialized medicine".
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But to me this is really just a natural consequence of being relatively poor, because no one is doing this in Croatia because they love it. Rich people get larger residences. Anything newly built in a rural area (so cheapish) will have the same size standards as what gets built in Northern Europe. People in the cities simply can't afford anything else (because property prices are ridiculously high compared to salaries) and it is considered perfectly normal.
I grew up rural so we never had this issue and I have to admit I don't feel the "cultural preference" vibe. Housing is minuscule only in areas where property is highly valued (i.e. where there are tourists and potential tenants). In areas where it has more or less no resale or rental value (like where I grew up, even though it is in the commuting distance to the capital city) it's very rare that people would live in very small spaces. It's just that it is so wide-spread because so many people in cities can't afford better that it becomes much more normalized than here where most people can afford more (I mean, by any traditional metric we can also afford a much larger property, but I hate Luxembourg and I will REALLY rather sleep on the couch than take out a million euro mortgage for a moldy house in this place lol).
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We just spent a week in Spain, not the same as moving there of course, but both our kids wound up in urgent care for one reason or the other. I’m an anti-Trump moderate, but the hours we spent in the waiting room for a life-threatening situation made me question socialized health care...Maybe it’s just because Spain is still a bit of an economic basket case, but I’m glad that we made it out of there alive.
I’m sorry you had an unpleasant experience. This has the potential to be a very useful thread and I would hate to see it derailed into a healthcare discussion so I’ll just re-iterate that as I said earlier, an American retiree FIRE or otherwise would most likely be looking at a non lucrative visa or similar, one condition of which is that you need to maintain private health insurance. So socialised medicine isn’t something you even need to worry about if you want to come and live in Europe! Again, the cost of this health insurance will likely be a fraction of what you would pay in the USA - we were quoted EUR 120 per month for full cover for our family of four, with a very small co-pay.
Maybe after living there for a few years you would start to wonder why all the locals seem pretty happy with their socialised treatment, and why not a single person you will ever meet seems to wish they were under the US system of healthcare instead.
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We are also considering retiring in Spain. It seems the culture for kids is so much better in comparison to the US. I have also followed the Wagoners blog and their kids seemed to do very well. We will be going in May to check it out more to see if it’s a fit.
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Recently I read that parents in Spain don't really have the time to do voluntary work at sports clubs and such, because they have such long working days. Long because of the long lunch break. I guess this could have some effects on kids in general. Maybe not for retirees.
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Recently I read that parents in Spain don't really have the time to do voluntary work at sports clubs and such, because they have such long working days. Long because of the long lunch break. I guess this could have some effects on kids in general. Maybe not for retirees.
Same here. A standard work day is 9-8 with a three hour lunch break 1-4. This is changing a bit in larger cities but working hours still tend to be long.
@Linea_Norway most people here pay for kids to teach their kids at sports clubs. Why should parents have to volunteer for these things? Us working parents have enough pressure on us without having to also do volunteer work.
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Just consider the fact that the average salary here is, depending a little on the source, between 800-1200€/month after taxes. If you can survive and live on 800€/month then there is obviously a "hidden" world for the rest of us outsiders who can easily spend 4000€/month. This is something that we have the intention to investigate throughly, is it possible to live here on those types of local incomes and still live the life that we want? I believe so and that would make a frugal FIRE very comfortable here. I will document our experiences and progress on the blog. In less than a year we will know! :-D
The salary figures are similar here in Italy and the way most people make it work is by relying on family. Family provides a free place to live (either living with parents or an inherited apartment), family provides vacation accommodation (a house in the ancestral village or a communal apartment near the beach), family looks after your kids, family provides food to some extent like olive oil or wine from the ancestral village. Life is much more expensive when you don't get family help as in our case.
MrSnow that was exactly our thinking coming to Spain also. I think what Hula Hoop says is certainly part of the story, also that many of the ordinary working people here simply have less material goods, international travel etc than we in more wealthy countries have become used to. But if a simpler style of life is part of what you are looking for I think that goes a way to bridging the gap; as would being FIRE so having time to deal with things, and having a paid off home.
So far we are still working to get our expenses down to quite the level we want them to be, thanks to a combination of costs related to setting ourselves up, and limited time since we are both still working at the moment.
One of the big areas for cost savings we have seen so far is that buying groceries from the smaller stores in areas with tourists are always expensive, while larger out of town supermarkets are much more reasonable. We’re trying to use a combination of weekly bulk shops via car or even online delivery, with top ups from local stores to reduce the cost of our groceries.
@Doubleh - We are thinking quite alike and make the exact same conclusions/assumptions. We are a lean FIRE family. We don't have, or have had the last 10 years, any aspirations for the material things most people crave for which we find a little "shallow". We like hanging with friends, hiking, bicycling, swimming, running and so on. Quite alike MMM as well. We had a frugal life in Sweden and our FIRE-plan was covering our expenses there. By moving to Spain we just increased those marginals quite a lot and will be able to afford more activities etc when the children gets older. Side note - i still work part time just because i like it and will probably continue "work" for as long as i physically can so our margins are quite large now. :-)
Thanks for all your great input into this thread! I´ll reach out over e-mail as well!
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Recently I read that parents in Spain don't really have the time to do voluntary work at sports clubs and such, because they have such long working days. Long because of the long lunch break. I guess this could have some effects on kids in general. Maybe not for retirees.
Same here. A standard work day is 9-8 with a three hour lunch break 1-4. This is changing a bit in larger cities but working hours still tend to be long.
@Linea_Norway most people here pay for kids to teach their kids at sports clubs. Why should parents have to volunteer for these things? Us working parents have enough pressure on us without having to also do volunteer work.
I believe most countries have different setups, culture, structure, etc... its sort of self explanatory *duh*. I also believe this is one of the most exiting things of visiting and learning how other countries works. Always looking at it with a straight comparison to you home country x is misleading, you have to get the broad picture. If you compare with taxes in Sweden, you will get horrified as its more or less state robbery from an US point of view. But we get a lot back in the form of free childcare, free schools, free university (even a state allowance), free hospital care, 480 days of paid childcare, long vacations, small social gaps, etc (god i sound like a socialist now). I am not trying to push for any system, i am just thinking that its nescessery to see the whole picture which we unfortunately seldom do.
Spain has extremely much "against it on paper" compared to Sweden or the US, but i´ve met so many people over the years who moved to Spain telling me that their move might not have given them career or money or "living standard" and they can't afford as much as it used to. But it had given them what we call "livskvalité" roughly translated as "quality of life". This is hard to measure with numbers, but they are basically more happy with their life and feel less stressed with everything.
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A friend of mine is living in Almeriá in Spain since a couple of years back. His total(!) monthly expenses is approx. 500€/month. He earns a fragment (7-800€) of what he did and he does not have large savings as for example us FIRE-entusiasts, but he has never been happier and have no thoughts of going back to Sweden. Thatis what i would call a lean FIRE looking at it from a budget perspective! :-D
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Following
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A friend of mine is living in Almeriá in Spain since a couple of years back. His total(!) monthly expenses is approx. 500€/month. He earns a fragment (7-800€) of what he did and he does not have large savings as for example us FIRE-entusiasts, but he has never been happier and have no thoughts of going back to Sweden. Thatis what i would call a lean FIRE looking at it from a budget perspective! :-D
IMO just getting away from the Scandinavian winter darkness/cold would lead to a huge increase in happiness. I find that weather really effects my mood.
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Hey Mr. Snow. Excited to follow your blog. Would you mind sharing your financials, i.e. expected spending, withdrawal rate etc, what is your stash made of, how you plan your taxes etc. Asking since there aren't that many European FIREees here and especially not with kids. So I am very curious to hear from someone who's already done it.
I often wonder how applicable the rules here are to us, as on the one hand, you most definitely need way less money in total, but it's also way harder to plan to pay little to no tax on anything that is remotely liveable.
We are also Swedish (well sorta, the rest of my family is, I wasn't born there but by now I qualify for a passport and the funny thing is that since we live in Luxembourg now, for us Sweden = cheap place to go retire to).
Hey @havregryn, i´ve updated the blog with at least some of your questions above regarding financials, SWR, stash composition, some background, etc. I´ll come back to more budget details (need more local data) and taxes (complicated as hell) later on!
Enjoy! (https://PalmaOnFIRE.com)
/ Snow
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We just spent a week in Spain, not the same as moving there of course, but both our kids wound up in urgent care for one reason or the other. I’m an anti-Trump moderate, but the hours we spent in the waiting room for a life-threatening situation made me question socialized health care...Maybe it’s just because Spain is still a bit of an economic basket case, but I’m glad that we made it out of there alive.
Emergency rooms are always a shitshow in July/August. Everyone is on vacation, doing things outside, getting injured. Including medical staff.
You were likely prioritized like everyone else, and whatever your life-threatening injury was, someone had it worse that day.
Yep, the guy with the cut on his foot and the kid with a black eye. My daughter meanwhile had food stuck in her throat and couldn’t swallow water. Look up esophageal bolus. They both came after us and left before us. Shitshow is right.
Just to be clear, it was the emergency room. The urgent care facility in town had an opening a day later.
In all fairness though, Spain is barely cheaper than the US, if at all. From Sweden, I suppose it would be a lot cheaper, but if you really want to save money move elsewhere.
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We are also considering retiring in Spain. It seems the culture for kids is so much better in comparison to the US. I have also followed the Wagoners blog and their kids seemed to do very well. We will be going in May to check it out more to see if it’s a fit.
Where are you heading? Lots of different cultures, languages, food, etc depending on location. :-)
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Spain is my ancestral home, so any talk of it interests me. Posting here solely to learn more in case I ever decide to move there.
Coincidentally, an ex-coworker of mine that I went to college with just texted me that he quit his job and had moved to Spain. He's FIRE but he doesn't know the acronym or the community. I thought you might be him, but he is not Swedish so I guess not.
¡Felicidades!
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I'm curious to know if other Americans have made the jump to Spain, and what the impact was to their net savings rate. We are considering a few different locations, and southern Spain is on the list.
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Following this interesting thread as its our dream to slow travel and live in Spain for a while.
Still staching... feels like this limbo period will never end.
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My wife keeps pushing me on why we can't just pull the plug now or maybe mid 2020. She gets a generous retirement that is definitely sufficient to survive in Spain/Portugal but I lack survivor benefits from that and only have about 7-8x annual expenses saved if I were to end up on my own (she is a cancer and stroke survivor). I am also just under 40 years old.
We also have a further 5-6x my annual expenses in home equity that we would free up once we move. The plan is to invest this and use it as an emergency fund if need be.
I am just nervous about pulling the plug now knowing that I am shoveling 2.5x annual expenses in investments each year. With only 2.5 more years I would feel much more at ease.
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I can’t imagine moving to Spain with any medical issues whatsoever. It’d be a quick death sentence. But first you’d wind up without any money.
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I can’t imagine moving to Spain with any medical issues whatsoever. It’d be a quick death sentence. But first you’d wind up without any money.
All is well with her now, no residual effects but it's more of a factor in my timeline to join her in retirement. Portugal is option A but Spain also attracts us.
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I can’t imagine moving to Spain with any medical issues whatsoever. It’d be a quick death sentence. But first you’d wind up without any money.
Why do you say that? I've heard good things about the Spanish medical system.
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I can’t imagine moving to Spain with any medical issues whatsoever. It’d be a quick death sentence. But first you’d wind up without any money.
Why do you say that? I've heard good things about the Spanish medical system.
You realize that life expectancy in Spain is 3-4 years better compared to the USA?
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I can’t imagine moving to Spain with any medical issues whatsoever. It’d be a quick death sentence. But first you’d wind up without any money.
Well.. they are healthy enough: https://www.bloomberg.com/news/articles/2019-02-24/spain-tops-italy-as-world-s-healthiest-nation-while-u-s-slips
And there is definitely nothing wrong with their healthcare system: https://www.bloomberg.com/news/articles/2018-09-19/u-s-near-bottom-of-health-index-hong-kong-and-singapore-at-top
With that said, if you want extra health care above the public one - yes, the premiums is going to be quite expensive for that health insurance.
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Been a little occupied lately with the move, new friends, activities, relocation, schools, etc. Wrote a post about the last two busy months here: https://palmaonfire.com/blog/2019/12/social-and-active-fire-life-11/
Will try to be a little more active in this thread moving on. :-)
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Following this interesting thread as its our dream to slow travel and live in Spain for a while.
Still staching... feels like this limbo period will never end.
You will get there! Just don't over-stash, which is easily done. Depending on your destination in Spain the stash necessary is going to be very different!
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Been a little occupied lately with the move, new friends, activities, relocation, schools, etc. Wrote a post about the last two busy months here: https://palmaonfire.com/blog/2019/12/social-and-active-fire-life-11/
Will try to be a little more active in this thread moving on. :-)
I like your blog. I just saw a House Hunter's episode involving a couple who retired in Mallorca. They bought a lot of land and a run-down house inland. Mallorca seems expensive in town (2 bedroom condo for $700K +), but a beautiful place to retire.
https://www.hgtv.com/shows/house-hunters-international/episodes/peace-vs-project-in-spain
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Been a little occupied lately with the move, new friends, activities, relocation, schools, etc. Wrote a post about the last two busy months here: https://palmaonfire.com/blog/2019/12/social-and-active-fire-life-11/
Will try to be a little more active in this thread moving on. :-)
I like your blog. I just saw a House Hunter's episode involving a couple who retired in Mallorca. They bought a lot of land and a run-down house inland. Mallorca seems expensive in town (2 bedroom condo for $700K +), but a beautiful place to retire.
https://www.hgtv.com/shows/house-hunters-international/episodes/peace-vs-project-in-spain
Thank you, that makes me really happy! It can be insanely expensive, but depending on where, what standard, etc the prices fluctuates ridiculously. You can find a nice apartment where i live for approximately $250K and that is close to pretty much anything. In short it depends. I wrote some about it here, but more is coming. https://palmaonfire.com/blog/2019/08/mi-casa-es-su-casa/
Also, if you want to investigate yourself you can use http://www.fotocasa.es and http://idealists.com to learn about the prices.
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I'll definitely check out your blog. Moving to Spain or at least living there part of the year has been a lifelong dream of ours. My family is from Mallorca so I got my Spanish citizenship a few years back in order to make the move easier and DH is a Swede. Look forward to reading about your adventures.
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I can’t imagine moving to Spain with any medical issues whatsoever. It’d be a quick death sentence. But first you’d wind up without any money.
Why do you say that? I've heard good things about the Spanish medical system.
A friend of mine that is a cancer survivor is thinking of moving to Madrid, and she did the research and agrees that Spain is known for its excellent health care system. She said Madrid is the only European city where the US based and highly renowned MD Anderson Cancer Center is located. https://mdanderson.es/en
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I can’t imagine moving to Spain with any medical issues whatsoever. It’d be a quick death sentence. But first you’d wind up without any money.
I think you mixed up Spain with the US - where your insurance death panel denies your treatment....
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Biggest "surprise" is how taxable accounts are essentially non-taxable for mustachians.
https://www.gocurrycracker.com/never-pay-taxes-again/
https://evergreensmallbusiness.com/why-you-dont-need-to-worry-about-taxes-in-retirement/
This despite the plan to do tax-free was in the works and implemented. This is my first full tax year as a FIREd person.
I've been prepping for taxes and it is clearer and clearer that we will have ZERO federal (US) taxes.
Even though I've read and planned for this, it still has an emotional impact.
t feels like I've just learned about it, even though I've been a forum member for four and a half years now.
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PTF
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Tomorrow I am interviewing for a position in Spain. We have been targeting Portugal but Spain might be too close to pass up.
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Tomorrow I am interviewing for a position in Spain. We have been targeting Portugal but Spain might be too close to pass up.
Best of luck! I’m jealous!
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Tomorrow I am interviewing for a position in Spain. We have been targeting Portugal but Spain might be too close to pass up.
Good luck, keeping my fingers crossed! We have never been happier! Life here is simple, joyful, calm, sunny and in most aspects just awesome! I am not sure I will ever move back. New years eves thoughts... https://palmaonfire.com/blog/2020/01/mil-gracias-2019/
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Tomorrow I am interviewing for a position in Spain. We have been targeting Portugal but Spain might be too close to pass up.
Best of luck! I’m jealous!
Thanks, interview went ok but from a subsequent conversation it does not appear this one is likely. I'm continuing to put my best foot forward but they are looking for more specific experience than i have. There were 150 applications and I made top 5-6 so I do feel good about my chances for other positions in this organization.
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Tomorrow I am interviewing for a position in Spain. We have been targeting Portugal but Spain might be too close to pass up.
Good luck, keeping my fingers crossed! We have never been happier! Life here is simple, joyful, calm, sunny and in most aspects just awesome! I am not sure I will ever move back. New years eves thoughts... https://palmaonfire.com/blog/2020/01/mil-gracias-2019/
Thanks!
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Tomorrow I am interviewing for a position in Spain. We have been targeting Portugal but Spain might be too close to pass up.
Best of luck! I’m jealous!
Thanks, interview went ok but from a subsequent conversation it does not appear this one is likely. I'm continuing to put my best foot forward but they are looking for more specific experience than i have. There were 150 applications and I made top 5-6 so I do feel good about my chances for other positions in this organization.
Yes, keep at it. If it’s part of your focus, you’re more likely to achieve it eventually.
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Ps. You can see our (so far) very thin blog at palmaonfire.com if you wish. Ds.
Love the blog. We've been considering moving away from the Pacific Northwest since the winters are hard on the spouse. A FIRE'd friend moved to Valencia about 3 years ago and is really having a grand old time. We visited them last year and the life there seemed to be pretty nice and inexpensive, compared to the Seattle area. We FIRE'd last year after my startup got sold. Probably in the Fat FIRE zone. Assume that we'd learn Spanish before moving, of course. So:
1) Did you have issues with making friends? We're pretty hardcore hikers and backpackers. Are there groups that we could join?
2) Do you guys still have your investments in Sweden and draw $ out of it? I'd prefer to keep my $ in the US for better market returns. Yeah, I'll cough up Spanish taxes.
3) Were there any "I wished I'd known that" insights you had?
thanks
e
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Ps. You can see our (so far) very thin blog at palmaonfire.com if you wish. Ds.
Love the blog. We've been considering moving away from the Pacific Northwest since the winters are hard on the spouse. A FIRE'd friend moved to Valencia about 3 years ago and is really having a grand old time. We visited them last year and the life there seemed to be pretty nice and inexpensive, compared to the Seattle area. We FIRE'd last year after my startup got sold. Probably in the Fat FIRE zone. Assume that we'd learn Spanish before moving, of course. So:
1) Did you have issues with making friends? We're pretty hardcore hikers and backpackers. Are there groups that we could join?
2) Do you guys still have your investments in Sweden and draw $ out of it? I'd prefer to keep my $ in the US for better market returns. Yeah, I'll cough up Spanish taxes.
3) Were there any "I wished I'd known that" insights you had?
thanks
e
Thank you, that makes us very happy! We try to post something every week now, hopefully interesting to aspiring expats. :-)
We where also considering Valencia for quite some time. Its a wonderful city, next to the Mediterranean, beautiful old town, awesome parks in the drained canal etc. Its definitely more Spanish than Palma which consists of 20% foreigners.
1. No and the Spanish are quite open and social people. They are definitely more like US people than Swedes from a social perspective and thats all positive! Depending on where you go you might have smaller or larger expat-communities. You might not move to Spain to hang around with Americans and other expats, but those communities are insanely easy to get into. Everyone has left family and friends back home and are open and interested in getting to know new people.
Hiking is probably bigger on Mallorca than Valencia but i honestly have no idea how big the community is in Valencia. Its a big city so most likely quite big! :-)
2. Yes, most of the stash in Sweden - https://palmaonfire.com/blog/2020/01/dissecting-the-butterfly/
The taxes aren't that bad and there are "solutions" around them like certain types of Endowment Ensurances that are tax exempted. Which brings me to the my next thought, you should use a financial advisor. If you are a FAT FIRE you might get hit by wealth tax that really hurts. You are allowed to have 700k € per person and withdrawal of 300k€ for the house. In reality you and your partner can have 1400k€ in investments together and 300k€ in the home before wealth tax kicks in.
3. Not many, we did some homework before the move. But got two good advices before which I find true now. 1 - If you want an easy relocation sell everything at "home" and cut old connections. If you don't you have a lot more paperwork and agency leg work ahead of you. 2 - The spanish administration is slow, incoherent and hugely irritating. Prepare yourself ahead with tons of patience and try and accept that it is what it is. Wrote some here: https://palmaonfire.com/blog/2019/09/adapt-or-perish/
One thing that i wish a did earlier rather than later was to take help from an Gestoria. It removes some of the pains dealing with the Government administration.
Kind regards,
Mr Snow
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Have you ever considered the canary islands? They are pretty high up on my list of potential future destinations.
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Ps. You can see our (so far) very thin blog at palmaonfire.com if you wish. Ds.
Love the blog. We've been considering moving away from the Pacific Northwest since the winters are hard on the spouse. A FIRE'd friend moved to Valencia about 3 years ago and is really having a grand old time. We visited them last year and the life there seemed to be pretty nice and inexpensive, compared to the Seattle area. We FIRE'd last year after my startup got sold. Probably in the Fat FIRE zone. Assume that we'd learn Spanish before moving, of course. So:
1) Did you have issues with making friends? We're pretty hardcore hikers and backpackers. Are there groups that we could join?
2) Do you guys still have your investments in Sweden and draw $ out of it? I'd prefer to keep my $ in the US for better market returns. Yeah, I'll cough up Spanish taxes.
3) Were there any "I wished I'd known that" insights you had?
thanks
e
Thank you, that makes us very happy! We try to post something every week now, hopefully interesting to aspiring expats. :-)
We where also considering Valencia for quite some time. Its a wonderful city, next to the Mediterranean, beautiful old town, awesome parks in the drained canal etc. Its definitely more Spanish than Palma which consists of 20% foreigners.
...
2. Yes, most of the stash in Sweden - https://palmaonfire.com/blog/2020/01/dissecting-the-butterfly/
The taxes aren't that bad and there are "solutions" around them like certain types of Endowment Ensurances that are tax exempted. Which brings me to the my next thought, you should use a financial advisor. If you are a FAT FIRE you might get hit by wealth tax that really hurts. You are allowed to have 700k € per person and withdrawal of 300k€ for the house. In reality you and your partner can have 1400k€ in investments together and 300k€ in the home before wealth tax kicks in.
...
Kind regards,
Mr Snow
Thanks a lot for the heads up. Fortunately(?)/unfortunately we are over the 1400K limit by quite a bit. So we'll have to figure that out. Similarly hiring a Gestoria would make a lot of sense, but the wealth tax seems like the bigger issue. Thanks for bringing it up.
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Have you ever considered the canary islands? They are pretty high up on my list of potential future destinations.
Actually no, but i´ve only heard good things from other people. Really mixed nature like Mallorca. Even warmer and better prices than Mallorca. For us it was the distance, you can get anywhere in Europe within 4 hours from Mallorca. For the Canary islands you have to add two extra hours to that.
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Thanks a lot for the heads up. Fortunately(?)/unfortunately we are over the 1400K limit by quite a bit. So we'll have to figure that out. Similarly hiring a Gestoria would make a lot of sense, but the wealth tax seems like the bigger issue. Thanks for bringing it up.
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It´s not a dead end. There are multiple ways around the wealth tax as well, like the "Beckham Law" but you want a professional to advice you on your alternatives. :-)
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Have you ever considered the canary islands? They are pretty high up on my list of potential future destinations.
Actually no, but i´ve only heard good things from other people. Really mixed nature like Mallorca. Even warmer and better prices than Mallorca. For us it was the distance, you can get anywhere in Europe within 4 hours from Mallorca. For the Canary islands you have to add two extra hours to that.
True. I ended up choosing Oahu over Gran Canaria, so distance to other places was clearly not that big of a factor to us... but I can see it being important if you strongly value access to mainland Europe. And man is it cheap.
FYI, there is a subsidized plane ticket program for Canarias residents:
https://www.iberia.com/es/faqs/residents/
It doesn't seem to apply to non-EEA citizens though.
Anyway, I'll stop astroturfing for the canary islands now. Keep up the blog, it's one my favorite!
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True. I ended up choosing Oahu over Gran Canaria, so distance to other places was clearly not that big of a factor to us... but I can see it being important if you strongly value access to mainland Europe. And man is it cheap.
@Paul der Krake Why did you choose Oahu over other Hawaiian islands?
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True. I ended up choosing Oahu over Gran Canaria, so distance to other places was clearly not that big of a factor to us... but I can see it being important if you strongly value access to mainland Europe. And man is it cheap.
@Paul der Krake Why did you choose Oahu over other Hawaiian islands?
1) better bathymetry and no shadowing from other islands, which makes for much better surfing conditions
2) much larger population center, which means more of everything: stores, restaurants, flights, doctors, potential friends, concerts, the list goes on
It wasn't even close. Like, even if housing was half the cost on neighbor islands (it's not!) I'd still have picked Oahu.
Picking a Canarias island is a much tougher proposition. Surfing is better on Fuerteventura and Lanzarote, but most people live on Gran Canaria and Tenerife. Life is hard.
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It´s not a dead end. There are multiple ways around the wealth tax as well, like the "Beckham Law" but you want a professional to advice you on your alternatives. :-)
Correct. I did start looking into this and there appear to be some alternatives. One alternative is to live in Madrid, which has no such tax - this isn't the preferred option. There are other options apparently is the best description (http://www.altalex.es/wp-content/uploads/90ti0239-Gabarro.pdf) that I found.
Portugal is also another alternative since they don't have wealth tax and the prices in the Algarve seem pretty reasonable - especially when we sell our house here in Seattle :-).
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It´s not a dead end. There are multiple ways around the wealth tax as well, like the "Beckham Law" but you want a professional to advice you on your alternatives. :-)
Correct. I did start looking into this and there appear to be some alternatives. One alternative is to live in Madrid, which has no such tax - this isn't the preferred option. There are other options apparently is the best description (http://www.altalex.es/wp-content/uploads/90ti0239-Gabarro.pdf) that I found.
Portugal is also another alternative since they don't have wealth tax and the prices in the Algarve seem pretty reasonable - especially when we sell our house here in Seattle :-).
Valencia is my Dream too, has everything you want at the right pace for someone retired. I didn’t realize you could avoid the wealth tax by living in Madrid though.
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Have you ever considered the canary islands? They are pretty high up on my list of potential future destinations.
Actually no, but i´ve only heard good things from other people. Really mixed nature like Mallorca. Even warmer and better prices than Mallorca. For us it was the distance, you can get anywhere in Europe within 4 hours from Mallorca. For the Canary islands you have to add two extra hours to that.
True. I ended up choosing Oahu over Gran Canaria, so distance to other places was clearly not that big of a factor to us... but I can see it being important if you strongly value access to mainland Europe. And man is it cheap.
FYI, there is a subsidized plane ticket program for Canarias residents:
https://www.iberia.com/es/faqs/residents/
It doesn't seem to apply to non-EEA citizens though.
Anyway, I'll stop astroturfing for the canary islands now. Keep up the blog, it's one my favorite!
As being as much nationalistic as Swede gets (very little), its nice to be able to get there within reasonable hours. I might do some "business" with Swedish companies as well, so thats important to.
I know, The Baleareas are included in that airflight program as well, 75%(!) reduction on all flights nationally. Sweet!
Thank you very much, its that kind of feedback that make me take the time to update it!
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It´s not a dead end. There are multiple ways around the wealth tax as well, like the "Beckham Law" but you want a professional to advice you on your alternatives. :-)
Correct. I did start looking into this and there appear to be some alternatives. One alternative is to live in Madrid, which has no such tax - this isn't the preferred option. There are other options apparently is the best description (http://www.altalex.es/wp-content/uploads/90ti0239-Gabarro.pdf) that I found.
Portugal is also another alternative since they don't have wealth tax and the prices in the Algarve seem pretty reasonable - especially when we sell our house here in Seattle :-).
A good paper. Number 9 is the so called "beckham law" that would protect you for 5 years. Number 10 has several options as well, one of the most popular putting your stash in a approved endowment policy in Luxemburg as it is tax exempted from Spain. The "only" backside with the last one is that you can't manage the money yourself, but you can buy a "product" you like.
Agree, from an FIRE view (frugality and financial) Portugal is better in all ways. Cheaper housing, food, etc and low to nothing in taxes. Spain is definitely not an tax haven. :-D
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It´s not a dead end. There are multiple ways around the wealth tax as well, like the "Beckham Law" but you want a professional to advice you on your alternatives. :-)
Correct. I did start looking into this and there appear to be some alternatives. One alternative is to live in Madrid, which has no such tax - this isn't the preferred option. There are other options apparently is the best description (http://www.altalex.es/wp-content/uploads/90ti0239-Gabarro.pdf) that I found.
Portugal is also another alternative since they don't have wealth tax and the prices in the Algarve seem pretty reasonable - especially when we sell our house here in Seattle :-).
Valencia is my Dream too, has everything you want at the right pace for someone retired. I didn’t realize you could avoid the wealth tax by living in Madrid though.
Wealth law is locally regulated, its differently implemented all over the country. Madrid decided they don't want it, probably to don't scare away professionals or crashing the housing market which is insanely expensive.
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Has anyone looked at Malta for a destination? Small EU island under Sicily, winter weather 50-60F, summer is hot. No wealth tax, no inheritance tax, no cap gains tax. Brits can get a 10 year residency permit before 2021. Also a reciprocal health care agreement with Britain exists. Seems very tax friendly with treaties in many countries. English is spoken since it has ties to the UK in the past.
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It´s not a dead end. There are multiple ways around the wealth tax as well, like the "Beckham Law" but you want a professional to advice you on your alternatives. :-)
Correct. I did start looking into this and there appear to be some alternatives. One alternative is to live in Madrid, which has no such tax - this isn't the preferred option. There are other options apparently is the best description (http://www.altalex.es/wp-content/uploads/90ti0239-Gabarro.pdf) that I found.
Portugal is also another alternative since they don't have wealth tax and the prices in the Algarve seem pretty reasonable - especially when we sell our house here in Seattle :-).
A good paper. Number 9 is the so called "beckham law" that would protect you for 5 years. Number 10 has several options as well, one of the most popular putting your stash in a approved endowment policy in Luxemburg as it is tax exempted from Spain. The "only" backside with the last one is that you can't manage the money yourself, but you can buy a "product" you like.
Agree, from an FIRE view (frugality and financial) Portugal is better in all ways. Cheaper housing, food, etc and low to nothing in taxes. Spain is definitely not an tax haven. :-D
With the Madrid money, you have to have the majority of your assets in Madrid, that wouldn’t work well as an expat if your assets are in your home country.
9, the Beckham rule doesn’t seem to work for people who are retired
8 seems to apply to retired people as you’d have 0 income, but wealth
And 10, tax exempt assets: it mentions pensions, but what about 401ks and such in the US, and superannuation in Australia? Or social security?
I’m going to visit Portugal and check it out, but not sure it’s going to top Spain for living.
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With the Madrid money, you have to have the majority of your assets in Madrid, that wouldn’t work well as an expat if your assets are in your home country.
I’m going to visit Portugal and check it out, but not sure it’s going to top Spain for living.
So, I don't doubt you are right on this one, but could you provide a link to something that speaks to the "majority of assets in Madrid"? Didn't see that anywhere.
2) The Algarve or Porto both seem very nice. Big expat communities too. Don't want to take the hardcore option of Andorra yet!! From a POV of investment, the wealth tax is adding a big overhead to a 4% SWR.
3) I'm an immigrant to the US myself from India (wife is not) so having a somewhat more diverse community around isn't a bad thing for me. Nor is moving to another country. The difference is that this time when I emigrate, I'll actually have some money instead of being an impoverished grad student!!!
I'm eagerly looking forward to hearing about your Portugal experience.
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With the Madrid money, you have to have the majority of your assets in Madrid, that wouldn’t work well as an expat if your assets are in your home country.
I’m going to visit Portugal and check it out, but not sure it’s going to top Spain for living.
So, I don't doubt you are right on this one, but could you provide a link to something that speaks to the "majority of assets in Madrid"? Didn't see that anywhere.
2) The Algarve or Porto both seem very nice. Big expat communities too. Don't want to take the hardcore option of Andorra yet!! From a POV of investment, the wealth tax is adding a big overhead to a 4% SWR.
3) I'm an immigrant to the US myself from India (wife is not) so having a somewhat more diverse community around isn't a bad thing for me. Nor is moving to another country. The difference is that this time when I emigrate, I'll actually have some money instead of being an impoverished grad student!!!
I'm eagerly looking forward to hearing about your Portugal experience.
It says it in the paper you linked. Re-read the section on Madrid.
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It says it in the paper you linked. Re-read the section on Madrid.
Wipes egg from face!! I stand corrected, I didn't read the small print well enough. Excellent catch & thank you. That changes everything - alas. Portugal is looking a lot better already. For those FIRE'ing and given the magic of compounding, I could easily imagine that people who weren't under the wealth tax regime could end up there.
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It´s not a dead end. There are multiple ways around the wealth tax as well, like the "Beckham Law" but you want a professional to advice you on your alternatives. :-)
Correct. I did start looking into this and there appear to be some alternatives. One alternative is to live in Madrid, which has no such tax - this isn't the preferred option. There are other options apparently is the best description (http://www.altalex.es/wp-content/uploads/90ti0239-Gabarro.pdf) that I found.
Portugal is also another alternative since they don't have wealth tax and the prices in the Algarve seem pretty reasonable - especially when we sell our house here in Seattle :-).
A good paper. Number 9 is the so called "beckham law" that would protect you for 5 years. Number 10 has several options as well, one of the most popular putting your stash in a approved endowment policy in Luxemburg as it is tax exempted from Spain. The "only" backside with the last one is that you can't manage the money yourself, but you can buy a "product" you like.
Agree, from an FIRE view (frugality and financial) Portugal is better in all ways. Cheaper housing, food, etc and low to nothing in taxes. Spain is definitely not an tax haven. :-D
With the Madrid money, you have to have the majority of your assets in Madrid, that wouldn’t work well as an expat if your assets are in your home country.
9, the Beckham rule doesn’t seem to work for people who are retired
8 seems to apply to retired people as you’d have 0 income, but wealth
And 10, tax exempt assets: it mentions pensions, but what about 401ks and such in the US, and superannuation in Australia? Or social security?
I’m going to visit Portugal and check it out, but not sure it’s going to top Spain for living.
"Madrid Money" - No, it says you have to have the majority of your assets in Spain(!) in Madrid. There's a difference. This is to try to limit you from buying a small property in Madrid and register there and then live on for instance Mallorca. I've met several people here in Palma that "lives" in Madrid.
"9" - Let a friend/family start a "sleeping" company and register you as an employee. Tadaa, employeed. Certain detailed conditions, get real advisor help.
"10" - Pension funds are exempted. Thats the trick for endowment policies as well, as they are exempted.
Portugal vs Spain - Its of course subjective, won't say nothing about that. But on the subject i´ve also met several people who are registered/residents in Portugal but live in Spain. This is especially the case with retirees as pensions completely are tax free in Portugal but not in Spain. :-D
To summarise the above - there are so many ways around this that its silly. My recommendation is to talk to an serious financial advisor and my bet is that hem/her is going to find several solutions around it. Post on the subject coming up tomorrow. :-D
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Moving abroad when I quit my job is also our plan, it will probably be Portugal for us but a lot of the same stuff will apply. I'm a European citizen and my wife is an American so as the timeline draws nearer (max 3 years but i feel it'll be sooner) we will have to figure it out.
Excited to follow this thread as well as your blog!
Seeking Portugal winters for this Canadian! you have concrete plans?
We have slightly changed our plans, I am currently actively pursuing internal job changes to Portugal and am in a loop for a position in Madrid as well.
I'm quite confident that this summer we are moving where I'll work a few more years or maybe more depending on how I enjoy it.
With this being a job transfer we are probably tied to Lisbon. Once work is over with I could see us move South to the Algarve.
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It´s not a dead end. There are multiple ways around the wealth tax as well, like the "Beckham Law" but you want a professional to advice you on your alternatives. :-)
Correct. I did start looking into this and there appear to be some alternatives. One alternative is to live in Madrid, which has no such tax - this isn't the preferred option. There are other options apparently is the best description (http://www.altalex.es/wp-content/uploads/90ti0239-Gabarro.pdf) that I found.
Portugal is also another alternative since they don't have wealth tax and the prices in the Algarve seem pretty reasonable - especially when we sell our house here in Seattle :-).
A good paper. Number 9 is the so called "beckham law" that would protect you for 5 years. Number 10 has several options as well, one of the most popular putting your stash in a approved endowment policy in Luxemburg as it is tax exempted from Spain. The "only" backside with the last one is that you can't manage the money yourself, but you can buy a "product" you like.
Agree, from an FIRE view (frugality and financial) Portugal is better in all ways. Cheaper housing, food, etc and low to nothing in taxes. Spain is definitely not an tax haven. :-D
With the Madrid money, you have to have the majority of your assets in Madrid, that wouldn’t work well as an expat if your assets are in your home country.
9, the Beckham rule doesn’t seem to work for people who are retired
8 seems to apply to retired people as you’d have 0 income, but wealth
And 10, tax exempt assets: it mentions pensions, but what about 401ks and such in the US, and superannuation in Australia? Or social security?
I’m going to visit Portugal and check it out, but not sure it’s going to top Spain for living.
"Madrid Money" - No, it says you have to have the majority of your assets in Spain(!) in Madrid. There's a difference. This is to try to limit you from buying a small property in Madrid and register there and then live on for instance Mallorca. I've met several people here in Palma that "lives" in Madrid.
"9" - Let a friend/family start a "sleeping" company and register you as an employee. Tadaa, employeed. Certain detailed conditions, get real advisor help.
"10" - Pension funds are exempted. Thats the trick for endowment policies as well, as they are exempted.
Portugal vs Spain - Its of course subjective, won't say nothing about that. But on the subject i´ve also met several people who are registered/residents in Portugal but live in Spain. This is especially the case with retirees as pensions completely are tax free in Portugal but not in Spain. :-D
To summarise the above - there are so many ways around this that its silly. My recommendation is to talk to an serious financial advisor and my bet is that hem/her is going to find several solutions around it. Post on the subject coming up tomorrow. :-D
“ Madrid provides a 100 percent tax rebate to its residents and to residents of other EU or EEA member states if the majority of their Spanish assets are in Madrid.”
On my reading, the if states the condition that the 100% rebate is only available if the majority if Spanish assets are in Madrid. If you don’t have Spanish assets, it doesn’t apply. If all of your assets are in another country, but you live in Madrid, it wouldn’t seem to apply. If you have a $3m home in Madrid, and $2m of investments in another country, it would seem to apply.
If that’s correct, I don’t see me using that one.
I think #10 is the most important if that includes all retirement like accounts (pensions, superannuation, 401ks, et al).
Basing yourself in Portugal but living somewhere else is entirely possible as I think you only need to spend 7-14 days or so in Portugal. However, if you bought property in Spain, you’d fall in their tax system. You would probably need to rent and be mindful of the 183 day trigger for taxes.
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PTF. I'm looking forward to reading your blog as well.
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"9" - Let a friend/family start a "sleeping" company and register you as an employee. Tadaa, employeed. Certain detailed conditions, get real advisor help.
"10" - Pension funds are exempted. Thats the trick for endowment policies as well, as they are exempted.
Well, in terms of "9", where companies hold your $ - the so called SICAV, it needs to have at least 100 employees! And SICAVs are under scrutiny. Moving to Luxembourg is another option, though who knows as a US investor how that will work with FATCA. Obviously when the time comes, we'll consult with some experts but the idea of paying 2.5% on top of inflation rankles.
In terms of "10", well, like the majority of people in the US, I don't have a pension or an annuity/endowment policy since it actually isn't advantageous to me to have an annuity. Looks like POR in my case, given the cursory level of investigation! Hey, how bad can it be?
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It´s not a dead end. There are multiple ways around the wealth tax as well, like the "Beckham Law" but you want a professional to advice you on your alternatives. :-)
Correct. I did start looking into this and there appear to be some alternatives. One alternative is to live in Madrid, which has no such tax - this isn't the preferred option. There are other options apparently is the best description (http://www.altalex.es/wp-content/uploads/90ti0239-Gabarro.pdf) that I found.
Portugal is also another alternative since they don't have wealth tax and the prices in the Algarve seem pretty reasonable - especially when we sell our house here in Seattle :-).
A good paper. Number 9 is the so called "beckham law" that would protect you for 5 years. Number 10 has several options as well, one of the most popular putting your stash in a approved endowment policy in Luxemburg as it is tax exempted from Spain. The "only" backside with the last one is that you can't manage the money yourself, but you can buy a "product" you like.
Agree, from an FIRE view (frugality and financial) Portugal is better in all ways. Cheaper housing, food, etc and low to nothing in taxes. Spain is definitely not an tax haven. :-D
With the Madrid money, you have to have the majority of your assets in Madrid, that wouldn’t work well as an expat if your assets are in your home country.
9, the Beckham rule doesn’t seem to work for people who are retired
8 seems to apply to retired people as you’d have 0 income, but wealth
And 10, tax exempt assets: it mentions pensions, but what about 401ks and such in the US, and superannuation in Australia? Or social security?
I’m going to visit Portugal and check it out, but not sure it’s going to top Spain for living.
"Madrid Money" - No, it says you have to have the majority of your assets in Spain(!) in Madrid. There's a difference. This is to try to limit you from buying a small property in Madrid and register there and then live on for instance Mallorca. I've met several people here in Palma that "lives" in Madrid.
"9" - Let a friend/family start a "sleeping" company and register you as an employee. Tadaa, employeed. Certain detailed conditions, get real advisor help.
"10" - Pension funds are exempted. Thats the trick for endowment policies as well, as they are exempted.
Portugal vs Spain - Its of course subjective, won't say nothing about that. But on the subject i´ve also met several people who are registered/residents in Portugal but live in Spain. This is especially the case with retirees as pensions completely are tax free in Portugal but not in Spain. :-D
To summarise the above - there are so many ways around this that its silly. My recommendation is to talk to an serious financial advisor and my bet is that hem/her is going to find several solutions around it. Post on the subject coming up tomorrow. :-D
“ Madrid provides a 100 percent tax rebate to its residents and to residents of other EU or EEA member states if the majority of their Spanish assets are in Madrid.”
On my reading, the if states the condition that the 100% rebate is only available if the majority if Spanish assets are in Madrid. If you don’t have Spanish assets, it doesn’t apply. If all of your assets are in another country, but you live in Madrid, it wouldn’t seem to apply. If you have a $3m home in Madrid, and $2m of investments in another country, it would seem to apply.
If that’s correct, I don’t see me using that one.
I think #10 is the most important if that includes all retirement like accounts (pensions, superannuation, 401ks, et al).
Basing yourself in Portugal but living somewhere else is entirely possible as I think you only need to spend 7-14 days or so in Portugal. However, if you bought property in Spain, you’d fall in their tax system. You would probably need to rent and be mindful of the 183 day trigger for taxes.
Madrid - I think we're on the same page and it's only my poor english that complicates things. As long as you are resident in Madrid you are exempted. But to be exempted the majority of your Spanish(!) assets has to be in Madrid. So what it basically means is that you can't(aren't allowed to) have a luxury house on Mallorca and on the same time have a small apartment in Madrid. What assets you have in other countries isn't important.
My general point, after meeting at least 30+ of 10 million $ people here is that no one is paying the wealth tax, and the general opionon is that isn't hard to avoid it legally. I'm not going to get better information than that because i am personally not affected by it and it would cost to much to consult an real specialist. I was advised to one of those by a rich friend, when i looked it up it was 450$/hour... not for the frugal ones in other words. :-D
Also, the Spanish government does not have the same control as other countries. I've met people who have been living in Spain for more than 10+ years and they are still residents in their "home country". That is illegal and not approved, but it kind of show the weakness of the entire system.
My advice is to talk to a specialist if you are a Fat FIRE and I am sure they can help you legally to avoid this.
Kind regards, Mr Snow
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"Basing yourself in Portugal but living somewhere else is entirely possible as I think you only need to spend 7-14 days or so in Portugal. However, if you bought property in Spain, you’d fall in their tax system. You would probably need to rent and be mindful of the 183 day trigger for taxes."
Its actual much simpler. People buy small apartments in Portugal. Register themselves as residents in there and then rent it out on the black market. Then they live in Spain but get Portuguese taxes. The government has no chance to identify that, they just drive over the border which within the European union is completely open. They tax you pay is generally controlled by where you are registering that you are stying the 183+ days. Tax agreements between the countries are in effect, but basic rules are the same.
To make it perfectly clear - i am not promoting tax evasion techniques or anything like that, i am just describing the reality here in Spain as I see it. :-)
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To make it perfectly clear - i am not promoting tax evasion techniques or anything like that, i am just describing the reality here in Spain as I see it. :-)
True. Will need to talk to some overpriced lawyers when the time comes. In the meantime, I'll live vicariously through your (excellent) blog.
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Some lively discussion here on wealth tax in Spain and some good points made already. I just wanted to jump in and point out a couple of things that make it less scary than it sounds at first.
Firstly the tax is in bands and only applies to assets above each band - there is a summary here https://www.spanishpropertyinsight.com/tax-and-pensions/spanish-wealth-tax-patrimonio/
So the top rate of 2.5% only apples to assets more than EUR 10.7m per person over the 700k exempt amount. That’s a pretty fat fire sum to talk about.
If you look at a more likely generous fire example of EUR 2m subject to the wealth tax for a couple, the tax would only be due at 0.2 or 0.3% on the 0.6m of assets above the combined exemption of 1.4m, which would come to a couple of grand a year. For a typical American this could easily be offset by the lower cost of health care you would pay in Spain (eg we pay about EUR 120 per month for comprehensive private health insurance for family of 4)
So it’s not like there is a limit at 1.4m and if you go over it a little bit you will pay tax on the whole 1.4 or anything like that.
But the situation is even better than this. My understanding is that investments held in private pensions including a 401k are exempt from wealth tax, which will likely exclude a chunk. IRAs seem like a grey area as Spain doesn’t really have an equivalent, but I believe there is an argument can be made that they should also be excluded.
Then if you say own an investment property in USA the wealth tax looks at what you paid for it, rather than the current market price which could make a big difference. And of course you net off any mortgage you have on the property and only pay on the net amount. Plus don’t forget the tax doesn’t include your property in Spain unless it is over 300k each / 600k for a couple which will go a fair way in most places.
If you factor all of these in, I suspect most people on this forum shouldn’t have too much to worry about from the wealth tax.
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Have you ever considered the canary islands? They are pretty high up on my list of potential future destinations.
Actually no, but i´ve only heard good things from other people. Really mixed nature like Mallorca. Even warmer and better prices than Mallorca. For us it was the distance, you can get anywhere in Europe within 4 hours from Mallorca. For the Canary islands you have to add two extra hours to that.
Mr Snow the canaries are very pleasant! If anyone is planing a visit to Gran Canaria send me a PM and I’m happy to meet for a beer. And yes some journeys need an extra flight although there are direct flights to a good few European capitals and several spanish cities.
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Some lively discussion here on wealth tax in Spain and some good points made already. I just wanted to jump in and point out a couple of things that make it less scary than it sounds at first.
Firstly the tax is in bands and only applies to assets above each band - there is a summary here https://www.spanishpropertyinsight.com/tax-and-pensions/spanish-wealth-tax-patrimonio/
So the top rate of 2.5% only apples to assets more than EUR 10.7m per person over the 700k exempt amount. That’s a pretty fat fire sum to talk about.
If you look at a more likely generous fire example of EUR 2m subject to the wealth tax for a couple, the tax would only be due at 0.2 or 0.3% on the 0.6m of assets above the combined exemption of 1.4m, which would come to a couple of grand a year. For a typical American this could easily be offset by the lower cost of health care you would pay in Spain (eg we pay about EUR 120 per month for comprehensive private health insurance for family of 4)
So it’s not like there is a limit at 1.4m and if you go over it a little bit you will pay tax on the whole 1.4 or anything like that.
But the situation is even better than this. My understanding is that investments held in private pensions including a 401k are exempt from wealth tax, which will likely exclude a chunk. IRAs seem like a grey area as Spain doesn’t really have an equivalent, but I believe there is an argument can be made that they should also be excluded.
Then if you say own an investment property in USA the wealth tax looks at what you paid for it, rather than the current market price which could make a big difference. And of course you net off any mortgage you have on the property and only pay on the net amount. Plus don’t forget the tax doesn’t include your property in Spain unless it is over 300k each / 600k for a couple which will go a fair way in most places.
If you factor all of these in, I suspect most people on this forum shouldn’t have too much to worry about from the wealth tax.
Thanks for the link. I am in total agreement on the health care thing. The US is gobsmackingly insane about this. Today I pay $24K a year for insurance for a family of 3. Since my son isn't yet of college age, we might have to tolerate the insanity for a while longer.
You should post something about your Gran Canaria life - we're envious!!
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Thanks for the link. I am in total agreement on the health care thing. The US is gobsmackingly insane about this. Today I pay $24K a year for insurance for a family of 3. Since my son isn't yet of college age, we might have to tolerate the insanity for a while longer.
You should post something about your Gran Canaria life - we're envious!!
Re the healthcare I don’t want to go down that rabbit hole as I could talk about it all day and don’t want to bring politics into a civilised discussion! But I do think it’s important to point out the stark difference in costs as I think a lot of Americans are probably put off moving overseas when they see higher taxes without ever considering how much difference the lower cost of healthcare makes.
Thanks for the suggestion about Gran Canaria - I don’t really think of it as anything special as it’s just the life we’re living now! I don’t want to detail Mr Snow’s thread but if more people are interested maybe I’ll start a journal or blog. For now Here’s a quick pic of a sunset I took on my phone a couple of weeks ago from the end of our road; the faint peak at the extreme right is mount Teide on Tenerife
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Some lively discussion here on wealth tax in Spain and some good points made already. I just wanted to jump in and point out a couple of things that make it less scary than it sounds at first.
Firstly the tax is in bands and only applies to assets above each band - there is a summary here https://www.spanishpropertyinsight.com/tax-and-pensions/spanish-wealth-tax-patrimonio/
So the top rate of 2.5% only apples to assets more than EUR 10.7m per person over the 700k exempt amount. That’s a pretty fat fire sum to talk about.
If you look at a more likely generous fire example of EUR 2m subject to the wealth tax for a couple, the tax would only be due at 0.2 or 0.3% on the 0.6m of assets above the combined exemption of 1.4m, which would come to a couple of grand a year. For a typical American this could easily be offset by the lower cost of health care you would pay in Spain (eg we pay about EUR 120 per month for comprehensive private health insurance for family of 4)
So it’s not like there is a limit at 1.4m and if you go over it a little bit you will pay tax on the whole 1.4 or anything like that.
But the situation is even better than this. My understanding is that investments held in private pensions including a 401k are exempt from wealth tax, which will likely exclude a chunk. IRAs seem like a grey area as Spain doesn’t really have an equivalent, but I believe there is an argument can be made that they should also be excluded.
Then if you say own an investment property in USA the wealth tax looks at what you paid for it, rather than the current market price which could make a big difference. And of course you net off any mortgage you have on the property and only pay on the net amount. Plus don’t forget the tax doesn’t include your property in Spain unless it is over 300k each / 600k for a couple which will go a fair way in most places.
If you factor all of these in, I suspect most people on this forum shouldn’t have too much to worry about from the wealth tax.
Awesome post, thanks for clarifying the details on the wealth tax! 🙏
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Thanks for the link. I am in total agreement on the health care thing. The US is gobsmackingly insane about this. Today I pay $24K a year for insurance for a family of 3. Since my son isn't yet of college age, we might have to tolerate the insanity for a while longer.
You should post something about your Gran Canaria life - we're envious!!
Re the healthcare I don’t want to go down that rabbit hole as I could talk about it all day and don’t want to bring politics into a civilised discussion! But I do think it’s important to point out the stark difference in costs as I think a lot of Americans are probably put off moving overseas when they see higher taxes without ever considering how much difference the lower cost of healthcare makes.
Thanks for the suggestion about Gran Canaria - I don’t really think of it as anything special as it’s just the life we’re living now! I don’t want to detail Mr Snow’s thread but if more people are interested maybe I’ll start a journal or blog. For now Here’s a quick pic of a sunset I took on my phone a couple of weeks ago from the end of our road; the faint peak at the extreme right is mount Teide on Tenerife
"I don’t want to detail Mr Snow’s thread..."
Thread subject is "Moving abroad to live that frugal FIRE life in Spain" and as far as I know the Canarias is in Spain, so you are welcome to go all in with blog, posts, journals, etc! 😂
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Thanks for the suggestion about Gran Canaria - I don’t really think of it as anything special as it’s just the life we’re living now! I don’t want to detail Mr Snow’s thread but if more people are interested maybe I’ll start a journal or blog. For now Here’s a quick pic of a sunset I took on my phone a couple of weeks ago from the end of our road; the faint peak at the extreme right is mount Teide on Tenerife
Thanks DoubleH. Nice picture. I concur with Mr Snow since this thread is about living and not the wealth tax!! It's been a long rainy winter in the Pacific North Wet and some sunny pics and blogs are certainly welcome, so thanks.
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Some lively discussion here on wealth tax in Spain and some good points made already. I just wanted to jump in and point out a couple of things that make it less scary than it sounds at first.
Firstly the tax is in bands and only applies to assets above each band - there is a summary here https://www.spanishpropertyinsight.com/tax-and-pensions/spanish-wealth-tax-patrimonio/
So the top rate of 2.5% only apples to assets more than EUR 10.7m per person over the 700k exempt amount. That’s a pretty fat fire sum to talk about.
If you look at a more likely generous fire example of EUR 2m subject to the wealth tax for a couple, the tax would only be due at 0.2 or 0.3% on the 0.6m of assets above the combined exemption of 1.4m, which would come to a couple of grand a year. For a typical American this could easily be offset by the lower cost of health care you would pay in Spain (eg we pay about EUR 120 per month for comprehensive private health insurance for family of 4)
So it’s not like there is a limit at 1.4m and if you go over it a little bit you will pay tax on the whole 1.4 or anything like that.
But the situation is even better than this. My understanding is that investments held in private pensions including a 401k are exempt from wealth tax, which will likely exclude a chunk. IRAs seem like a grey area as Spain doesn’t really have an equivalent, but I believe there is an argument can be made that they should also be excluded.
Then if you say own an investment property in USA the wealth tax looks at what you paid for it, rather than the current market price which could make a big difference. And of course you net off any mortgage you have on the property and only pay on the net amount. Plus don’t forget the tax doesn’t include your property in Spain unless it is over 300k each / 600k for a couple which will go a fair way in most places.
If you factor all of these in, I suspect most people on this forum shouldn’t have too much to worry about from the wealth tax.
Awesome post, thanks for clarifying the details on the wealth tax! 🙏
Yeah, this is my reading as well regarding 401ks, and presumably superannuation in Australia, although a bit different but essentially the same. So, if you had a bulk of your money in those accounts and your non retirement accounts were less than $700k euros per person, you won’t be subject to any wealth tax. If you’re living off of that money, then no other income taxes in Spain. Don’t own a home and you avoid those taxes as well. Yes, this seems doable. Spain is back on the table!
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We're visiting Spain in May. It's the first time for me & I'm really looking forward to it. :)
I doubt I'll ever be able to get DW to leave family behind, but I'm so tired of US politics the thought of finding a better country sure is appealing.
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We're visiting Spain in May. It's the first time for me & I'm really looking forward to it. :)
I doubt I'll ever be able to get DW to leave family behind, but I'm so tired of US politics the thought of finding a better country sure is appealing.
Spain (and the EU in general) has a lot of problems too, just different ones, and not readily visible to short-term visitors.
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Spain (and the EU in general) has a lot of problems too, just different ones, and not readily visible to short-term visitors.
What are the Spain specific problems that will affect expats, Paul? We need the skeptics view!!
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Spain (and the EU in general) has a lot of problems too, just different ones, and not readily visible to short-term visitors.
What are the Spain specific problems that will affect expats, Paul? We need the skeptics view!!
The bearish case for Spain is the poor economic environment that caused a modern-day diaspora 10 years ago. All of a sudden there were thousands of young Spaniards in the streets of London. The more affluent ones were being sent by their parents to study at a foreign university to improve their chances on the job market. The less affluent ones were doing whatever odd jobs the British economy would have them do because it was better than living with their parents at home.
https://en.wikipedia.org/wiki/Youth_unemployment_in_Spain
There's a reason everything is so cheap out there, it's because wages are low and professional development prospects are bleak. Can you name a large, innovative Spanish company? Didn't think so.
The next door neighbor France has simlar problems, but it's not as dire. Both countries have serious demographic problems that will require significant big sacrifices if their social model is to survive. But hey, at least they're not as screwed as Italy, the perennially broke peer.
Now the "good" news is that as an early retiree, you can fully insulate yourself. That's true stateside too: the opioid epidemic or Trump's latest stunt likely doesn't affect you at all if you're an upper middle class American.
Will Spain work for you? I don't know, probably? You have money, which is the ultimate cheat code everywhere in the world. But you're still part of the larger ecosystem, and that ecosystem is not healthy. That doesn't mean you shouldn't go, but don't fool yourself and only paint the picture you want to see. Find the local newspaper of the city you're targeting and read about what ails the locals.
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@Paul, not sure I can rally argue with that, still wouldn’t stop me. Aren’t too many perfect places, however Spain isn’t so broken, it won’t work. I love the: money is the ultimate cheat code. Absolutely true.
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These are excellent points and agree with the "cheat code" statement. I noted that the POR youth unemployment (https://tradingeconomics.com/portugal/youth-unemployment-rate) rate looks better than Spain. But it looks like a lot of Europe is going to face demographic problems since the level of education needed to hold a job keeps going up and some of the entry level unskilled jobs get displaced by AI.
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Spain (and the EU in general) has a lot of problems too, just different ones, and not readily visible to short-term visitors.
What are the Spain specific problems that will affect expats, Paul? We need the skeptics view!!
...
Will Spain work for you? I don't know, probably? You have money, which is the ultimate cheat code everywhere in the world. But you're still part of the larger ecosystem, and that ecosystem is not healthy. That doesn't mean you shouldn't go, but don't fool yourself and only paint the picture you want to see. Find the local newspaper of the city you're targeting and read about what ails the locals.
As already noted - the demographic problem is a western world problem in general and a European one very much. Same issue in Sweden.
It might be cynical but most of Spains problems doesn't effect me directly as they are of more national character (unemployment, industry, etc) at the moment. Swedish problems with violent gangs and crowded emergencies rooms would affect me directly.
Local problems/news in Palma de Mallorca (in english) can be found here: https://www.majorcadailybulletin.com
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New post on our current, future and possible frugal budget today! Might be helpful, or worthless, i don't know. :-D
https://palmaonfire.com/blog/2020/02/budget-time-part-1/
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New post on our current, future and possible frugal budget today! Might be helpful, or worthless, i don't know. :-D
https://palmaonfire.com/blog/2020/02/budget-time-part-1/
Interesting. School is 1K Euros a month?
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New post on our current, future and possible frugal budget today! Might be helpful, or worthless, i don't know. :-D
https://palmaonfire.com/blog/2020/02/budget-time-part-1/
Interesting. School is 1K Euros a month?
Public school: Free
State-Private (Concertadas): 20-200€/month
Private: Most 450-600€/month
We got several little bastards so we pay 1K € / month. :-)
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Almost forgot, you usually have some extra fees on top of that. The Matricula fee ("one-time-fee" / new client) which varies a lot, 100-4000€ / child. Lunch, books and school uniform might, or not, be separate as well in some schools.
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Local problems/news in Palma de Mallorca (in english) can be found here: https://www.majorcadailybulletin.com
It was interesting that several of the problems seemed either tourist or traffic related. As a cyclist, the article on a cyclist getting killed struck home. How do you find cycling there?
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For the folks on here from the US and Canada, I'm curious what the draw is to Spain over Latin America.
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One is a first world country, the other is a loose group of second-to-third world countries.
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For the folks on here from the US and Canada, I'm curious what the draw is to Spain over Latin America.
For me it is a completely different cultural experience. Very European, Moorish, and Arabic compared to most areas in Mexico, Central and South America. As a single woman living and travelling alone thru out Spain I also felt extremely safe compared to many places in S. American. I lived in a small coastal.town about 45 minutes outside Girona (fabulous biking btw) and never worried about my safety no matter what time of night or if out of town late at night walking, biking, or taking buses or trains any where. Plus very easy cheap access to cooler weather areas - Andorra for example - and to other "different" countries and cultures.
ETA: While I wouldn't live in Spain again if I ever moved out of country, I liked the ease and safety of getting around any where in Europe. I would move to Germany or a more northern European country like Sweden as I like the weather better then Spain. Oh and I LOVE the architecture and history (pre-Roman as well as Roman) in Spain.
Makes sense. I am surprised to hear Spain described as so safe. I had the impression that it was a country where you needed to maintain a certain amount of awareness of your surroundings.
One is a first world country, the other is a loose group of second-to-third world countries.
I understand what you're saying, but saying it like that could be perceived as a bit derogatory.
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PTW.
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Local problems/news in Palma de Mallorca (in english) can be found here: https://www.majorcadailybulletin.com
It was interesting that several of the problems seemed either tourist or traffic related. As a cyclist, the article on a cyclist getting killed struck home. How do you find cycling there?
Spot on, the majority of the experienced(!) problems are related to tourism and traffic. Traffic is a little bit like a Grand Theft Auto game, rules can be followed but not really if you don't feel like it. ;-) Joking aside, we have a problem with bad/ignorant drivers as well as driving and drinking here. Its supposed to be legal to drink a beer or two but i´ve seen people drinking a lot more and getting behind the wheel.
That said, Mallorca is considered one of the best bicycling places in Europe and there are tens of thousands of cyclists coming here to train every year. I guess its both the mountains as well as the flat areas that appeal.