Author Topic: Moving abroad to live that frugal FIRE life in Spain  (Read 22300 times)

life_travel

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #50 on: December 04, 2019, 02:19:34 PM »
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.

ItsALongStory

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #51 on: December 04, 2019, 02:54:19 PM »
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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smoghat

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #52 on: December 04, 2019, 08:54:22 PM »
I cant imagine moving to Spain with any medical issues whatsoever. Itd be a quick death sentence. But first youd wind up without any money.

ItsALongStory

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #53 on: December 04, 2019, 09:26:06 PM »
I cant imagine moving to Spain with any medical issues whatsoever. Itd be a quick death sentence. But first youd 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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Hula Hoop

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #54 on: December 05, 2019, 03:42:55 AM »
I cant imagine moving to Spain with any medical issues whatsoever. Itd be a quick death sentence. But first youd wind up without any money.

Why do you say that?  I've heard good things about the Spanish medical system.

Hirondelle

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #55 on: December 05, 2019, 04:57:56 AM »
I cant imagine moving to Spain with any medical issues whatsoever. Itd be a quick death sentence. But first youd 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?


MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #56 on: December 05, 2019, 10:29:38 AM »
I cant imagine moving to Spain with any medical issues whatsoever. Itd be a quick death sentence. But first youd 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.

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #57 on: December 05, 2019, 10:32:55 AM »
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. :-)

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #58 on: December 05, 2019, 10:35:34 AM »
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!

Nickel

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #59 on: December 09, 2019, 12:46:58 PM »
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

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #60 on: December 10, 2019, 08:14:14 AM »
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.

Loama

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #61 on: December 19, 2019, 09:40:43 AM »
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.

Daisy

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #62 on: January 01, 2020, 11:57:04 PM »
I cant imagine moving to Spain with any medical issues whatsoever. Itd be a quick death sentence. But first youd 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

Panly

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #63 on: January 09, 2020, 10:51:54 AM »
I cant imagine moving to Spain with any medical issues whatsoever. Itd be a quick death sentence. But first youd wind up without any money.

I think you mixed up Spain with the US -  where your insurance death panel denies your treatment....

markbike528CBX

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #64 on: January 11, 2020, 03:26:02 PM »
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.

TeeNixx

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #65 on: January 28, 2020, 06:44:15 AM »
PTF

ItsALongStory

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #66 on: January 28, 2020, 09:41:09 PM »
Tomorrow I am interviewing for a position in Spain. We have been targeting Portugal but Spain might be too close to pass up.

MrThatsDifferent

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #67 on: January 29, 2020, 12:15:48 AM »
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! Im jealous!

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #68 on: January 30, 2020, 10:04:20 AM »
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/

ItsALongStory

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #69 on: January 31, 2020, 10:43:11 AM »
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! Im 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.

ItsALongStory

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #70 on: January 31, 2020, 10:43:27 AM »
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!

MrThatsDifferent

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #71 on: January 31, 2020, 01:03:31 PM »
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! Im 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 its part of your focus, youre more likely to achieve it eventually.

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #72 on: February 03, 2020, 11:58:38 AM »

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

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #73 on: February 03, 2020, 02:17:50 PM »

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

Paul der Krake

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #74 on: February 03, 2020, 02:53:57 PM »
Have you ever considered the canary islands? They are pretty high up on my list of potential future destinations.

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #75 on: February 03, 2020, 02:59:52 PM »

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.

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #76 on: February 04, 2020, 12:45:32 PM »
Have you ever considered the canary islands? They are pretty high up on my list of potential future destinations.

Actually no, but ive 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.

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #77 on: February 04, 2020, 12:48:21 PM »


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.
[/quote]

Its 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. :-)

Paul der Krake

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #78 on: February 04, 2020, 01:17:56 PM »
Have you ever considered the canary islands? They are pretty high up on my list of potential future destinations.

Actually no, but ive 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!

Telecaster

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #79 on: February 04, 2020, 01:45:03 PM »

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?

Paul der Krake

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #80 on: February 04, 2020, 02:11:01 PM »

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.

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #81 on: February 05, 2020, 09:26:31 AM »

Its 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 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 :-).

MrThatsDifferent

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #82 on: February 05, 2020, 06:53:17 PM »

Its 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 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 didnt realize you could avoid the wealth tax by living in Madrid though.

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #83 on: February 06, 2020, 10:03:17 AM »
Have you ever considered the canary islands? They are pretty high up on my list of potential future destinations.

Actually no, but ive 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!

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #84 on: February 06, 2020, 10:13:19 AM »

Its 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 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

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #85 on: February 06, 2020, 10:15:50 AM »

Its 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 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 didnt 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.

jim555

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #86 on: February 06, 2020, 10:47:08 AM »
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.

MrThatsDifferent

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #87 on: February 06, 2020, 11:54:57 AM »

Its 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 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 wouldnt work well as an expat if your assets are in your home country. 

9, the Beckham rule doesnt seem to work for people who are retired

8 seems to apply to retired people as youd 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?

Im going to visit Portugal and check it out, but not sure its going to top Spain for living.

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #88 on: February 07, 2020, 08:48:19 AM »

With the Madrid money, you have to have the majority of your assets in Madrid, that wouldnt work well as an expat if your assets are in your home country. 

Im going to visit Portugal and check it out, but not sure its 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.

MrThatsDifferent

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #89 on: February 07, 2020, 01:43:12 PM »

With the Madrid money, you have to have the majority of your assets in Madrid, that wouldnt work well as an expat if your assets are in your home country. 

Im going to visit Portugal and check it out, but not sure its 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.

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #90 on: February 07, 2020, 06:39:00 PM »
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.

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #91 on: February 09, 2020, 07:04:29 AM »

Its 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 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 wouldnt work well as an expat if your assets are in your home country. 

9, the Beckham rule doesnt seem to work for people who are retired

8 seems to apply to retired people as youd 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?

Im going to visit Portugal and check it out, but not sure its 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 ive 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

ItsALongStory

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #92 on: February 09, 2020, 07:17:05 AM »
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.

MrThatsDifferent

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #93 on: February 09, 2020, 04:55:22 PM »

Its 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 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 wouldnt work well as an expat if your assets are in your home country. 

9, the Beckham rule doesnt seem to work for people who are retired

8 seems to apply to retired people as youd 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?

Im going to visit Portugal and check it out, but not sure its 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 ive 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 dont have Spanish assets, it doesnt apply. If all of your assets are in another country, but you live in Madrid, it wouldnt seem to apply. If you have a $3m home in Madrid, and $2m of investments in another country, it would seem to apply.

If thats correct, I dont 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, youd fall in their tax system. You would probably need to rent and be mindful of the 183 day trigger for taxes.
« Last Edit: February 09, 2020, 05:31:17 PM by MrThatsDifferent »

ApacheStache

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #94 on: February 09, 2020, 07:35:40 PM »
PTF. I'm looking forward to reading your blog as well.

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #95 on: February 10, 2020, 08:15:20 AM »


"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?

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #96 on: February 10, 2020, 02:56:23 PM »

Its 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 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 wouldnt work well as an expat if your assets are in your home country. 

9, the Beckham rule doesnt seem to work for people who are retired

8 seems to apply to retired people as youd 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?

Im going to visit Portugal and check it out, but not sure its 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 ive 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 dont have Spanish assets, it doesnt apply. If all of your assets are in another country, but you live in Madrid, it wouldnt seem to apply. If you have a $3m home in Madrid, and $2m of investments in another country, it would seem to apply.

If thats correct, I dont 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, youd 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

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #97 on: February 10, 2020, 03:05:08 PM »
"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, youd 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. :-)

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #98 on: February 11, 2020, 10:20:15 AM »

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.

Doubleh

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #99 on: February 15, 2020, 04:10:41 PM »
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. Thats 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 its 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 doesnt 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 dont forget the tax doesnt 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 shouldnt have too much to worry about from the wealth tax.