Whether you’re preparing to relocate or have recently made the move, choosing Spain as your new home is a decision that brings not only lifestyle advantages—sunshine, culture, and a relaxed pace of life—but also important financial considerations.
Relocating to a new country can significantly change your tax obligations, investment options, and estate planning priorities. The earlier you begin planning, the better positioned you’ll be to make the most of available opportunities and avoid costly surprises.
At Blacktower, we help expatriates navigate this journey with confidence. Here are seven key areas to consider as part of your financial planning when moving to Spain in 2025.
1. Understanding Your Tax Residency Status
In Spain, you are considered tax resident if you spend more than 183 days in the country during a calendar year, or if your centre of economic interest is there. Residency may also apply if your spouse and/or minor children reside in Spain.
Once tax resident, you’ll generally be liable to Spanish tax on your worldwide income, gains, and wealth, and subject to Spanish succession and gift tax rules.
If you still generate income from the UK (pensions, rental income, or capital gains), the UK–Spain Double Taxation Agreement will determine where this should be declared and taxed. Meanwhile, UK rules such as inheritance tax on worldwide assets (for up to 10 years after departure) and pension rules may still apply.
✅ Tip: Monitor your position under the UK statutory residence test to avoid inadvertently triggering UK tax residency.
2. How Much Tax Will You Pay in Spain?
Spain’s autonomous regions can adjust tax rates and allowances, meaning your effective tax burden may vary depending on where you live.
- General income tax (e.g., pensions, salaries, rental income):
- Rates range from 19% to 54%, depending on region.
- For example, the Valencian Community applies rates of 18.5% to 54%; Andalucía and Murcia, 19% to 47%.
- Savings income tax (interest, dividends, capital gains):
- Taxed progressively from 19% up to 30% for income above €300,000.
- Wealth tax:
- Applies to individuals with worldwide assets exceeding €1 million, after allowances.
- Some regions, like Madrid and Andalucía, offer exemptions or significant reductions.
- A “Solidarity Tax on Large Fortunes” is also in force at the national level, targeting individuals with assets above €4 million.
✅ Tip: Tax-efficient investment structures—such as Spanish-compliant investment bonds—may help reduce liability for income and wealth taxes.
3. Are Your Savings and Investments Optimised for Spain?
UK residents often hold ISAs, premium bonds, or other tax-wrappers that lose their tax efficiency once you become Spanish tax resident. For instance, ISAs become taxable in Spain on interest, dividends, and capital gains.
Take a holistic look at your portfolio:
- Does it suit your current goals and risk profile?
- Is it sufficiently diversified?
- Where is it domiciled, and how does that impact taxation and regulation?
With Brexit, many UK financial institutions no longer offer services to EU residents, and UK-based advisers may no longer be authorised to give advice to Spanish residents.
✅ Tip: Work with an adviser authorised to operate cross-border within the EU and familiar with Spain’s regulatory environment.
4. Should You Adjust Your Currency Exposure?
If you now spend in euros, but your assets or income remain denominated in sterling, your finances could be exposed to exchange rate fluctuations.
Structures that allow you to hold investments in multiple currencies—with the flexibility to draw income in euros—can help stabilise your spending power and reduce the impact of currency risk.
5. Buying or Selling Property: What Are the Tax Implications?
Whether you are planning to sell a UK home or buy a Spanish property, timing and structuring are crucial:
- Capital gains tax may apply in both jurisdictions, depending on residency and asset location.
- Wealth tax and succession tax liabilities may be impacted by Spanish property values.
- Stamp duty, notary fees, and regional taxes should all be factored into your budget.
✅ Tip: Get clarity on how property decisions impact your broader tax and inheritance planning before making a move.
6. What Should You Do with Your UK Pensions?
If you’re retiring in Spain, it’s essential to understand the available options for your UK pensions, including:
- Whether to retain your pension in the UK
- Transfer to a QROPS (Qualifying Recognised Overseas Pension Scheme), if eligible
- Drawdown, annuity, or lump sum
From April 2027, UK pension pots will count towards your UK inheritance tax (IHT) liability, even if you’re non-resident. Understanding both Spanish income tax treatment and UK IHT exposure is critical.
✅ Tip: Always seek regulated, cross-border pensions advice tailored to your residency and estate planning goals.
7. Estate Planning and Inheritance Law
Spain’s succession rules are markedly different from the UK. Key considerations include:
- “Forced heirship” laws in Spain dictate certain shares for close relatives unless overridden through correct legal planning.
- Spanish succession and gift tax varies by region, relationship between parties, and asset location.
- Regions like Andalucía, Madrid, and the Balearics have significantly reduced tax for immediate family, but this is not universal.
British expats remain liable for UK inheritance tax on UK assets, and potentially on worldwide assets for 10 years post-departure.
✅ Tip: A Spanish will can help streamline probate. Certain investment structures may also be used to pass assets efficiently to heirs.
Integrated Planning: A Holistic Approach
All these considerations—tax residency, income structure, pensions, property, succession—are interconnected. Planning in silos can lead to unintended consequences. Working with a financial advisory firm experienced in cross-border planning ensures your strategy is comprehensive, compliant, and aligned with your personal goals
Ready to review your financial position in Spain?
Contact Blacktower’s to schedule a confidential consultation with an experienced adviser.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
Tax planning should be a New Year priority for any British citizen who has recently become an expat.
A pension transfer is not for everyone and there will be many factors to weigh up before making the decision to transfer from an existing scheme into a QROPS, SIPPs or other structure.