Retirement Planning for Expats in Spain

Spain continues to be one of the most popular retirement destinations for British expats and globally mobile individuals seeking a warm climate, excellent healthcare, and a high quality of life. But while the Mediterranean lifestyle may be the initial draw, long-term success as a retiree in Spain requires careful  financial planning and an understanding of tax obligations.

Whether you’re already living in Spain or considering making the move, this guide outlines the key pillars of retirement planning for expatriates — from pensions and residency to estate planning and cross-border tax strategies.

Why Retire in Spain?

Spain offers a compelling combination of lifestyle and infrastructure benefits for retirees:

• Mild year-round climate with over 300 days of sunshine in regions like the Costa del Sol and Costa Blanca.
• World-class healthcare, both public and private.
• Well-developed expat communities, English-speaking services, and social integration support.
• Affordable cost of living, especially outside major cities.
• Schengen Zone access, enabling visa-free travel across 26 European countries (for non-EU retirees with residency).

However, to fully enjoy these benefits, expats need to plan carefully — particularly given the post-Brexit changes to residency and tax obligations.

1. Residency and Legal Status

As a UK national, you no longer have automatic rights to live in Spain post-Brexit. To retire in Spain, most British citizens opt for one of the following routes:

Non-Lucrative Visa (NLV)

Ideal for retirees, the NLV requires proof of sufficient income without working in Spain. In 2025, the income threshold is approximately €2,400/month for a single applicant, with €600/month for each dependent.

Digital Nomad Visa

If you plan to continue remote work for a foreign employer or company you own, Spain’s new Digital Nomad Visa under Law 28/2022 may be an option, although this has tax and reporting implications.

Golden Visa

For HNWIs, Spain’s Golden Visa allows residency through real estate investment (€500,000+), with minimal stay requirements and the ability to include family members.

Note: Visa requirements and income thresholds are subject to periodic changes, so it’s essential to consult with a licensed immigration adviser or legal expert.

2. Retirement Planning and Pension Management

Retirement planning for expats in Spain often revolves around how to efficiently access and manage pension income.

UK Pensions in Spain

You can continue receiving your UK State Pension in Spain. While uprated annually under the UK-Spain Social Security Agreement, you must ensure you’re registered with the UK International Pension Centre.

Private or workplace pensions can typically be accessed while living in Spain, but how you draw them and where you are tax-resident will significantly affect your net income.

QROPS and SIPPs

Some expats consider transferring UK pensions to a Qualifying Recognised Overseas Pension Scheme (QROPS) or Self-Invested Personal Pension (SIPP). While QROPS may offer tax advantages, post-Brexit rules now limit eligibility, and a 25% overseas transfer charge (OTC) may apply.

Professional advice is essential before making pension transfers, as once completed, they are often irreversible and may carry compliance, tax, and currency risks.

3. Tax Planning: Spain vs UK

Spanish tax residency is triggered by:

• Spending more than 183 days in Spain in any calendar year, or
• Having your centre of vital interests (economic or familial) in Spain.

Once resident in Spain for tax purposes, your worldwide income and assets become reportable and taxable. Key considerations:

Income Tax (IRPF)

Spanish income tax is progressive and can range from 19% to 47%, depending on your region. Pension income, rental income, and dividends are all subject to tax, although double taxation treaties may apply.

Wealth Tax (Patrimonio)

Spain levies a Wealth Tax on worldwide assets above regional thresholds (often from €500,000–€700,000 per person). Some autonomous regions, like Madrid, offer 100% relief, but others such as Catalonia or the Balearics impose higher effective rates.

Modelo 720: Foreign Asset Reporting

Expats with more than €50,000 in foreign assets (e.g., UK pensions, property, bank accounts) must submit the Modelo 720 each year. Penalties for non-compliance can be significant, though have recently been moderated following EU court rulings.

Early tax structuring — before you become tax-resident — is often the most effective strategy to reduce long-term exposure.

4. Currency Risk and Income Planning

Retirees reliant on UK-based income streams (e.g., pensions, ISAs, rental property) must account for GBP/EUR exchange rate fluctuations. A strong pound may boost your Spanish income; a weak pound can diminish your purchasing power.

Solutions may include:

• Multi-currency accounts
• Regular FX transfers with rate locks
• Investment portfolios structured in euros

Working with  a financial adviser with cross-border expertise can help you manage income and currency risk, supporting more stable long-term planning.

5. Estate and Inheritance Planning

Spanish succession law is markedly different from that of the UK. Under Spanish law:

• Forced heirship rules apply by default, which can override your wishes unless you specify UK law in your will (under the EU Succession Regulation 650/2012).
• Spain imposes inheritance tax (IHT) on a beneficiary-by-beneficiary basis, not on the estate. Rates vary by region and by the relationship between the deceased and the beneficiary.

Cross-Border Wills

It is strongly advised to have both a UK will and a Spanish will (ensuring they don’t contradict each other), particularly when dealing with Spanish property or business assets.

6. Healthcare and Insurance

If you are receiving a UK State Pension, you may be eligible for state healthcare via the S1 form, which allows the NHS to fund your treatment in Spain. If not, you’ll need private health insurance, which must meet specific criteria for visa applications (e.g., no co-payments, full coverage).

Retirees often prefer a combination of public access (via S1 or residency) and private top-up insurance to ensure access to faster or specialised care.

7. Working with a Cross-Border Financial Adviser

The complexity of retirement planning as an expat — particularly in a post-Brexit and digitally evolving regulatory environment — underscores the need for expert guidance.

A qualified cross-border adviser can:

• Help optimise pension drawdown strategies
• Advise on tax-efficient investment structures (e.g., Spanish-compliant bonds)
• Navigate UK/Spain double tax treaty issues
• Assist with succession planning and wills
• Coordinate with legal and immigration specialists

Final Thoughts

Spain offers a vibrant, welcoming retirement destination — but enjoying life here long-term requires more than sun and sangria. From pensions and tax to healthcare and estate planning, a proactive approach to financial planning can help  protect your wealth and support peace of mind.

At Blacktower, we provide tailored financial advice to help British and international retirees plan for their financial future in Spain. Our local teams are here to guide you through every step — with full compliance, transparency, and client care.

Disclaimer:  This content is for informational purposes only and does not constitute financial, investment, tax, legal, or other professional advice. You should not act on any information contained herein without first seeking professional advice tailored to your individual circumstances. All information is subject to change and may not apply to your specific situation.