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Spain to end the Golden Visa. How does this impact UK nationals?
By Paul Montague, Partner, Blevins Franks
928 433 411 | canaryisles@blevinsfranks.com | www.blevinsfranks.com
The Spanish government has announced its intention to end Spain’s golden visa. Once ratified, non-EU nationals will no longer be able to obtain residency and freedom of movement in Spain simply by buying Spanish high value property.
While this sounds like bad news for UK nationals who no longer have EU freedom of movement, other visa options are available if you intend to retire in Spain and so live here most of the year. In fact, the non-lucrative visa approach is cheaper as you don’t need to spend a set amount on a property and can choose to buy or rent whichever home you want.
Spain’s golden visa current rules
The golden visa currently offers a flexible residence option for third-country nationals who can make a substantial capital investment in the country. For some, the key attraction is being able to come and go as they please with virtually no cap on how much time they can spend in or out of the country.
The most common way to qualify is through purchasing property worth at least €500,000. Other pathways include buying shares in a company or making a deposit in a Spanish bank of a €1 million+, or investing in a new business that offers employment opportunities or significant local benefits.
The scheme was launched by previous Prime Minister Mariano Rajoy in 2013, in the wake of the banking and property crisis which hit Spain hard.
Eliminating the Golden Visa
At a cabinet meeting on 9 April 2024, Spain’s Council of Ministers agreed to eliminate the golden visa. They believe this will help ease housing shortages and make homes affordable again for local residents, and it follows on from last year’s decision to impose rental caps in some areas.
Prime Minister Pedro Sánchez explained that his government intends “to guarantee that housing is a right and not merely the subject of business speculation“. Over 90% of properties bought to obtain a golden visa are in Barcelona, Madrid, Malaga, Alicante, Balearic Islands and Valencia, where the housing market is under pressure and priced too high.
The Minister for Housing, Isabel Rodríguez, said that eliminating the golden visa will be a key step in increasing housing availability and affordability. Over 14,000 golden visas linked to real estate investments have been granted since 2013, with the annual number doubling since 2022. Most beneficiaries have been from China and Russia, but also from the UK, US, Ukraine, Iran, Venezuela and Mexico.
Spain has also been under pressure from the European Commission, which wants to clamp down on such residence schemes because of security concerns.
So far all we have is the announcement of the government’s intention to close the scheme. The law will still need to be amended, agreed on and ratified, and a timeframe established. Currently the golden visa route remains open, but bear in mind that buying property, submitting an application and getting it approved is a lengthy process.
Spain’s Non-Lucrative Visa option for retirees
The non-lucrative visa is the residence approach most retired UK nationals take since Brexit.
As explained on Spain’s Ministry of Foreign Affairs website, this is a “visa to reside in Spain without carrying out any gainful (work or professional) activity, provided that the applicant has sufficient and guaranteed means to live on”.
A key requirement for a successful application, therefore, is to provide proof of sufficient financial means to cover the expenses of residing in Spain or confirming that you have a regular source of income. If your monthly pension income does not reach the minimum, having sufficient deposits in a Spanish bank account may cover you.
You’ll also need suitable medical health insurance from an insurer in Spain, medical check records, and clean criminal records.
Your initial visa will last for one year, at which point you renew it for two years. You’ll need to provide similar documentation again, including proof of funds. After five years you can apply for a permanent residency permit, if eligible.
Residency requirement
While the golden visa did not commit you to spending more than a few days a year in Spain, with the non-lucrative visa you are committing to being resident here, which generally means spending 183+ days in the country each year.
You will also be expected to register as a tax resident in Spain and meet your tax obligations – your worldwide incomes, gains and wealth will be subject to Spanish income and wealth taxes, and you are subject to the Spanish succession and gift tax rules.
Making the most of Spain
If you do decide to move to Spain, you will need to adjust your financial affairs to suit your new situation. You will benefit from planning ahead before you become tax resident, to understand all the tax implications and make the most of opportunities to save tax by restructuring your affairs before you change residency.
Take advice from a cross-border tax and wealth management specialist, who understands the residence and tax rules in both Spain and the UK and the interaction between them. You may be surprised by how much tax a strategic and compliant financial plan could save you.
With offices in the Canary Isles, mainland Spain and London, and specialist tax experts, Blevins Franks is perfectly placed to guide you through the whole moving to Spain process, from residency, to tax and estate planning, to investments and pensions. We can help you grow and protect your wealth in the most tax-efficient way, for yourself and your heirs in future.
The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should take personalised advice.
Blevins Franks Wealth Management Limited (BFWML) is authorised and regulated by the Malta Financial Services Authority, registered number C 92917. Authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists. Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts, retirement schemes and companies. This promotion has been approved and issued by BFWML.
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