Hi all. My partner (retired) and I (currently working part time but retiring in a few weeks) are mulling over the possibility of relocating from the UK to Spain but I have a couple of fairly fundamental queries that I hope someone may be able to help with.

Firstly, we'd be looking to obtain NLVs but neither of us would have any regular income. We both have retirement pots of around 350k each, spread across eSIPPs, ISAs, and General Investment Accounts. Is it likely that this would prove acceptable for the financial stability requirements?

My second query is about taxation - I've read so much about the Spanish system but I'm still unsure as to how it would impact us.
Our retirement pots are looked after by a financial planner, the idea being he will put money into our bank account as and when we request it, and he would move funds from our eSIPPs, ISAs and GIAs in varying amounts as he feels is best at the times of our requests.
As we would effectively be living on a combination of savings and private pensions what tax would we be liable for in this instance?

Thanks

Any income derived from your savings (ISAs , Premium Bonds etc) will be liable for tax. There is a small tax allowance but nothing like as generous as UK. All your assets outside of Spain need to be registered with taxman so they can track any sales or change in value. Be aware that wealth tax exists in Valencia region which applies to all your world assets( UK property ) once they exceed €500.000 per person. Unlike UK pensions are also taxable. Not a major disadvantage unless you you are individuals with property in both countries and sizeable savings with good pensions.

Full NLV and taxation info here

https://www.pellicerheredia.com/en/open-library/

they look after all of my tax and legal affairs

As you are probably aware financial requirements for NLV for first applicant is 400% IPREM plus 100% for the second which in 2024 totals €36000 for two. This doubles at renewal time for years 2&3 and 4&5 to €72000. It is preferably a demonstrable regular income stream such as pensions but you can also use other financial means. But be aware that they may require financial means to be liquid/accessible e.g. not 5 year fixed bond etc.

As for tax as others have mentioned all worldwide income is considered for tax including ISA (tax free in UK), interest from savings, dividends. You are not taxed on withdrawals from savings but on any interest. Sale of shares/funds in GIA would be considered for tax on the gain. You can considered different approaches for investments if you have UK allowances available to baseline the purchase value.

You should get your financial affairs in place before you become a Spanish tax resident and before you stop being a UK resident (opening any required UK savings, bank, ISA, SIPP etc). Not impossible after but more choice before you leave UK. And one of these items is taking tax free lump sum from pensions as it is not tax free as a Spanish tax resident.

Also capital gains on UK property sales when Spanish tax resident are likely to be liable for tax. As others have mentioned there is also Wealth tax to consider. You should seek proper financial advice before making any decisions.

If you are a Farcebook user there are many good groups on there especially for NLV as well as the views of people on here but probably less so for NLV.

I would sincerely expect a combined investment portfolio of around £700k to easily produce an annual income sufficient to satisfy the financial requirements for the NLV!

Any and all income from those investments will be liable for tax in Spain and although it's not as simple to work out as UK where you have a fixed tax allowance, putting it in broad simplistic terms, as an individual the effective tax threshold is around €15k. As a married couple you can choose to be taxed as such or as individuals whichever works out to your advantage.

Beyond €15k the tax bands are as below although they can vary slightly from region to region.

• A tax of up to €12,450 at 19%
• From €12,450–€20,200 at 24%
• From €20,200–€35,200 at 30%
• From €35,200–€60,000 at 37%
• From €60,000–€300,000 at 45%
• More than €300,000 at 47%

Don't forget the dreaded Modelo 720 in which you have to meticulously declare any and all assets you hold worldwide which in total exceed €50k. It's not taxed just a declaration.

The tax threshold of €15k is not for every taxpayer. For the 2023 tax year, people with an income of €14,047 or less got an additional tax allowance of €6,498 to add to the basic €5,550 (for those under 65) and the €2,000 deduction for general expenses. Above that income level the additional allowance tapers away gradually until those earning €19,749 don't get any of it, only the basic €5,550 plus the €2,000 for general expenses. The low income allowance has been increased for the 2024 tax year. It's explained here

Reducción por obtención de rendimientos del trabajo 2023 | Club MAPFRE (mapfretecuidamos.com)

The new figures for 2024 are here

Agencia Tributaria: Novedades de normativa 2024 - Principales novedades normativas Real Decreto-ley 4/2024, de 26 de ...

All very fine but remember I did say "in broad simplistic terms" not to mention of course that nobody qualifying for an NLV is going to be classified as 'low income'!

Yep and you were correct...

BUT... For people like me who are below pension age but have a private pension and savings and premium bonds.

AND its worse if one person has no income because you dont get 2x the allowances if you file as a couple. You get 1x €5550 1x €2000 and 1x €3400 or at least I have had for the past three years.
We filed as a couple as we always do and my tax bill for 2023 was €2448 on a combined income of €23,998

To the OP... With the pension funds you have indicated you will be wealthy in comparison to almost any Spanish worker.

Everyone I know who has arrived under the NLV in the last year or so has had to show at least 50% of the amount specified as a regular checkable income, the rest CANNOT be cash savings as there is no guarantee you will have this at renewal.
In checkable you have to show earning statements. But as everyone I know was a UK pensioner or had a private pension that was paying out this was accepted.
One couple only had a large amount in savings as they liquidised everything (houses, cars, collections etc) to prevent CGT and the London Consulate told them to put the money in a pension plan or fixed income bond.
They were sent away and went back three months later and the visa was approved..

Pre Brexit people were borrowing the cash required from a bank and using that to prove savings,.Once they had residency they were paying it back and living off free air..
When we moved in 2020 Alicante stated you needed €9,000 per person in a bank account (not savings) and to show three months in and outgoings.

The most important question, which keeps getting shoved under the mattress is Private Health Care. YOU have to have this or an S1 in place or the rest of your plans cant happen.
Again I know of some people like me under OAP age that were all set to move over but couldn't get Private Cover due to current illness's. None of them have been able to move here due to that reason and one of my friends is not short a bob or two (million).

One is now resigned to 90/180 but he cannot drive as he had to surrender his Uk licence because of the medical issues..
The others are looking at other countries with less stringent visa rules (possibly some minor S.American countries and maybe the odd old Russian bloc ones)

When talking about income and the allowances mentioned above, as far as I am aware income from investments, savings etc (e.g. non pension) will only receive the basic allowances starting at €5550. You only benefit from the general expenses allowance and low income allowance if employed (not possible on NLV) or taking pension income - perhaps there are other income that allows it that I’m unaware of.

Why - Technically anyone on NLV can be classed as low income or even no income. They just need to meet the 400%/800% financial means at each stage of the application.
Edit: when drawing pension I (here on NLV) fully intend being low income to make best use of this allowance.


Ok this might be everyone you know on NLV and the situation is different for each application. The 50% as regular income is not required for all applicants and CAN be cash savings. I appreciate this is your experience. If the applicant doesn’t have the required financial means in cash at renewal, it is likely to be refused.

Thank you for all the replies, they are a great help.

I think the most fundamental query I had was regarding what actual income we would be taxed on and, if I am interpreting this correctly, it would be only on withdrawals from gains made on our ISAs / GIAs and not on withdrawals from capital?

So, hypothetically, if our ISAs / GIAs made no gains during a tax year but we made withdrawals from them, our withdrawals would not be subject to tax?

Also, I assume we would be taxed on any withdrawals from our private pensions as if they were income, so above the thresholds mentioned in the above posts we would pay tax at the staggered rates?

Nope, everyone gets both the €5550 which is the state reduction AND the €2000 which is the local (or as the return states other deductible)
And you then get another amount which is the low income benefit....there is nothing on my 2023 return giving me any more off.
It may be just for low income or retired with state OAP.

Someone else will be along who will know more and correct me if I am wrong (happens all the time)
I just give mine to the accountant and he does it, but last year i used the online calculator and it came out the same as the amount of tax I paid....

My assumption as a non-tax expert… not gains made in a tax year, but any gains made from original acquisition to disposal. Similar for property, bought a house 30 years ago fir £100000 that is now worth four times at £400000 you could be taxed on the gain.

There are no specific CGT allowances I’m aware of including any offset for losses. Investments inside ISA are not regarded as tax efficient in Spain - they’re treated in a similar way to GIA.

From here https://sede.agenciatributaria.gob.e...s-trabajo.html

“Deductible expenses for work income. €2,000 annually, in general, for all taxpayers who earn income from work.”

But thanks for getting me to think about this as now looking at exactly what triggers this allowance.

My assumption as a non-tax expert… not gains made in a tax year, but any gains made from original acquisition to disposal. Similar for property, bought a house 30 years ago fir £100000 that is now worth four times at £400000 you could be taxed on the gain.

There are no specific CGT allowances I’m aware of including any offset for losses. Investments inside ISA are not regarded as tax efficient in Spain - they’re treated in a similar way to GIA.[/QUOTE]

Personally if you are concerned about tax ( and why not) and are going to be comparing it with the system in UK it is just going to constantly upset you if you move to Spain. Basically if you are on average well off by Spanish standards you will be taxed quite heavily compared with UK and will find Spain nearly as expensive as UK. Everything is taxed in Spain and every sizeable movement of your wealth ( gifts, sales, ) requires reporting through notaries which are expensive and requires lots of documentation. Plus tax laws are local and change each time new administrations take charge meaning you are always restructuring things. Then there is the language problem- you are constantly at the mercy of your accountant/ lawyer ( or forums like this) to understand things as translators can not deal with different financial instruments( UK folk talk about Council Tax in Spain but the Spanish tax is not really an equivalent so isn't translated)and how taxes work. I have lived here on off for 25 years and the only time I struggle is with accountants and lawyers - tax is complicated here especially if you have various saving schemes and assets outside Spain and getting it wrong involves all kinds of fines.

You're quite correct. Although you have to demonstrate a 'potential' income to satisfy the NLV rules there is noting to say that you have to draw down that amount per annum, or therefore be taxed on it.

Mortgage or rent free even as a couple it's perfectly possible to live quite comfortably on a lot less than €28,800 never mind €36,000. We do on 2 (old) state pensions plus a couple of hundred quid a month from a UK annuity. We pay zero tax.