Looking to obtain Spanish residency without the need to make a Golden Visa investment in 2021? If you’re a financially independent individual or retiree, the Spain Non Lucrative Visa Program may be the most affordable option for you.
Given that the fees on the Spanish Golden Visa can be as high as €30,000 per couple, in addition to a €500,000 property investment, very few investment citizenship and residency firms actively promote EU passive income visas as an option to their clients. Yet if you’re ready to up sticks and move to Spain, the Non Lucrative Visa could be a highly attractive option.
Find out more about the program requirements, benefits and application process below, or contact us now for expert assistance with your visa application.
As a rule, all expats in Spain are subject to some form of local taxation. Your exact taxation in Spain will be dependent on your specific situation. In general, however, expats will need to familiarize themselves with the tax implications relating to personal income tax (IRPF), wealth tax, capital gains tax as well as inheritance tax:
Personal income tax (IRFP): In Spain, personal income tax applies to your pension, salary or dividends, and is progressively charged from 19% to 46%, depending on how much you earn. You may also be eligible for a flat-rate tax of 25%, with several additional allowances available based on your particular situation.
Wealth tax: High-value real estate assets attract a wealth tax of between 0.2 – 2.5% for both residents and non-residents. There are a number of allowances that may reduce our wealth tax burden, depending on where the property is situated and whether you are using it as your primary residence.
Capital gains tax: Any profits generated from the sale of an asset in Spain are subject to capital gains tax. Such profits are taxed at between 19% and 23% for residents, while a flat rate of 24% applies for non-residents. Again, there are some exceptions to this.
Inheritance tax: Any donations or inherited assets you receive in Spain, both as a resident and non-resident, will be subject to inheritance taxes.
VAT: VAT is also applicable in Spain. There are three VAT rates, set at 4%, 10% and 21%, depending on the type of product of service being sold.
What are the tax implications of the Spain Non Lucrative Visa?GoldenVisasAdmin2020-11-27T07:16:31+00:00
A key requirement of maintaining your Spanish Non Lucrative Residence is the need to spend a minimum of 183 per year in Spain. At that point you will become tax resident in Spain, and you will be expected to pay taxes on your worldwide income.
You will also have to pay taxes in Spain if you have economic interests in the country, e.g. if you are self-employed or running a business in Spain. In addition, you may also be considered tax resident if your spouse and or children live in Spain.
Bear in mind that Spain has non-double taxation treaties in place with a host of countries, to prevent you from being taxed twice on the same income. You can view the list of countries here.
Should you invest in Spanish company shares, you’ll be eligible to pay capital gains tax to the Spanish revenue service. In addition, if you were to buy a property in Spain, this transaction may be subject to certain taxes as well.
It is always advisable to seek specialist tax advice about your unique financial situation before making any decisions about immigrating to Spain.
IPREM is a Spanish index used in the calculation of economic aid, unemployment benefits, grants, scholarships and allowances based on and individual person’s specific income and situation. Known in Spanish as El Indicador Público de Renta de Efectos Múltiples, the IPREM indicator is often referred to as the Multiplier for the Public Income Index in English.
As an income benchmark, the IPREM also informs the calculation of the amount of funds you’ll be required to have access to in order to qualify for the Non Lucrative Residency Visa.
Formally known as the Numero de identidad de extranjero, the Spanish NIE is a tax identification number. Foreigners seeking to settle in Spain will require a NIE to work, study, or purchase real estate or vehicles.
The NIE number appears on your Spanish residency card, known as the “tarjeta de residencia” in Spanish, and is linked to both your residency status and access to social security services while in Spain.
The NIE format comprises a mix of alpha numeric characters – an initial letter, followed by 7 digits, and ending with a verification letter.
The Spain Non Lucrative Residency Visa at a glance
The Non-Lucrative Visa is ideal for non-EEA nationals seeking settlement in Spain. As the name suggests, however, you will not be able to undertake any commercial activity or seek gainful employment in Spain during the first 12 months of your visa’s validity. It is therefore vital that you are able to prove sufficient savings and / or offshore income to cover your living and accommodation expenses while living in Spain.
This visa program is in therefore increasingly becoming popular among retirees with offshore pensions, digital nomads and remote workers seeking to spend longer periods of time in Spain.
The Non Lucrative Visa also allows your spouse and dependent minor children to settle in Spain, subject to you having the means to support them without the need to access state funds or support.
It is initially issued with a 12-month validity period, after which it become renewable every 2 years. After maintaining your Spanish residency status and minimum in-country presence 5 years, you can become eligible to apply for permanent residency. After maintaining your legal residency status for a period of 10 years, you can become eligible to apply for Spanish citizenship.
Unlike with the Spanish Golden Visa program, the Non Lucrative Residency Visa does not require you to make a mandatory property investment of €500,000, however you will be required to have a fixed address in Spain. A signed rental agreement can typically be used to meet this requirement. Should you wish to buy a home in Spain, however, you are able to do so.
1. Proof of financial means: In order to successfully apply for the Non Lucrative Visa, you will be required to submit proof of having sufficient savings to support yourself and any dependents in Spain. Whereas the Portuguese D7 Visa and the Italian Elective Residency programs require you to have ongoing, stable passive income, you can apply for Non Lucrative Residency by proving adequate savings only. The threshold savings amount, however, is substantially higher, comparatively speaking.
You should have a minimum of 400% of the Public Indicator of Multiple Effects Income (IPREM, or El Indicador Público de Renta de Efectos Múltiples in Spanish). As of 2020, the Spanish IPREM IS €537.84 per month, or €6454.03 per year. This means that prospective Non Lucrative Residency applicants should hold at least €25,817 in savings – and ideally even more than that, as the exact minimum required may vary from one Spanish embassy or consulate to the next.
2. Proof of comprehensive private health insurance cover: Non Lucrative Residents aren’t eligible to access any national healthcare benefits. As such, you’ll be expected to purchase comprehensive health insurance for yourself and any dependents. This policy must be pre-paid, and should cover the entire period for which your Non Lucrative Residency visa is valid for.
3. Minimum stays: you will be required to spend a minimum of 6 months per year in-country in order to keep your residency permit renewable. The clock starts ticking on this once your initial temporary residency permit has been issued. This requirement means that the Spain Non Lucrative is not suitable as a Plan B visa – instead, it is intended to attract foreigners seeking to immigrate to Spain and retire or settle on a permanent basis.
PLEASE NOTE: The Spanish authorities require you to strictly adhere to their guidelines in terms of documentary requirements, formatting and sequencing thereof. Even the tiniest deviation can lead to your application being rejected, leading to time consuming resubmissions and the need for potential appeals. It is therefore highly advisable to work with a reputable Spanish immigration firm, rather than submitting your visa application independently…
As of November 2020, the following documents are required, as a minimum, to apply for the Spanish Non Lucrative Visa:
1 x Passport photo. The photograph must be clear and professionally taken against a white background. The photo should be 5cm x 5cm (2 x 2 inches). Be sure to check your local consulate’s requirement for the passport photo requirement as this may vary from one diplomatic mission to the next.
Your valid passport AND a certified photocopy of the main page. The passport should have at least 2 blank pages, and should be valid beyond the expiry date of your initial Non Lucrative Residency permit’s validity.
Proof of current legal residency: This requirement can be met by submitting both your current valid ID card or driver’s license, along with a certified copy thereof.
A Medical Certificate, demonstrating that you do not suffer from any infectious
A duly completed and signed copy of the EX-01 form