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Living Costs in Costa Blanca

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Posted: Tue Mar 13, 2018 10:41am
10 replies267 views6 members subscribed
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gsonn

Posts: 1

Location: Benidorm

We (my family) like a lot of people are seriously considering moving to spain. So we are thinking about cost of living. If we bought a house there are there any cost like council tax or  ground rent to pay, obviously electicity bills but what bills would we inccur? Also can we just dig our land and put a pool in or does that need some type of planning permission. What can i do on my property without asking? 

Driving....

Here we have tax, insurance MOT. If i bought a car in spain, what would the running costs be? Can i use full uk driving licence? 

Are there common things people miss out when considering moving there? I want to be as clued up as possible. 

french martini

french martini

Very helpful member

Tue Mar 13, 2018 11:41am

Posts: 1238

Location: Playa Flamenca

652 helpful posts

Posted: Tue Mar 13, 2018 11:41am

Hi, you still have council tax but it's cheaper than the uk, electricity and water bills are charged also. My electricity bills are around 125€ a month but it varies depending on house size etc and usage.  You can't dig up your own land for any reason, if you wanted a pool then you need planning for that, in fact you need planning for everything really. Cars are expensive over here also so you have to budget a lot more even if you wanted a second hand a car. Insurance etc are on the same principal as Britain. Nicola :-)


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jimtaylor

jimtaylor

Legendary helpful member

Tue Mar 13, 2018 4:06pm

Posts: 1753

Location: Almoradí

2356 helpful posts

Posted: Tue Mar 13, 2018 4:06pm

Living costa have already been covered:

https://www.costablancaforum.com/area/la-mata-spain-73/general-la-mata-discussion-9/living-costs-29949/

For a pool you'll need a major works license, with full architect's plans.

Minor work outside the property needs a minor works license, which is much easier to get.

UK license is OK to start with, but you have to change it to a Spanish license. Vehicle running costs are similar to the UK. It's the vehicle purchase which is expensive; if you buy second-hand, it will be a lot dearer than in the UK as vehicles here hold their price, and you'll have to pay tax on the value of the vehicle plus a fee for doing the transfer of ownership.

Kimmy11

Kimmy11

Helpful member

Thu Mar 15, 2018 2:11am

Posts: 491

453 helpful posts

Posted: Thu Mar 15, 2018 2:11am

gsonn wrote:

We (my family) like a lot of people are seriously considering moving to spain. So we are thinking about cost of living. If we bought a house there are there any cost like council tax or  ground rent to pay, obviously electicity bills but what bills would we inccur? Also can we just dig our land and put a pool in or does that need some type of planning permission. What can i do on my property without asking? 

Driving....

Here we have tax, insurance MOT. If i bought a car in spain, what would the running costs be? Can i use full uk driving licence? 

Are there common things people miss out when considering moving there? I want to be as clued up as possible. 

Hi Gsonn,

A friend said to me today that the only things cheaper in Spain than the UK are food and drink - I thought they were right, but then I thought..... how do you put a price on sunshine??  :o)

I won't repeat the items already covered in the link that Jim provided for you, but just to add two further items:

Healthcare - if you're working here and paying into the Spanish system, or of pensionable age and drawing UK state pension, then you will be able to access Spanish healthcare.  Otherwise, you may need to pay for private health insurance.

Assets/Income Tax - potentially, you'll also need to pay tax on your worldwide assets/income. If you live in Spain less than 183 days in each tax year, you'll pay a Non-Residents' tax based on the value of your property (this is in addition to IBI, which is the Spanish equivalent of Council Tax, and is often called Suma, although this is actually the name of the agency which collects the payments).  If you live here more than 183 days per year, you'll need to obtain a Residents' Green Card and pay your taxes here - this is based on a declaration of your worldwide assets and income.  Some things are exempt, such as UK Government/Military pensions, where the tax still has to be paid in the UK, and the amount paid is offset against tax due in Spain.  Some UK benefits are exportable to Spain.  The greatest consideration here is that the starting point for tax allowances in Spain is much lower than the UK, e.g. UK personal tax allowance is currently £11,500 p.a., whereas Spain's personal allowances start at only Eu 5,000.  It's worth taking specialist tax advice - any reputable tax advisor should offer an initial consultation at no charge.

Our tax advisors are Abaco.  Even if you don't feel you need specific tax advice, they have a really good website which covers all sorts of areas that you may find useful to read through: http://www.abacoadvisers.com/

It's also worth bearing in mind your "start up" costs beyond the obvious things like house purchase and removals.  Unless you have a pretty good command of Spanish, about the only thing you can do for yourself is to open a bank account, but for things like obtaining your NIE (foreigners ID number), obtaining Residencia (if applicable), paying taxes other than IBI, you're likely to need the services of a solicitor, accountant or gestor.  We don't have an equivalent of a gestor in the UK - they may be legally or financially qualified, but more usually they're neither; their skill lies in having a good understanding of Spanish administration and a network of contacts to cut through the country's bureaucracy, and their hourly rate is cheaper than the other two.  When you get to the point of needing such services, I'm sure you'll get good recommendations from this forum.

Kind regards,

Kim

wannaberetiree

Thu Mar 15, 2018 9:23am

Posts: 20

Location: Alcoy

1 helpful posts

Posted: Thu Mar 15, 2018 9:23am

french martini wrote:

Hi, you still have council tax but it's cheaper than the uk, electricity and water bills are charged also. My electricity bills are around 125€ a month but it varies depending on house size etc and usage.  You can't dig up your own land for any reason, if you wanted a pool then you need planning for that, in fact you need planning for everything really. Cars are expensive over here also so you have to budget a lot more even if you wanted a second hand a car. Insurance etc are on the same principal as Britain. Nicola :-)

Just curious about your electric bill... Here in the UK mine is around £30 per month but I live on my own. Yours seems astronomical in comparison, is that because of your house and family, or Nexus it is just more expensive in Spain?

Solar panel install I see is around 6000€ which would probably pay for itself fairly quickly?

wannaberetiree

Thu Mar 15, 2018 9:27am

Posts: 20

Location: Alcoy

1 helpful posts

Posted: Thu Mar 15, 2018 9:27am

Kimmy11 wrote:

Hi Gsonn,

A friend said to me today that the only things cheaper in Spain than the UK are food and drink - I thought they were right, but then I thought..... how do you put a price on sunshine??  :o)

I won't repeat the items already covered in the link that Jim provided for you, but just to add two further items:

Healthcare - if you're working here and paying into the Spanish system, or of pensionable age and drawing UK state pension, then you will be able to access Spanish healthcare.  Otherwise, you may need to pay for private health insurance.

Assets/Income Tax - potentially, you'll also need to pay tax on your worldwide assets/income. If you live in Spain less than 183 days in each tax year, you'll pay a Non-Residents' tax based on the value of your property (this is in addition to IBI, which is the Spanish equivalent of Council Tax, and is often called Suma, although this is actually the name of the agency which collects the payments).  If you live here more than 183 days per year, you'll need to obtain a Residents' Green Card and pay your taxes here - this is based on a declaration of your worldwide assets and income.  Some things are exempt, such as UK Government/Military pensions, where the tax still has to be paid in the UK, and the amount paid is offset against tax due in Spain.  Some UK benefits are exportable to Spain.  The greatest consideration here is that the starting point for tax allowances in Spain is much lower than the UK, e.g. UK personal tax allowance is currently £11,500 p.a., whereas Spain's personal allowances start at only Eu 5,000.  It's worth taking specialist tax advice - any reputable tax advisor should offer an initial consultation at no charge.

Our tax advisors are Abaco.  Even if you don't feel you need specific tax advice, they have a really good website which covers all sorts of areas that you may find useful to read through: http://www.abacoadvisers.com/

It's also worth bearing in mind your "start up" costs beyond the obvious things like house purchase and removals.  Unless you have a pretty good command of Spanish, about the only thing you can do for yourself is to open a bank account, but for things like obtaining your NIE (foreigners ID number), obtaining Residencia (if applicable), paying taxes other than IBI, you're likely to need the services of a solicitor, accountant or gestor.  We don't have an equivalent of a gestor in the UK - they may be legally or financially qualified, but more usually they're neither; their skill lies in having a good understanding of Spanish administration and a network of contacts to cut through the country's bureaucracy, and their hourly rate is cheaper than the other two.  When you get to the point of needing such services, I'm sure you'll get good recommendations from this forum.

Kind regards,

Kim

Hi there

So if I wanted to live in Spain full time I would have to pay my income tax in Spain and not UK even if my income is generated in UK? Is that correct?

I did some research and read that income from renting a house isn't taxed in Spain at all, would anyone be able to confirm or deny that please?

Andrew 😊

Kimmy11

Kimmy11

Helpful member

Thu Mar 15, 2018 9:44am

Posts: 491

453 helpful posts

Posted: Thu Mar 15, 2018 9:44am

Hi wannaberetiree (love that name!),

I have a rental property in the UK - I pay tax on the income in the UK. Because I live in Spain full-time, I declare the tax I've paid in the UK in my Spanish tax return, where it is offset against any Spanish tax liability.  My husband does the same thing for his military pension, which also has to be taxed in the UK and, again, the tax he pays is offset against his Spanish tax liability.

Kind regards,

Kim

wannaberetiree

Thu Mar 15, 2018 9:53am

Posts: 20

Location: Alcoy

1 helpful posts

Posted: Thu Mar 15, 2018 9:53am

Hi Kim

I see, thanks. So you don't then pay any income tax in Spain at all?

Kimmy11

Kimmy11

Helpful member

Thu Mar 15, 2018 10:37am

Posts: 491

453 helpful posts

Posted: Thu Mar 15, 2018 10:37am

Hi there,

I wish that was the case :o)  We still have to pay tax in Spain because the allowances here are much lower, e.g. personal tax allowance in the UK is currently £11,500 p.a. as opposed to €5,000 in Spain. There are a whole range of allowances that could apply, but this would need to be assessed based on your individual circumstances.

As Non-residents when we first moved here in 2016 (because we moved half way through the Spanish tax year, which runs from Jan to Dec, and so lived here for less than 183 days in that tax year), our tax liability was €114 and based on the value of our property here (note: this is an asset tax, not IBI, which is the Council tax). This year, we will be submitting our first tax return as Residents: the tax thresholds and allowances here are more complex than the UK, so I would recommend speaking with a specialist. I don't know what our bill will be yet, but based on discussions with our tax advisor, I expect to get one.  Even simple things like, for example, ISA savings, which are tax free in the UK, have to be declared in Spain and tax paid on the interest. And It's not worth failing to declare them, because the fines for doing so are punitive to say the least.

There are many Brits living in Spain "under the wire" and not paying asset/income tax, but a combination of the US's FATCA regulations, which were adopted by the EU in 2015, and the imminent Brexit, means that at recent British Consul meetings with ex-pats in Spain, we have all been told to "get legal".

In practice, I think this means that Spain won't be as affordable as it once was and it's something people will need to seriously consider before making the move.  But, personally, I don't think I could put a price on escaping the rain and not having to drive around the M25 every day :o)

Kind regards,

Kim

wannaberetiree

Thu Mar 15, 2018 12:57pm

Posts: 20

Location: Alcoy

1 helpful posts

Posted: Thu Mar 15, 2018 12:57pm

Hi Kim

That's really interesting, I've just been reading about it all. 

For me at least, I'll only be paying an additional 5% income tax by the look of it when I become a resident. While not insignificant it is still affordable, I'll just offset it against all the glorious sunshine and being able to spend about 90% more time outside walking or cycling!!

Thanks

Andrew 😊

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