Retiring to Spain, the readiness questions that differ

Terms used

• S1 — The S1 is a form that lets pensioners from EU/EEA states or the UK use Spanish public healthcare, paid for by the pension-paying state.
• INSS — The INSS is Spain's national social security institute, where you register an S1.
• Convenio especial — The convenio especial is a paid agreement with the regional health service giving public healthcare to people not otherwise eligible.
• IRPF — The IRPF is Spain's personal income tax, filed every year by tax residents.
• Agencia Tributaria — The Agencia Tributaria is Spain's tax authority.
• Dependencia — The dependencia is Spain's public system of care and support for people who cannot manage daily life alone.

Key rules

• Healthcare: Non-lucrative visa holders and most non-EU retirees without an S1 need full private insurance with no co-payments and no waiting periods.
• Pension tax: As a Spanish tax resident you declare your foreign pension on your annual IRPF return, and a tax treaty decides which country may tax it.
• Long-term care: Public dependencia care needs five years of legal residence, the last two immediately before you apply.
• Trial stay: Rent for several months, including a winter, before you sell your home or buy in Spain.
• Absence: Temporary residence permits can be put at risk if you are away from Spain for more than 6 months in a year.

Check these five things before you sell your home

Retiring is different from other moves. You may stay for decades, your health needs will grow, and a mistake is expensive to undo. Settle each point below before you sell anything. The decision, warnings and FAQ below the text cover the details.

Healthcare: pick your route

There are four ways to get care. Which one you can use depends on where you come from.

• S1 form. If you draw a pension from an EU or EEA state or the UK, you can register an S1 with the INSS. Spanish public healthcare is then paid for by the country paying your pension.
• Residency-based access. Legal residents with no other cover may qualify for public care. Some regions ask for a minimum period of residence first.
• Convenio especial. This is a monthly-fee scheme with the regional health service, for people who are not otherwise eligible. The fee is higher if you are over 65. It generally needs at least one year of registered residence.
• Private insurance. The non-lucrative visa and most residence permits for non-EU retirees without an S1 require it. The policy must be full cover, with no co-payments and no waiting periods. EU citizens without an S1 also need comprehensive cover to register as residents.

The convenio especial fee and the regional rules change, so ask the INSS and your regional health service for current figures.

Pension tax

Once you are tax resident in Spain, you are taxed here on your worldwide income. Your foreign pension counts as work income on your annual IRPF return, at progressive rates. There is no special exemption. Some lump-sum withdrawals may get a reduction.

Whether Spain or the paying country may tax you depends on the double tax treaty and the type of pension. The decision below walks through private, government service and state pensions. If the paying country does tax you, Spain gives a credit for the foreign tax. The credit is capped at the Spanish tax due on that income. Confirm your own case with the Agencia Tributaria or a tax adviser before you commit.

Long-term care

Spain's public care system for dependent people is called dependencia. You can use it only if you are legally resident. You must have lived in Spain for five years, and the last two must come right before you apply. You apply through the regional social services department. It assigns a grade of dependency from I to III. Benefits, waiting times and co-payments depend on the region. If you may need care soon after you arrive, plan to pay for it privately.

Car reliance

In villages and most coastal urbanizations, you will need a car. Villages often have few or no daily buses, and many urbanizations sit far from shops and clinics. Larger coastal towns and cities have buses. Some areas also have regional trains, such as Cercanías in Málaga and Alicante. Even there, evening and weekend services are limited. Many people who stop driving have to move closer to town, so choose a place where you could live without a car.

Distance from family

Isolation is one of the most common reasons retirees go home. It often happens after widowhood, illness or the end of driving. Weigh these before you choose a place:

• flight links to your family
• how well you speak the language
• the local social network
• access to healthcare

A place with an existing expat or local community lowers the risk. Rent for several months, including a winter, before you sell your home or buy in Spain.

Staying on your permit

If you hold a temporary residence permit, being away from Spain for more than 6 months in a year can put it at risk. Other permits have their own limits. Long-term residence is lost after 12 consecutive months outside the EU. Permanent EU residence cards are lost after 2 consecutive years outside Spain. Check the limit for your permit type before you plan long stays back home.

Choosing between options

Which country taxes your foreign pension once you are tax resident in Spain?

• Private pension: Fits a pension from a private scheme. Under many treaties it is taxable only in Spain, where you live, as work income at the progressive rates.

• Government service pension: Fits a pension from work for a government. It is typically taxable only in the country that pays it, with some exceptions.

• State social-security pension: Fits a state pension. Many treaties let the paying country tax it, but the UK treaty makes UK state pensions taxable in the country where you live.

Find the treaty between Spain and the country paying your pension, then match your pension type to it. If Spain may tax it, you declare it on your annual IRPF return and claim a credit for any foreign tax paid, up to the Spanish tax due.

What to watch out for

• Isolation can push you back home: Distance from family and isolation are the most commonly reported reasons retirees return home. The risk rises after widowhood, illness or when you can no longer drive. Rent for several months, including winter, before selling your home or buying in Spain. Check flight links to family, your language level, the local social network and healthcare access.

• Long stays away can cost you your permit: Residence permits have their own limits on time away from Spain. Long-term residence is lost after 12 consecutive months outside the EU, and a permanent EU residence card after 2 consecutive years outside Spain. Check the absence conditions for your permit type before planning long stays abroad. The limit for temporary permits is set out in Ageing parents or shared custody, can you really move?

Check the absence conditions for your own permit type with the immigration office.

Frequently asked questions

Can I get Spanish public healthcare as a retiree?

Yes, you can get Spanish public healthcare if you hold an S1 form from an EU/EEA state or the UK, qualify through legal residence, or pay into a convenio especial. The convenio especial is a monthly payment to the regional health service and generally needs at least one year of registered residence. Non-EU retirees without an S1 usually need a full private policy with no co-payments and no waiting periods.

Will I pay tax twice on my foreign pension?

Usually no, because Spain gives a credit for foreign tax you have paid, limited to the Spanish tax due on that income. You declare the pension on your annual IRPF return, Spain's income tax return.

Can I use Spain's public long-term care (dependencia) as a foreign retiree?

Yes, but only if you are legally resident and have lived in Spain for five years, two of them immediately before you apply. You apply to your regional social services department, which assesses your level of dependency from grade I to III.

Can I live in a Spanish retirement area without a car?

Only in larger coastal towns and cities, where bus networks and some regional trains exist. Rural villages and most coastal urbanizations depend heavily on a car, and even town services are limited in the evenings and at weekends. People who can no longer drive often have to move closer to town.