How Much Does It Cost to Live in Spain?

Spain is the largest country on the European continent and a crucial member state of the European Union. It rightfully holds the status of one of the most sought-after immigration destinations among citizens of post-Soviet countries. With a comfortable climate, decent living standards, and rich cultural heritage – in the eyes of many potential migrants, Spain appears as a paradise. But is everything so idyllic, and what should one be prepared for when planning to move? To get a clearer picture, let's look at the main pros and cons of living in Spain.

Pros of Living in Spain

Pros and Cons of Living in Spain: What to Expect When Moving?

Millions of people from all corners of the world dream of moving to Spain. And it's no wonder, considering the wide range of benefits of living in the country:

• High standard of living – As Spain is a member of the European Union, it offers decent salaries and a well-developed social security system.
• Unique climatic conditions – The country enjoys a predominantly Mediterranean mild climate, which is not only comfortable but also beneficial for health.
• Wide opportunities for domestic travel – Spain is full of vibrant cities, beautiful nature, picturesque coastlines, and numerous attractions.
• Impressive cultural heritage – If you are an art lover and enjoy various cultural sites, you will surely find Spain fascinating.
• Developed education system – Spain is home to several prestigious European universities: the University of Barcelona, the Autonomous University of Madrid, the Complutense University of Madrid, and the Polytechnic University of Catalonia. Obtaining an education is one of the accessible ways to immigrate to the country.
• Relatively low real estate prices – Compared to other Western European countries, real estate in Spain can be purchased at a price affordable to immigrants. Moreover, investing in real estate is the fastest way to obtain a residence permit and, eventually, a Spanish passport.
• High-quality roads and well-developed transportation infrastructure – This ensures convenient connections between regions.
• Developed healthcare system – Modern public clinics are available both in major cities and provinces. The right to free medical care is granted not only to Spanish citizens but also to working foreigners and residents with Spanish registration.

Cons of Living in Spain

Despite Spain being rightfully considered one of the most promising and comfortable countries for immigration, moving to this country also has some less appealing aspects. Among the main cons that should be considered:

• Unstable political situation – The problematic situation in Catalonia increases the risks for investments in the country and negatively affects its economic development.
• The necessity of having a good command of the Spanish language – Without knowing Spanish, finding a decent and qualified job is nearly impossible. The language is not easy to learn, requiring considerable time and effort from foreigners. For a comfortable immigration experience, it is advisable to know Spanish at a level of at least B1.
• Inconveniences due to the specific work schedule – During siesta, many establishments close for several hours. Additionally, shops and pharmacies may not be open in the evenings, on weekends, and during holidays.
• High cost of telecommunications and utilities – Mobile services, internet, and all types of utilities are quite expensive. Moreover, not all homes are equipped with central heating.
• Waiting times in medical institutions – To receive free services, one may have to wait several weeks. The only alternative is private medical centers.
• High taxes – Spain has higher tax rates compared to other European countries. Many of these taxes are progressive, increasing as income rises. Furthermore, each of the 17 regions of the country can set its rates and tax levies.

Work and Salaries

Unemployment has traditionally been a pressing issue in Spain. Although the situation has improved since the 2013 crisis, the current average unemployment rate remains around 14-15% among the entire population and nearly 30% among the youth. The job market is highly competitive, not only because of local citizens but also due to residents of the European Union who can work in Spain without special permits and visas.

To legally gain employment, a foreigner must complete several steps:

1. Find a vacancy.
2. Sign an official contract.
3. Obtain a work permit.
4. Secure a long-term visa.

The entire procedure can take up to 6-8 months.

Spain has a high demand for qualified professionals such as doctors, programmers, engineers, and teachers. There is also a traditionally high demand for unskilled workers, such as caregivers, housekeepers, nannies, and harvesters.

Legal employment guarantees workers a minimum wage, regardless of contract conditions, age, or the nature of the work. The minimum wage is €1,050 per month. For comparison, this is 50% higher than in Poland, but just as much lower than in Germany.

The average salary is about €1,925 before taxes. It varies depending on the region and field of employment. For instance, the highest average income is in Barcelona – €3,700. The lowest average salaries are found in Murcia – around €1,650.

Employers are responsible for withholding taxes and social contributions from employees' earnings.

Overview of Real Estate Costs in Spain: Taxes, Fees, and Service Payments

On our GARANT estate website, we provide detailed coverage of various issues related to the sale of European real estate. Special attention is given to countries with active Golden Visa programs, as statistical data shows that investors from third countries obtain this visa mainly through real estate purchases.

However, when acquiring real estate (whether for obtaining a residence permit or for other reasons), taxes must be paid! This occurs during the purchase, the ownership period, and upon sale.

What are these taxes? How many are there, and who is responsible for them? What are the rates of these taxes? These are not trivial questions and are of great interest to every investor.

Need accurate information? — Our specialists have it!

Firstly, it should be noted that this material should not be considered an accurate and reliable legal document. It provides only basic information about Spanish real estate taxes. The data provided often changes, as the country's authorities, and even individual municipalities, adjust their tax policies. Nevertheless, the article will give readers a picture close to reality. To understand the nuances and obtain accurate data needed in each specific case, our specialists, who have extensive experience in real estate and are aware of all current changes, will be able to assist.

How does the country's real estate market look in Europe?

Spanish real estate is known in Europe for being quite affordable. To avoid being unfounded, we present a table with data from the Global Property Guide. The table shows the average prices per m² as a percentage, with the Spanish price level taken as 100%.

• Spain – 100%
• Austria – 193%
• Germany – 118%
• France – 257%
• Netherlands – 138.6%
• Italy – 132.4%
• Portugal – 73%
• Greece – 71.5%
• Cyprus – 33%

The taxes paid by property owners in Spain can also be considered moderate compared to the rest of Europe. Let's examine them, step by step: from purchase to maintenance, and to sale.

Costs During Property Purchase

In Spain, the taxes during the transaction are divided between the seller and the buyer, although this division is not equal. The seller pays only for real estate agency services. The buyer, however, must pay:

• VAT (IVA);
• property transfer tax (ITP);
• notary fees;
• registration fee;
• stamp duty (AJD).

This list is not universal; it mainly depends on whether you are buying a brand-new property or are interested in a resale, as well as the property type (residential or commercial real estate).

Value Added Tax (IVA)

This tax is paid only by buyers of new properties being sold for the first time, as well as when purchasing land plots or commercial real estate. In the first case, the tax rate is 10%, and in the second case – 21%.

Important! When a commercial property is purchased by a legal entity, VAT is refunded to the buyer within 30 days. However, there are certain exceptions to this rule in some municipalities.

Property Transfer Tax (ITP)

This applies only to buyers on the resale market. The tax rate varies significantly across different regions of the country and can range from 6% to 11%.

Examples of regions with the lowest ITP: are Álava, Bizkaia, Madrid, and Navarre.

Regions with high ITP levels: Andalusia, Balearic Islands, Valencia, Catalonia, Extremadura.

Additionally, there are several regions where this tax is not fixed but is calculated based on a certain scheme: it increases as the value of the property rises. For example, in Extremadura, the tax rate varies from 8% to 11%. Similar schemes operate in Aragon, Asturias, the Balearic Islands, and a few other places.

ITP is paid to local tax authorities or, in their absence in a settlement, to the government body that registers the transaction.

Notary Fees

The size of these fees ranges from 0.03% to 0.45% and increases with the property's value. The most common rate is 0.1%, applicable to properties valued between €60,000 and €150,000.

Important! If the property's value exceeds €601,000, the buyer and the notary have the right to agree on the fee amount contractually.

Registration Fee

This is a sort of tribute to the state treasury for the service of registering the new owner. The fee amount ranges from 0.02% to 0.175% of the property's value. Like the previous fee, this one increases as the property's price goes up.

Stamp Duty (Actos Jurídicos Documentados, AJD)

Its size also depends on the autonomous region and varies from 0.5% to 1.5% (in Madrid – 1.5%).

In summary, the additional costs for the buyer during the transaction process average 8-10% of the property's price.

Maintenance Costs

The list and size of all expenses, like with taxes during the purchase, are not universal and depend on several factors, namely:

• the owner's status (resident or non-resident of Spain);
• how the property is used (for residence or rental);
• the region and municipality;
• the property's status (commercial or residential).

What are the main taxes and payments an investor who has purchased property in Spain should expect?

Property Tax, or "Municipal Tax" (Impuesto sobre Bienes Inmuebles, IBI)

This tax is paid by both residents and non-residents, at a rate of 0.405% to 1.3% of the cadastral value, and it varies in each region. It should be paid quarterly, although it is considered an annual tax. For example, in Madrid, the tax rate is 0.6%, in Barcelona – 0.825%, in Valencia – 1.071%, in Tarragona – 1.02%. In nominal terms, this typically amounts to €200 to €800 per property.

Important! The cadastral value of a property is almost always significantly lower than its market value.

Wealth Tax (Impuesto extraordinario sobre el Patrimonio, IP)

This tax applies only to non-residents. For properties valued up to €167,000, the tax rate is 0.2%. It gradually increases with the cadastral value and reaches 2.5% if the property exceeds €10.7 million.

Income Tax from Rental

This is paid by property owners who rent out their houses and apartments. The tax rate is fixed at 24% of the gross income generated by the rental if the owner is a non-resident. If the investor has already become a resident (i.e., lives in Spain for at least 183 days a year), they pay slightly less – 19% to the state treasury. This tax is also paid quarterly. The tax amount can be effectively reduced by deducting depreciation costs and utility bills from it.

Insurance

Those investors who bought property using mortgage funds must deal with this for sure. In this case, the bank that lent you money requires insurance. Understandably, the insurance amount can vary, but – for orientation – it will be around €300 per year for a property worth approximately €170,000-180,000.

Utility Bills

The lion's share of these costs consists of payments for electricity, gas, water, heating, and internet with television. On average, the total annual amount of these payments will be:

• for apartments – €1,000-1,700;
• for houses – €1,300-2,400.

Community Services (Comunidad)

In Spain, these services include maintaining the surrounding area (cleaning entrances, garbage collection, ensuring elevator operation, garden maintenance, etc.). In the case of private homes, community functions are performed by management companies with which each homeowner signs a separate contract. On average, each apartment in a multi-story building pays the housing cooperative €300-1,000 annually.

If we are talking about a private house, the management company's services will be much more expensive, from €1,600 to €3,200 annually. The significant difference compared to apartments is mainly due to the costs of garden and pool maintenance (if available). Of course, these tasks can be done independently, and then the payments to the company will be significantly lower.

Utility payments and community services can also be sharply reduced if the property is used only during the warm period of the year, which is often done by property owners who purchase real estate within the Golden Visa program.

Conclusion

Thus, we have shown the costs that an investor purchasing real estate in Spain will incur. As already mentioned, the amounts and tax rates are subject to frequent changes.

On our website, we monitor these changes and regularly report them. We are confident that the information provided in this material will be useful to our clients and readers of the website.