Analysis

Spain Tries to Attract More Expats

Taxes are cut, but there’s not much the national government can do about overbearing bureaucracy.

Barcelona Spain
Skyline of Barcelona, Spain (Unsplash/Anastasiia Tarasova)

Maybe I left Spain too soon. The country is trying to lure (back) expats by cutting red tape and taxes.

Early in the pandemic, expats and tourists stayed away when Spain imposed one of the strictest lockdowns in Europe. For weeks, we weren’t allowed to leave our homes except to do groceries and walk the dog.

But as restrictions were relaxed, and teleworking became the norm Europe-wide, sunny Spain suddenly looked more attractive to knowledge workers in Northern Europe. Tens of thousands made the trek south.

Pedro Sánchez wants them to stay.

Proposals

His Socialist government unveiled proposals on Friday that would:

  • Enable entrepreneurs to register a new company online and without paying a fee.
  • Reduce corporate tax for startups from 25 to 15 percent.
  • Reduce nonresident income tax from 24 percent, or 19 percent for EU citizens, to 15 percent.
  • Exempt stock options worth €50,000 from income tax, up from €12,500.
  • Raise the tax deduction for investing in startups from €60,000 to €100,000.

There would also be more subsidies, in particular for women-led enterprises. Currently one in five Spanish companies are launched by women.

How Spain compares

One-day registration of startups is also an ambition of the new German government.

15 percent corporate tax in the first four years of positive earnings would put Spain in the bottom tier of EU countries.

Belgium takes 20 percent out of a company’s first €100,000 in profits. The Netherlands charges 16.5 percent on the first €200,000 and 25 percent on the rest. Business taxes in Germany vary from 23 to 33 percent, depending on the state. Italy charges 28 percent, France 30 percent (including social contributions).

15 percent income tax for nonresidents would similarly push Spain to the bottom of the list.

Bureaucracy

Surveys consistently find that expats value Spain for its culture, the weather and its work-life balance — but hate the bureaucracy.

That’s not something Sánchez can do a lot about. Most paperwork is handled at the regional level.

To get a residence permit in Catalonia, we had to bid for appointment slots that were made available only once a month. We would be waiting in front of our computers at noon on the day and hit refresh until the slots appeared. If you didn’t get one, you’d have to wait another month. (Nobody knew why it worked this way.)

The website didn’t list everything we needed to bring to the immigration office. Almost everybody I spoke to found out they lacked something. In our case it was Spanish health insurance. Luckily my husband speaks Spanish (the officials don’t, or won’t, speak English) and we were able to convince the man we would buy insurance that same week. I imagine not everyone gets the benefit of the doubt.

(Once you have a residence permit, by the way, you qualify for public health care and don’t need private insurance anymore, but it’s worth keeping if you can afford it. Private health care gives you more choice and it’s usually faster.)

Registering as self-employed with the Spanish tax authority required an in-person visit to the Barcelona office. So did registering with the Catalan social security administration.

Bilingual Catalonia at least provides English versions of most official documents online. Not all regions do.

Leave a Reply

Your email address will not be published.