It’s all change in Spain as British, German and Scandinavian expats are leaving in droves – to be replaced by a flood of Russians.
The problem for European expats is Spain’s new law that means any tax resident expat has to declare assets worth more than £39,750 (50,000 euros) held overseas.
The Spanish National Institute of Statistics (INE) reports a 7.8% drop of the number of expats living full time in the country – around 500,000 people.
Only tax resident expats are counted in the figures and have to declare their assets. To be tax resident, expats have to spend at least 183 days a year in the country. Those that do not remain tax resident in their home country.
Buying a golden visa
INE clarified the figures with some detail:
- The British expat population in Spain reduced by a quarter
- The number of German expats dropped by 24%
- French expats in Spain decreased by 13%
However, the number of Russians opting for a ‘golden visa’ increased to more than 60,000, making them the seventh largest expat community in Spain.
Non-European Union residents can buy residency in Spain by spending at least £400,000 (500,000 euros) on a home or investing £800,000 (1 million euros) in a business.
INE also points out that other factors may also affect the numbers of expats from specific countries.
The downturn in the economy and unemployment running at 25% has seen many businesses close, while plunging house prices have left many expats in negative equity.
Declaring offshore assets
While falling house values have sent many EU expats packing, properties are cheap for the rising nouveaux riche Russian middle class.
Businesses are suffering badly in the smaller coastal towns. Torrevieja’s population is down by 15,000 this year, while Calpe has lost 5,000 expat residents.
However, the effect of the law forcing expats to declare their assets should not be underestimated.
The financial thresholds mean any British, German or French expat owning a home outside Spain easily exceeds the limits and must declare all their savings, assets and investments.
After the first declaration, expats only have to refile the notice if their offshore holdings increase by £16,000 or more a year (20,000 euros) – but with house prices showing double-digit growth in the UK, this is easily exceeded by owning anything other than a modestly priced home.