Pension in Spain: What Germans need to consider regarding taxes and co.

Pension in Spain: What Germans need to consider regarding taxes and co.
Pension in Spain: What Germans need to consider regarding taxes and co.

More and more Germans are moving to Spain for longer periods of time in their retirement. However, pensioners who move their life there permanently should consider taxes and insurance.

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They have come to stay longer: every year, numerous German pensioners are drawn to Spain, planning to spend a large part of their retirement there. The reasons are varied: the pleasant climate, love for the country and the mentality of the people. In many cases, the pension also moves with them: “The German pension insurance is currently transferring around 200,000 pensions to Spain,” says Katja Braubach, press officer at the German Federal Pension Insurance. In addition to old-age pensions, this also includes other pensions such as disability pensions or widows’ and widowers’ pensions.

Anyone who is thinking about having their pension transferred to Spain in the future should inform the pension insurance company in good time so that there is no interruption. “If a permanent change of residence is planned, the pensioner should inform the relevant pension insurance company at least two months in advance,” says Brauchbach.

The amount of the pension does not usually change if it is transferred to another EU country. However, there are some exceptions and special circumstances that can lead to reductions. This can be the case, for example, if the pensioner receives a disability pension that is not only for medical reasons, or if periods spent abroad were taken into account in the German pension insurance.

Center of life is crucial

Important to know: As long as a pensioner stays in Spain for less than 183 days a year and continues to reside in Germany, nothing changes in terms of pension and insurance. After this period has expired, however, he is obliged to report to the Spanish immigration authorities and register as a so-called “resident”.

This means that he is considered a tax resident in Spain. “But that says nothing about where the actual center of life is,” says Rainer Fuchs, lawyer and author of the guide “Carefree living under the Spanish sun.” But the center of life alone determines which national law the respective pensioner is subject to and what tax and insurance consequences this entails. “In any case, it is also important to consider how pensioners abroad are insured for health and nursing care,” says pension expert Braubach.

Medical treatments can be expensive

As soon as someone moves their main residence to Spain in retirement, this has an impact on their previous health care: the obligation to be insured with the statutory health insurance company in Germany remains in place even if they move to Spain, provided that compulsory insurance was in place here and the pension is drawn solely from Germany. In other words, the pensioner has the right to full and free medical treatment from the state health service in their new domicile – just as they did in Germany. However, the benefits granted are based on the usual standard in the new place of residence. This may be lower than in the home country. In addition, pensioners can no longer submit private doctor’s bills to the German health insurance company.

If a pensioner with statutory health insurance moves to Spain and receives a Spanish pension in addition to the pension from Germany, the compulsory insurance in the German health and nursing care insurance ends in parallel with the move. Instead, the person is admitted to the Spanish Seguridad Social.

Anyone who wants or needs to take out private health insurance in Spain should also bear in mind that it is often cheaper than in Germany. “However, it does not offer full insurance cover, is usually only valid in a limited area and excludes certain expensive treatments,” says Fuchs. Caution is also advised with Spanish private clinics: They are not subject to a fee schedule and can charge whatever they want for treatments. Foregoing medical insurance cover completely when emigrating is therefore not a good idea.

Plan your finances for retirement in Spain in advance

Pensioners who move their main residence to Spain must also expect changes in their tax system. If they move completely, they must pay tax on company pensions and other retirement income – apart from the statutory pension – according to Spanish tax law. The tax allowances granted in Germany therefore no longer apply.

What retirees in their prime should also bear in mind when planning to emigrate: Even if there are no major personal, health or financial difficulties at the time of emigrating, this can change over time. Issues such as the need for care or the death of a partner can arise. This can result in higher costs that could potentially throw the financial calculations into disarray.

Last but not least, language skills and good local social contacts are also important in order to feel comfortable in your new home. Mobility and good connections and supplies should also be guaranteed if you become less mobile yourself. “All of these aspects must be taken into account when planning to emigrate,” says Fuchs. He also advises trying out retirement life in Spain first, rather than packing up camp in Germany completely straight away. Emigrant forums can also provide guidance on the advantages and disadvantages of moving to Spain in retirement, where you can find helpful tips and insights into retirement life under the Spanish sun.

Source: Stern

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