Posted on: 10th January 2025

Checklist for Expats: Managing Your Finances Abroad

Moving to a new country can be exciting, but managing your finances as an expat requires careful thought and planning.

Whether relocating for work, retirement, or a fresh start, understanding how to handle your money effectively will make life abroad much smoother.

If you’re planning to settle in Spain, this guide is for you. Here’s your friendly checklist to help you stay on top of your finances while enjoying your new life.

Understand Your Tax Obligations

Your tax situation is one of the first things you need to accept. Tax laws vary by country , and it’s essential to understand what applies to you. For example, spending more than 183 days in Spain in a calendar year usually makes you a tax resident. This means you’ll be taxed on your worldwide income—not just what you earn in Spain.

To avoid paying tax twice, check if there’s a double taxation agreement between Spain and your home country. These agreements can help ensure you’re not taxed twice on the same income.

It’s also a good idea to seek advice from a tax expert who understands both countries’ systems.

Open and Manage Bank Accounts

Having a local bank account is essential for managing your day-to-day finances. It’ll make it easier to pay bills, receive income, and avoid hefty fees for international transactions. Shop around for a bank that offers low fees, online banking in English, and good customer service.

If you need to transfer money between your home country and Spain, look for services that offer competitive exchange rates and low fees. Some popular platforms include Wise and Revolut. These services can save you money compared to traditional banks.

Optimise Your Investments

Your investment strategy may need to change when you move abroad. Tax-efficient investments in your home country might not work the same way in Spain. For instance, UK Individual Savings Accounts (ISAs) are not tax-efficient in Spain and may even be taxable.

Consider looking into Spanish-compliant investment bonds. These can offer tax advantages and simplify reporting to Spanish tax authorities. Consult a financial adviser who specialises in expat finances to ensure your portfolio is optimised for your new situation.

Plan for Retirement

If you’re thinking about retirement, planning is crucial . Depending on your home country, you may be able to transfer your pension to a scheme that’s more tax-efficient in Spain.

Options like Qualifying Recognised Overseas Pension Schemes (QROPS) or International Self-Invested Personal Pensions (SIPPs) might be worth exploring.

You should also check how living abroad affects your state pension. You’ll still be able to claim it in many cases, but you might not get any increases applied to pensions paid to residents in your home country.

Speak to a pension adviser to understand your options.

Address Estate and Succession Planning

Estate planning can be more complicated when you’re living abroad. In Spain, inheritance laws are different from those in the UK and other countries. For example, Spanish law imposes rules about dividing your estate, often prioritising children over spouses.

It’s vital to draft or update your will to reflect these laws. Be aware of Spain’s succession tax, which varies by region and can be significant. Planning can help minimise these costs and ensure your wishes are respected. Again, professional advice is invaluable here.

Secure Adequate Insurance

Insurance is a must when living abroad. Spain has a public healthcare system, but as an expat, you may not be automatically eligible. Comprehensive health insurance is essential to ensure you’re covered for routine and emergency care.

If you plan to explore neighbouring countries, you’ll also want to consider other types of insurance, such as life insurance, home insurance, and even travel insurance. Ensure your policies provide the coverage you need and check whether they meet local requirements.

Seek Professional Financial Advice

Navigating finances in a new country can be daunting, but you don’t have to do it alone. A qualified financial adviser who understands both your home country’s system and Spain’s can offer tailored advice to suit your situation.

Ensure the adviser is appropriately licensed and regulated in Spain. Regular check-ins with your adviser can help you stay on track as your circumstances change.

Stay Updated on Legal and Regulatory Changes

Financial rules and regulations can change, so staying informed is essential. Changes in tax laws, residency requirements, or financial regulations could affect your plans. Keep an eye on updates from reliable sources, such as government websites or expat forums.

Being proactive about staying informed will help you avoid surprises and stay compliant with local laws.

Take Control of Your Money

Managing your finances as an expat may seem overwhelming, but with careful planning and advice, you can take control of your money and enjoy your new life abroad. From understanding tax obligations to securing insurance and optimising investments, this checklist covers the essentials to help you succeed.

Remember, professional advice can make all the difference. Take the time to plan correctly, and you’ll be well on your way to a financially secure and fulfilling experience in Spain or wherever your expat journey takes you.