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The downsides of moving to Spain for work

Spain is an amazing country to live in but it’s important to be aware of the drawbacks that exist for people looking to further their careers here.

The downsides of moving to Spain for work
Photo: AFP

*This article was originally written in December 2019 before the Covid-19 pandemic

For a news website which aims to bring greater understanding of Spain to English speakers who have chosen it as their home or are planning to, writing about the more negative sides of life in España can feel a bit like sacrilege. 

After all, no country is without its faults, and for all the World Happiness Indexes that put countries such as Denmark, Finland and Switzerland on the podium, Spain is for many foreigners and proud Spaniards a country that oozes calidad de vida (quality of life).

That’s the chief reason why the recent HSBC Expat Explorer Survey ranked it in fourth position globally as the best country to move to for foreigners, only behind Switzerland, Canada and Singapore.

Respondents already living in Spain gave it sky-high scores for “quality of life”, “physical & mental wellbeing”, “cultural, open and welcoming communities”, “political stability” (despite there being four general elections in four years) and “ease of settling in”.

The “little expat” scores reviewing what it is like for foreign families with children in Spain were equally encouraging: second best globally for “learning” and making “friends”. 

The quality of life in Spain is undoubtedly good. Photo of Granada: Kristoffer Trolle/flickr

But, and it’s a very big but, Spain’s Expat Explorer scores for the “aspiring” category focusing on work matters were far less encouraging: 21st for “income”, 27th for “disposable income”, 14th for “economic stability” as well as a lowly 33rd place for “career progression” and 28th for “reaching potential”.

Another survey by Internations drew a similar conclusion: Moving to Spain will make you happier and healthier, but there’s a downside (no brownie points for guessing what it is now).

So there you have it. In a nutshell: life in Spain is good, work in Spain is bad.

Does that mean that if you move to Spain for work you’re destined for a life of poverty and feeble working conditions? Absolutely not. 

In fact, your language skills – English or otherwise – could be what make you stand out in a competitive job market famed for its chronic unemployment.

And we’re not just talking about language teaching, there are plenty of companies with international operations in Spain that will be willing to pay (fairly) well for your services.
However, the overall consensus is that Spain has a lot to improve on when it comes to work matters.

If you’ve been thinking of moving to Spain but you’re unsure about what awaits you regarding work, here is some more detailed information that could help you make your mind up.

Lower than average salaries

The average Spanish salary before tax is €1,658/month compared to the EU28 average of €2,091/month. That makes Spain the country with the lowest pay in Western Europe, with only Portugal below it (€997/month).

Sure average living costs are on average lower than in neighbouring countries, but recent data by the Bank of Spain and the country’s National Stats Agency (INE) show that whereas wages have only gone up by 1.3 percent since 2013, rents have increased by 30 times that in the same period.

This is particularly true in big cities such as Madrid and Barcelona and popular tourist spots such as Ibiza, Mallorca and Tenerife.

Stunted career aspirations

It’s worth noting that the HSBC study mentioned earlier in which Spain came 33rd for “career progression” included 33 countries, so Spain came rock bottom in that category.

In the Internations study, three in ten expats (29 percent) said they were disappointed with their career prospects in Spain (vs. 24 percent globally).

According to Barcelona University economics professor Gonzalo Bernardos, there isn’t a system of meritocracy applied in Spanish companies.

This, along with the other drawbacks of working in Spain, means that the main reasons foreign professionals end up coming or staying in the country are either personal or because they set up their own business.

It’s perhaps understandable that in a country where unemployment and job instability have been a mainstay, there is an unspoken attitude of protectionism when it comes to who gets to move up the ladder.

Painfully slow bureaucracy

This is a serious problem for foreign professionals whose occupation has to be recognized and regulated by Spanish authorities and/or a governing body: doctors, vets, nurses, pharmacists, physiotherapists, architects, lawyers, engineers, academics etc

Spain has always had slow and long-winded bureaucratic processes but the arrival of thousands of Venezuelans escaping their crisis-hit country in the last few years has made matters much worse as the Spanish ministries charged with degree recognition struggle to keep up.

For a person with a non-EU qualification in one of these regulated occupations, the current waiting period is two years and in many cases even longer.

That’s compared to 3 to 4 months in countries such as the Netherlands or Germany.

For the recognition of an EU qualification the waiting period is less but the process could still end up taking 6 to 8 months.

Less job security

Even though Spain has put the worst of the economic crisis behind it (when a quarter of the country’s working population was out of work), the economic model remains the same: a service-based economy that’s largely reliant on tourism.

This means a lot of the work being created is still largely seasonal and fails to offer Spaniards, especially under 25s, any sort of job stability.

The proliferation of zero-hour contracts and “falsos autonomos” (‘fake self-employed people’ as they’re referred to in Spain, given that they’re working full-time without getting their social security paid for them by companies) has only meant that workers in Spain have fewer rights than ever.

A 2018 study by the European Trade Union Institute reported that Spain had the worst working conditions in the EU with only Greece and Romania receiving a worse score.

READ MORE: ‘Think hard before going self-employed in Spain’

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For members

PENSIONS

What Brits should know about SIPP and QROPS pensions if moving to Spain

This Q&A offers some key information on SIPP and QROPS pension plans for British pensioners thinking of retiring in Spain, to help them decide which option is better for them.

What Brits should know about SIPP and QROPS pensions if moving to Spain

Q: What are SIPPs?

A: SIPP stands for Self-Invested Personal Pension and is a UK-based pension plan. If you open an international SIPP then you can draw from this while you’re living in Spain.

Q: What is QROPS?

A: QROPS stands for Qualifying Recognised Overseas Pension Scheme. It allows you to transfer your UK pension out of the country. They are outside the UK tax regime, but must be inside the European Economic Area (EEA) if you want to avoid charges from HMRC. They also need to have similar rules and regulations to a UK-registered pension plan. Many QROPs from those wishing to retire to somewhere in Europe are transferred to Malta. As there is a dual tax treaty between Spain and Malta you will not be subject to Maltese tax when you draw your pension from there.

Q: What do I need to consider when opening a SIPP?

A: If you choose to open a SIPP, as it is self-invested, you will be responsible for managing it and making all the investment decisions. It is therefore best for those who already have some knowledge of investing or those who have the time and who are willing to put the work in to learn. It does, however, mean that you also have greater control and flexibility over your finances. You can choose to have the SIPP managed by a professional advisor, but of course this is an extra expense. Your SIPP could also be potentially subject to UK tax laws. 

Q: What do I need to consider when opening QROPs?

A: This is best for those wishing to cut all ties with the UK and permanently retire to Spain for the rest of their lives. You could lose UK domicile if you choose to do this and don’t have any other assets there, but it could mean you could also avoid UK inheritance tax. It’s also ideal if you wish your family also live outside of the UK

Q: I intend to return to live in the UK at some point in the future, which is best for me?

A: As SIPPs are UK-based, if you plan on returning there to live at some point during your retirement, that option is best. If you have QROPS, you could be subject to a large tax payment if you want to transfer it back to the UK.

READ ALSO: Six factors British people need to consider before retiring to Spain

Q: Which option will be cheaper for me?

A: SIPPs are generally cheaper than QROPs as you are managing it and investing yourself. If you choose someone else to manage it for you, however, this may not be the case.

Q: Will my SIPP be subject to tax in Spain?

A: Yes, if you are resident in Spain then you must follow Spanish tax regulations meaning that any withdrawals from SIPPs will be subject to income tax here. Pensions in Spain are subject to progressive tax rates ranging from 19 to 47 percent.  While SIPPs are also subject to UK tax rules, due to the double tax treaty between Spain and UK, you will not be taxed twice.

Q: Will my QROPS my subject to tax in Spain?

A: Yes, again if you’re resident in Spain you will be taxed on pension income. You must report income from a QROPS on your annual tax return. If you’re already a Spanish tax resident when you move your pension, it’s important to be aware that you’ll pay Spanish income tax on the whole value of the fund, therefore it’s much better to move it beforehand and then make your permanent move to Spain. 

Q: I want my pension to be paid in Euros to avoid exchange fees, which option will be best for me?

A: If you want to be paid in Euros, then QROPS will be the best as you will have completely transferred it out of the UK and into the EEA. This means that when you draw your pension, it will be paid out to you directly in Euros.

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