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MOVING TO SPAIN

Swapping Dublin for Madrid: The right escape from Ireland’s cost-of-living crisis?

Seventy percent of young Irish people are considering moving abroad to escape Ireland’s worsening housing and cost-of-living crisis. Could Spain’s capital offer solutions to those seeking a new home? Irish Madrid resident Cormac Breen breaks down the costs.

Published: 21 November 2022 12:36 CET
Updated: 26 November 2022 13:48 CET
Swapping Dublin for Madrid: The right escape from Ireland's cost-of-living crisis?
Could swapping Dublin for the Spanish capital of Madrid be the right solution for Irish people looking to evade Ireland's cost-of-living and housing crisis? Photo: Diogo Palhais, Victor/Unsplash

More than a million people in Ireland (out of a population of 5 million) are struggling to make ends meet.

That’s according to the Irish government’s latest Behaviour & Attitudes (B&A) survey, which also saw four in five Irish people acknowledge that they have less money than a year ago. 

Ireland’s cost-of-living and housing crises are affecting young people in particular, so much so that another survey carried out for the National Youth Council of Ireland (NYCI) found that 70 percent of 18- to 24-year-olds in the country are considering moving overseas.

Finding a home to rent in Dublin for under €2,000 has become almost impossible, even small one-bedroom flats are going for €1,500.

So, could Spain’s capital offer what young Irish workers and graduates are after? Madrid is certainly an exciting and varied city with lots to offer, and although it’s not on the coast, it certainly boasts better weather than the Irish capital.

READ ALSO: Where do Spain’s Irish residents live?

Is it possible for Irish people to find work and accommodation in Madrid relatively easily and have enough money to cover costs and save up?

English teacher Cormac Breen, who swapped Dublin for Madrid, explains what his countrymen should factor in.  

Average wages

As of 2022, the minimum monthly salary in Spain stands at €1,166 gross for a 40-hour work week. Despite this, the average monthly salary in Madrid is about €2,000 gross, about €300 higher than the national average.

Comparing this to Dublin, where the average weekly wage in 2022 is €850 a week, or about €3,683 gross per month, it is clear to see that salaries are much higher in Ireland. 

Earning considerably less may worry you, but as you read through this article, you’ll see how you will also be spending less in Madrid than in Dublin.

Job prospects

You’re probably familiar with the fact that Spain isn’t renowned for its great career prospects, but native English speakers often find they can access jobs that aren’t as easily available to Spaniards.

Many of them work in the education sector as teachers, particularly in private language academies.

Salaries range from about €1,200 to €1,400 a month net for about a 30-hour working week but with fluency in English being such a sought-after skill in Spain, there are endless opportunities to supplement your income with private classes which can earn you about €15 to €25 per hour. After Brexit, there are fewer UK nationals who can move to Spain to work as language teachers, so young Irish people will find it easier to get work and take advantage of their EU status. 

READ ALSO: The most in-demand jobs in Spain in 2022

There’s also remote working for a company, Irish or otherwise, from Madrid. The rules on remote working from Spain are a bit of a grey area sometimes, but you will generally be expected to pay taxes in Spain if you settle here. 

The Spanish government is also set to introduce a new startups law and digital nomad visa which will go a long way to remove the current bureaucratic hurdles that exist for non-Spanish residents wishing to work remotely from the country. Although this visa is aimed at non-EU remote workers, there are parts of the legislation which are geared towards making Spain a better place to set up a business, including for Irish and other EU nationals.

READ ALSO: New self-employed workers in Madrid to pay no social security tax

Accommodation

Irish salaries are among the highest in Europe but so are rental prices, with Dublin in particular proving to be very expensive to live in (recent figures place the average monthly rent in Dublin at just under €2,000).

According to comparison website Expatistan.com, on average housing in Dublin is about 79 percent more expensive than in Madrid.

If you’re looking to rent a place for yourself, or to share, prices in Madrid city centre will of course be higher, especially in more touristy areas and trendy neighbourhoods such as Chueca and Malasaña.

Finding a place slightly outside the centre can often offer cheaper rents, and more modern buildings. Renting a studio flat will cost you about €800 to €1,000 a month while a one or two-bedroom apartment can cost upwards of €1,200 per month.

Sharing a room is the most economical choice in Madrid, with a room in a shared flat costing on average about €400 to €600 a month. 

It’s worth remembering as well that finding a place to rent in Spain’s big cities is also becoming harder than it was, even though prices and the lack of rental units isn’t as severe as in Ireland. 

READ MORE:

Maximilian Vitzthum

Madrid’s main street – Gran Vía. Photo: Gregor Schram/Unsplash

Utilities

Like most European countries, Spain has seen a sharp increase in the cost of utilities, with heating and electricity in particular becoming much more expensive. Even so, it may still work out to be cheaper than bills in Ireland, where the average household’s annual electricity bill in 2022 is expected to be €2,120.

All in all, you can expect to pay about €50 to €80 a month if you are sharing a flat in Madrid, with bills rising to about €100 to €130 per month if you rent a studio or one-bedroom flat.

Spanish homes normally have to pay for heating, electricity, water and internet access. How much you pay a month will largely depend on your usage, and whether you are sharing a flat or renting your own place.

Water tends to be the cheapest utility, costing about €10 to €20 per month. Shopping around can help you find the best deal on internet packages which often come with landlines or mobile services included. Prices start at €20 per month depending on whether you want to pay just for wi-fi access, and what speed of internet connection you want.

Transport

Dublin is the second most expensive city in Europe for public transport costs. Spain and Madrid on the other hand have recently introduced big discounts on public transport (or made it completely free) to help people deal with rising inflation.

Madrid has an extensive public transport network, incorporating metro, bus and light rail along with a range of individual options such as bike and scooter hire schemes. Having a car in the centre is not really necessary given the costs involved with parking and fuel, and most people prefer to take advantage of public transport as their primary means of commuting to work and moving around the city.

Transportes Madrid offers a range of options for those wishing to take advantage of the vast transport network, with the monthly pass by far being the most popular. For a 30-day pass, giving unlimited access to the entire transport network, prices start at about €25 for under 26’s, rising to about €55 for anyone above this age. In an effort to tackle costs, the transport authority introduced an almost 50 percent reduction on the cost of a 30-day pass meaning that someone under the age of 26 can expect to pay as little as €10 euro for their monthly pass, while someone availing of the standard rate now pays about €32.

READ ALSO: 12 Madrid life hacks that will make you feel like a local

The Crystal Palace in Madrid’s huge El Retiro Park, in the centre of the city. Photo: Maximilian Vitzthum/Unsplash

Enjoying life in Madrid

Dublin residents will know full well that eating out or having drinks can be pretty expensive. Not so in the Spanish capital.

From restaurants, museums, theatres and trendy bars to nightclubs, food markets and sports, Madrid has something for everyone.

And even if you’re on a tight budget, you won’t miss out on what this city has to offer.

A night out in Madrid usually involves food and alcohol. A glass of beer or wine in a modest city centre bar or terrace, can cost as little as €2 or €3 while a copa such as a gin and tonic, can cost about €7 or €8. Trendy wine and vermouth bars, cheap and cheerful cervecerías, late night dance bars, and some of the best nightclubs in Europe, Madrid’s nightlife has something for everyone.

A meal in a standard restaurant can cost from €20 to €25 for two courses and a drink between two people. For €12 to €15, you get a two-course meal, along with a dessert and drink as part of the popular menú del día. 

The city contains impressive and sometimes free public amenities, such as parks, gyms, swimming pools, sports pitches, museums, exhibitions, and theatres. A monthly gym membership costs between €20 to €40. Tickets to live music or cultural performances can cost as little as €10, but range upwards towards €100 for international acts. Madrid unfortunately lacks a beach, but it is very close to the mountains where you can enjoy hiking all year round, and for those with a bit of extra cash, skiing in the winter.

Madrid costs breakdown

With the above considerations in mind, here is how much you should expect to spend living in Madrid as a single person, renting a room in a city centre flat on a monthly income of about €1,600.

Rent: €600

Utilities: €50 – €80

Transport: €10 – €30

Food: €200-€300

Activities/Entertainment: €100+

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For members

TAXES

How foreigners in Spain’s capital can pay less tax with the new Mbappé Law

The regional government of Madrid is finalising the approval of the so-called Mbappé Law, a very favourable new personal income tax regime for foreigners who settle and invest in the Spanish capital.

Published: 23 April 2024 16:44 CEST
How foreigners in Spain's capital can pay less tax with the new Mbappé Law

Similar to Spain’s Beckham Law, introduced in 2005, this piece of legislation is named after a famous footballer who will be the first to benefit from lower tax rates, as will other foreigners in Madrid.

Kylian Mbappé is a French footballer who currently plays for Paris Saint-Germain, but looks set to sign for Real Madrid this summer.

The objective of the right-wing Madrid government of Isabel Díaz Ayuso is to attract more foreign investment to the region with beneficial fiscal rates.

READ ALSO – Beckham Law: What foreigners need to know about Spain’s special tax regime

Unlike the Beckham though, the Mbappé Law is only designed to benefit foreigners who move to the region of Madrid, it’s not open to those who want to move elsewhere in Spain.

Also unlike the Beckham law, foreigners will only be able to reap the rewards of the Mbappé Law if they invest money into the region. This could be in the form of investments in companies or in vehicles, but it cannot include investments in property.

Specifically, applicants will be able to deduct 20 percent of all the money they invest in the Madrid region.

The law applies to regional personal income tax, which accounts for approximately half of entire tax payments in Spain, since the other part corresponds to the State’s collection.

Normally, a foreigner like Mbappé will be taxed in the highest income bracket, as they will earn well over €300,000 gross per year.

When the law is finally approved however, Mbappé could avoid paying the regional income tax entirely, in the event that 20 percent of his Madrid investments represent the same amount that he would have had to pay in taxes on his salary.

READ ALSO: Why you should move to this region in Spain if you want to pay less tax

How will the Mbappé Law work?

For example, if Mbappé earned €40 million gross (not his actual salary), he would normally be charged €18 million in personal income tax.

Of this, 24.5 percent would correspond to the state tax, and this would have to be paid as normal. This means the state would collect €9.8 million from him in tax.

The change happens with the rest of the tax – the regional tranche. If he doesn’t make any investments, which now seems unlikely, he would have to pay €8.2 million in tax to Madrid.

If on the other hand the French superstar invested €40 million in Spanish companies or state bonds – he could deduct €8 million, which represents 20 percent of that amount.

This would mean that Mbappé’s tax rate would remain at 24.5 percent, a marginal rate that is slightly higher than the personal income tax for a worker who earns €20,000 and receives around €1,300 net per month.

As a percentage, of course, the amounts in Mbappé’s case are going to be huge. So, instead of paying €18 million in total, he would only pay €9.8 million.

Overall, this legislation signals that Madrid will become even more attractive to foreign investors.

By contrast, those who move to Catalonia will have to pay 25.50 percent in regional income tax, which added to the 24.5 percent of the state tax would increase personal income tax by half. So as a Real Madrid player Mbappé would earn €30.2 million, but if he signed for Barça he would pocket €20 million.

What’s the catch?

There are a few caveats to the new law, which primarily depend on how long you stay in Madrid. The new regulations establish that you have to stay and live in Madrid for a total of six years. If you leave before those six years are up, then you will be forced to return part of the tax savings you made.

What does this mean for Madrid?

The regional government of Madrid estimates that 30,000 foreign investors could choose to move to the region specifically in order to benefit from the new law and that it will cost the public coffers €60 million per year.

The idea is that Madrid will continue to attract foreign investment. Madrid’s leader Isabel Díaz Ayuso recently claimed that: “Two out of every three euros that arrive in Spain as an investment from abroad do so in projects that are developed within the Community of Madrid. In the last decade, the flow of investments has doubled”.

Madrid already has some of the best tax incentives in Spain. Residents pay less tax on their income, assets, inheritance and property transactions and conditions are beneficial to high-income earners in particular.

Financial experts agree that Madrid is among, if not the top region, with the most lenient tax system in the country, and when the Mbappé law comes into force, the region will benefit from even more incentives.

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