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Visas and money: 10 things you should know about Spain’s IPREM index

If you have ever tried to apply for a Spanish visa or you live here and have tried to get financial aid, you will have probably heard of the term IPREM. But what exactly is it? Here's what you need to know about the IPREM and how it affects foreigners.

Published: 9 July 2024 10:39 CEST

Visas and money: 10 things you should know about Spain's IPREM index

The IPREM index is important for many foreigners in Spain. Photo: John Schnobrich/Unsplash

What is the IPREM?

IPREM stands for Indicador Público de Renta de Efectos Múltiples, and it’s essentially a government index used to establish the limits for state aid, as well as a base level income in order to qualify for certain types of visa (more on that below).

The IPREM was actually created to replace Spain’s minimum income as the index for granting benefits, and it’s roughly half the state-mandated minimum wage (known as Salario Mínimo Interprofesional).

What’s it used for?

The IPREM is used as an index or threshold for government aid, whether it be unemployment, grants, school grants, certain subsidies for the purchase or rental of housing, legal aid, or energy subsidies.

This means, for example, that if you want to apply for a grant, it is possible that one of the requirements is that the income of the person applying for the grant, or of their family unit, does not exceed a certain amount per the IPREM.

The IPREM changes every year

In order to keep pace with inflation and changing prices, the IPREM is updated by the government every year.

So if you’re applying for state aid, or a certain type of visa that requires proof you earn more than the IPREM (though in many cases, it will be 3 or 4 times the IPREM), make sure you’re looking at the latest year.

How much is it worth in 2024?

Saying that, unusually this year the IPREM for 2024 actually stayed the same as it was the previous year (which is rare) because the government didn’t have an official budget.

As such, for 2024 the IPREM is €600 per month, €7,200 per year or €8,400 for 14 payments (as is often the case in Spain).

You need to know about the IPREM to get Spain’s non-lucrative visa

IPREM is used as a minimum income scale for non-lucrative applicants, who need to prove that they have 400 percent of the annual IPREM.

The annual IPREM is €7,200, so four times this amount is a total of €28,800. For every family member included in the residency application, it’s an extra 100 percent of the IPREM, which is an extra €7,200 for the year.

This means that a couple will need to prove savings or passive income of €36,000.

According to the Spanish government website: “The applicant must submit the originals and a copy of the documents proving that they have sufficient financial means to cover the expenses of residing in Spain for the initial year of the residence permit, or accrediting that they have a regular source of income, for themselves and, where applicable, for the family members accompanying them.

“The minimum required amount is equivalent to 400 percent of Spain’s IPREM. To this amount must be added 100 percent of the IPREM for each family member in the applicant’s care.”

So, you’ll need to be able to prove an annual income of at least €28,800 to enter the country on the NLV.

The IPREM is used for Spain’s Golden Visa requirements

Although Spain has announced it will be scrapping the golden visa through real estate, for now, it’s still available. To be eligible you need to invest in property worth €500,000 or more, or invest €1 million in shares in Spanish companies or have that much in a Spanish bank account.

On top of this, you need to prove that you have at least 400 percent of the IPREM a month to live on. This means €2,400 per month in 2024.

It’s also used as a financial reference for getting a student visa

If you are applying for a student visa, you will also need to prove you have money to live on. The requirement for this is 100 percent of the IPREM per month, which in 2024 is as you know is €600. If you are bringing family members with you to Spain, you will also need 75 percent of the IPREM for the first one and 50 percent for each additional family member.

Although this is not really enough to live on in most big Spanish cities, it’s a starting point. You are also allowed to work up to 30 hours per week for additional income.

The IPREM is used for allocating social housing in Spain

IPREM is also used as an income threshold for accessing social housing in Spain.

Though each region in Spain has slightly different requirements, they are generally:

You must be of legal age
You must be legally registered in your region
You cannot already own your own home
Your income as a family must not exceed 5.5 times the IPREM.

So, as the IPREM is €600 per month, in order to qualify, your household income cannot exceed €3,300 per month.

You must be able to prove your income with a certificate from the tax agency, as well as the income of all members of your family unit.

IPREM is also linked to unemployment benefit

The IPREM is closely related to unemployment benefits in Spain (known as el paro), as it is used to establish the maximum and minimum limits received.

These were tweaked slightly by the government in recent months, so from November 1st 2024, the amount of benefit received will decrease in accordance with the periods of time spent receiving it.

During the first 180 days on unemployment, 95 percent of the IPREM (€570 per month)
From the 181st to the 360th day: 90 percent of the IPREM (€540)
From day 361 and until the end of the period: 80 percent of the IPREM (€480)

Digital Nomad Visa

The Digital Nomad Visa or DNV is in fact not linked to the IPREM, the the NLV. It’s connected to the minimum wage instead, which is slightly different. The monthly minimum wage for 2024 is €1,323 gross per month (over 12 payments), which is different from two times the IPREM.

You need 200 percent of the minimum wage to be eligible for the DNV. Find out more about the financial requirements for the DNV in 2024.

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Navigating Spain's real estate market: A guide for American homebuyers

Buying a residential property in Spain can be an exciting yet complex endeavour, especially for American buyers unfamiliar with the intricacies of the Spanish real estate system.

With varying regulations at the state, regional, and local levels, it is crucial to be well-informed and well-prepared.

In this article, Maryem Essadik, immigration lawyer and head of English-speaking international law firm Marfour, offers US nationals a breakdown of the key considerations when buying a Spanish property.

Legal Complexities

Spain’s legal framework for real estate transactions is multifaceted, involving regulations that differ significantly between the national, regional, and local levels. Therefore, engaging specialized real estate lawyers is highly advisable.

1. State, Regional, and Local Regulations: The Spanish legal system is characterized by its decentralized nature. Each autonomous community in Spain can have distinct laws affecting real estates and property transactions. For example, while some regions may establish restrictions for renting out properties (ie. Limitations or prohibitions on carrying out short-rental activities, limitations on long-term rental prices etc.), others might have significantly varying taxes and fees associated with property purchases, and others can also count with a singular regional Civil Code that regulates in a particular manner important aspects such as the initial down payment contract (“Arras” in Spanish) when buying a property. Municipal regulations can also considerably impact property use and renovations.

2. Legal Representation: A lawyer with expertise in Spanish real estate law can navigate these complexities, ensuring compliance with all applicable regulations. They can conduct due diligence, verify property titles, and check for any encumbrances or legal issues that could affect the purchase. Legal representation is not just a formality but a necessity in Spain to avoid potential pitfalls.

3. Immigration legal advice: In connection with the property you want to buy in Spain you should receive the proper immigration law advice. Nationality and Immigration regulations in Spain are a complex but at the same time exciting field to navigate to find the best solution that will be matching your concrete case and circumstances (i.e: Digital Nomad Visas, Non Lucrative visas etc.)

LISTED: The visa options Americans can apply for to live in Spain

Fiscal Considerations

Taxation is another critical area that requires careful attention. Spain’s tax system includes various taxes that can impact the overall cost and benefits of owning a property.

1. Tax Residency: Determining your tax residency status is essential as it influences the taxes you are liable to pay. If you spend more than 183 days in Spain in a calendar year, you are considered a tax resident. You can also qualify as tax resident in Spain if having in this country the centre of your economic interests. Tax residents are subject to Spanish income tax on their worldwide income, while non-residents are taxed only on income generated in Spain.

2. Income Tax and Wealth Tax: Spain imposes income tax (IRPF) and wealth tax (Impuesto sobre el Patrimonio) differently across its autonomous communities. The rates and allowances can vary, so understanding the specific regulations in the region where you plan to buy is crucial. For instance, some regions might have higher exemptions for wealth tax, impacting the overall cost of owning high-value properties.

3. Rental Income: If you plan to rent out your property, you need to be aware of the taxation rules on rental income. US tax residents are currently taxed for their rental incomes in Spain at a 24 percent flat rate on rental income (not being allowed to deduct any expense), whereas Spanish tax residents include rental income in their general taxable income (with different expenses being tax deductible), which could be taxed at progressive rates. Counting with the appropriate assistance of tax lawyers specialized in American clients and with a full knowledge of the US-Spain Tax Treaty can considerably help you to improve your tax bill.

4. Special Tax Expats Regime: Implemented at the time that David Beckham joined Real Madrid (and known because of that as “Beckham Regime”), that regime may allow you enjoying the pros of being a tax resident in Spain, by living in this country exceeding 183 days per year, but taking advantage of a 24% flat rate and only making taxable in Spain labour incomes together with other incomes generated in Spain but not being taxable in Spain those sourced abroad. This tax regime has a maximum total 6 years duration and those who are eligible for it they also avoid filing Wealth Tax in Spain for their worldwide wealth.

To properly apply for it, it is always recommendable carrying out a previous tax planning and analysis with specialized Tax Lawyers before buying your property and moving to Spain.

READ MORE:

Property Inspections

A thorough technical inspection by a qualified architect is advisable to ensure the property meets all regulatory standards and is free from structural defects.

1. Construction Defects: Architects can identify potential issues such as structural integrity, water damage, and compliance with building codes. This is especially important for older properties or those that have undergone renovations.

2. Urban Planning Compliance: The inspection should also verify that the property complies with local urban planning regulations. Non-compliance can result in significant fines or even demolition orders.

Buyer’s Agents

Unlike real estate agents who typically represent the seller and defend his interests, buyer’s agents work in the interest of the buyer, offering numerous advantages.

1. Local Market Knowledge: Buyer’s agents are well-versed in the local market conditions and can provide valuable insights into different neighbourhoods, school districts, community amenities etc. This knowledge helps in identifying properties that best match your preferences and needs.

2. Fair Pricing: Buyer’s agents can help negotiate better prices. They are familiar with the local market rates and can prevent the common practice of overpricing properties for foreign buyers.

3. Due Diligence: By conducting thorough market analyses and property evaluations, buyer’s agents can ensure that you make an informed decision. They also handle the negotiation process, striving to secure the best possible deal on your behalf.

READ ALSO:

Financial Advice

Securing favourable financial terms can result in substantial savings, making it essential to seek expert financial advice.

1. Currency Exchange: For American buyers, currency exchange rates can significantly impact the cost of purchasing a property. Working with a reputable currency exchange provider can help you get the best rates, reducing overall expenses.

2. Mortgage Conditions: Comparing mortgage conditions from different lenders is crucial. Spanish banks offer various mortgage products, and an independent financial advisor can help you find the most favourable terms, considering interest rates, repayment periods, and other conditions.

Conclusion

Buying a residential property in Spain involves navigating a complex legal and fiscal landscape.

By engaging specialized lawyers, conducting thorough property inspections, utilizing the services of buyer’s agents, and counting with expert financial advice, American buyers can mitigate risks and make informed decisions.

With careful planning and the right support, purchasing a home in Spain can be a rewarding investment and a gateway to enjoying the country’s rich culture and beautiful landscapes.

This article was written by Maryem Essadik, immigration lawyer and head of English-speaking international law firm in Madrid Marfour (Contact: +34 698 917 840, [email protected]).

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