Forget Spain, here’s where to move to cut your tax bill – and receive a warm welcome
Italy charges non-residents a flat tax of €200,000 – Balate Dorin/iStockphoto
British people have long had a love affair with Spain. But last week, the Spanish government threatened to shatter this relationship.
Prime minister Pedro Sanchez’s plans to impose a 100pc tax on property purchases by non-resident buyers living outside the EU would effectively ban the biggest national group of buyers in Spain – the British.
The Left-wing leader has also this week gone further and suggested Spain could ban anyone from outside the EU from buying properties.
The proposals may never happen, but it has caused uncertainty and spooked prospective buyers. A solicitor in Valencia had buyers drop out of a property purchase last week, while an agent on the Costa del Sol reported that four potential British buyers and a South African had cancelled their flights out to Spain to view properties.
It’s clear that the Spanish government wants to deter British people. So where else should holiday home buyers look for lower tax rates, easier visa access – or just a warmer welcome?
For people moving abroad or buying a holiday home, seeking out a tax haven may not traditionally be top of the list. But since the tax rises in last October’s Budget, cutting your tax bill has become a bigger consideration, says Stuart Wakeling, of Henley & Partners, a migration adviser.
While Portugal, Greece, Cyprus and Italy have had a “steady flow” of interest among British buyers, he says, over the past few months, the United Arab Emirates has become the top choice – and its appeal is widening.
He adds: “Typically we were dealing with the very wealthy, but now we are seeing applicants with a much lower net worth selling up in the UK and using those funds to buy real estate in Dubai instead.”
There is zero income tax in the UAE, and the dynamic English-speaking business-friendly economy encourages many foreign workers to move there for the opportunities as well as a city-beach lifestyle.
If you spend at least 183 days in a year there, there are no UAE taxes on your assets outside the country, and setting up a company is “easy and efficient” according to Henley & Partners.
The country offers golden visas, requiring investment of AED 2m (£444,406) but also other long-term residence options. Alternatively, you can set up a company with AED 5,000 (£1,109) for a two-year residence permit.
Cyprus and Malta also offer low tax rates. Non-domiciled residents of Cyprus are exempt from tax on dividends and interest, there are no inheritance, wealth or gift taxes and there is no capital gains tax on property sold outside the island, according to KPMG.
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Greece is an attractive option, requiring a €100,000 lump sum on non-Greek assets – George Pachantouris/Moment RF
In Malta, expats can pay tax rates of 15pc on income and they are exempt from capital gains tax on foreign assets.
Greece, with a lump-sum tax of €100,000 on non-Greek assets, and Italy with its flat tax of €200,000, are also considerations for wealthy buyers who want to cut their tax bill.
Spain is closing its golden visa scheme in April, and not everyone will have sufficient income for the alternatives: for example, you need to earn at least €2,650 per month for the digital nomad visa.
Portugal may be a better alternative – its golden visa requires an investment of at least €250,000 in a fund or donation, while its D7 visa for retirees only requires a minimum income of €870 per month.
Richard Lovell, 59, who moved to Aljezur with his wife Rachel in 2022, says the process is “relatively painless”.
“It took two weeks to get an answer after an appointment at the Portuguese consulate. No expert advice is needed, and it costs less than £200 per person.”
Portugal’s golden visa is ‘relatively painless’ say Britons who have applied – Nick Brundle/Moment RF
The Greek government raised the entry point of its golden visa to €800,000 in popular areas such as Crete, in an effort to deal with housing affordability issues. But it is still possible to get the same visa for less money – just look for homes in less in-demand areas such as the Peloponnese.
There you can still get a residency permit by purchasing a home for €250,000 – a sum that can get you a four-bedroom villa that is five minutes from the beach.
You will not find that kind of value for money in France (or any golden visas either). But it does offer more options and a relatively painless process to get a visa for most people.
“It didn’t used to be the straightforward process it is now,” says Tracy Reece, 56, who in 2023 moved to Normandy on a long-stay visitor visa – the first step to getting permanent residency.
Unlike Spain, France also offers a six-month non-resident visa, the VLS-T, which allows second-home owners to renew it each year. This is a post-Brexit hassle, but it’s a relatively inexpensive option at £150 each time. You are not allowed to carry out paid work in France on the visa, and must have means for support.
France offers a six-month non-resident visa which costs £150 – David C Tomlinson/The Image Bank RF
Cyprus does have a golden visa – requiring the purchase of a new-build property for at least €300,000 plus VAT – but there’s a snag: you must also show you have €50,000 in the bank.
Instead, the temporary annual renewable permit is more popular with British arrivals, according to Sarah Hordle of Island Homes Cyprus, which is available to those renting or owning a Cypriot home. You must show an income of €24,000 a year and have €10,000 in the bank. “Typically British buyers spend around £250,000 on a three-bedroom villa,” she says.
Aside from cheaper domestic travel, discounted holidays through the Spanish government scheme for pensioners, and access to healthcare for UK-born residents of state pension age, Spain doesn’t offer any other perks for retirees.
But in other countries expat retirees can save money. In Cyprus they can choose between a flat rate of 5pc tax on pension income or they can be taxed at normal tax rates (after personal allowances) of 20pc upwards.
“If your pensions add up to more than €25,000 a year it’s better to go for the flat rate,” says Nick Cairns, of Blevins Franks advisers.
Other attractive tax rates on pension income can be found in Malta where its retirement programme, known as the MRP, is open to over-55s and has a flat tax rate of 15pc on foreign income, subject to a minimum annual tax liability of €7,500. In Greece, there is a non-dom regime where expats can pay 7pc on their foreign-sourced income.
You are unlikely to find locals waving ‘tourists go home’ in Italy – Fani Kurti/E+
Retirees preferring the rural charm of Italy’s hilltop villages might be enticed by the flat tax rate of 7pc on foreign income – available in qualifying areas of Umbria, Marche, Lazio and southern Italy.
Buyers in Italy, Portugal and Greece rarely fail to mention the warm reception of the locals when taking their steps to buying a new home there, and you won’t find locals waving ‘tourists go home’ placards on your favourite beach.
Cretans believe hospitality is sacred, something that helped persuade Marcia, 69, to move to Drapanos in 2023, on a golden visa.
“Everyone just chats to us in the local taverna or the shops or invites us into their homes,” she says. “Practising my conversational Greek does help.”
British people are now heading to Crete on the D Visa or digital nomad visa, according to Phil Ambrose of A Home in Crete, an estate agency. “Most spend €300,000 to €350,000 on a home in the Chania/Apokoronos region, villages like Plaka, Kalyves, Vamos.”
Homes in Chania, Crete, can be bought for €300k-€350k, and many Britons opt for the digital nomad visa – Gatsi/iStockphoto
Unlike Spain, where regions have been restricting holiday rental licences, and where antagonism to Airbnb properties has been growing, those who wish to rent out their home on the Greek islands or the Algarve (for now) face no issues obtaining the necessary licences for short-term lets.
“I feel the Portuguese and the British have a similarly sanguine attitude to life and it just feels familiar,” says Sandie, 51, who is moving to Lagos on the western Algarve and prepping her newly renovated villa for year-round rentals.
Other locations actively encourage (and even incentivise) owners to let out their homes to attract tourism. In France, gite or chambre d’hote business owners can take advantage of tax breaks offered by the régime reel system, with grants offered for home improvement, and even personal development.
Across the Atlantic in Florida, Orlando’s designated short-term rentals zone is attracting many hundreds of British villa owners who can capitalise on year-round income from strong demand from families for the theme parks.
Owners can take advantage of a very comprehensive list of deductible expenses – and achieve yields of 8-10pc, according to Zoe Attwood of Serhant, a real estate brokerage.
And when it’s time to sell up, costs are lower, too; very few owners pay capital gains tax on selling, adds Simon Howell of Howell International Tax in Kissimmee.
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