Pension Retirement in Mallorca: What German pensioners in Spain need to consider
Sunny prospects for retirement: many German pensioners are drawn to Spain
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More and more Germans are moving to Spain for longer periods of time after retirement. Pensioners who permanently relocate there should consider taxes and insurance
They have come to stay longer: Every year, numerous German pensioners and retirees are drawn to Spain, planning to spend a larger part of their retirement there. The reasons are of different nature: the pleasant climate, cheaper cost of living, love for the country and the mentality of the people. In many cases, the pension also moves with them: “The German Pension Insurance is currently transferring around 200,000 pensions to Spain,” says Katja Braubach, press officer at the German Pension Insurance Federation. In addition to old-age pensions, this also includes other pensions such as disability pensions or widows’ and widowers’ pensions.
Anyone who is considering having their pension transferred to Spain in the future should inform the pension insurance company in good time so that there is no interruption. “If a permanent change of residence is planned, the pension recipient should inform the relevant pension insurance company at least two months in advance,” says Brauchbach.
The pension amount does not usually change if it is transferred to another EU country. However, there are some exceptions and special features that can lead to cuts. This can be the case, for example, if the pensioner receives a disability pension for reasons other than just medical ones, or if periods abroad were taken into account by the German pension insurance.
center of life is crucial
Important to know: As long as a pensioner stays in Spain for less than 183 days a year and continues to live in Germany, nothing changes in terms of pension or insurance. After this period has expired, however, he is obliged to report to the Spanish immigration authorities and be registered as a so-called “resident”.
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He is therefore considered a tax resident in Spain. “But that says nothing about where the actual center of life is,” says Rainer Fuchs, lawyer and author of the guide “Living worry-free under the Spanish sun.” However, the center of life alone decides which state law the respective pensioner is subject to and what tax and insurance consequences this entails. “In any case, it should also be taken into account how pension recipients abroad are insured for health and nursing care,” says pension expert Braubach.
Medical treatments can be expensive
As soon as someone in retirement moves their main residence to Spain, this has an impact on their previous health care: the obligation to be insured in the statutory health insurance in Germany remains even if you move to Spain, provided that there was compulsory insurance here and the pension is drawn solely from Germany. In other words, the pensioner has – just as before in Germany – the right to full and free medical treatment from the state health service in his new home. However, the benefits granted are based on the usual standards of the new place of residence. This can be lower than in your home country. In addition, pensioners can no longer submit private medical bills to the German health insurance company.
If a pensioner with statutory health insurance moves to Spain and receives a Spanish pension in addition to the pension from Germany, the compulsory insurance in German health and nursing care insurance ends parallel to the move. Instead, they will be included in the Spanish Seguridad Social.
Anyone who wants or needs to take out private health insurance in Spain should also keep in mind that it is often cheaper than in Germany. “However, it does not offer full insurance cover, is usually only valid for a limited area and excludes certain expensive treatments,” says Fuchs. You should also be careful with Spanish private clinics: They are not subject to any fee schedule and are allowed to charge whatever they want for treatments. Completely foregoing medical insurance coverage when emigrating is not a good idea.
Plan your finances proactively
Pensioners who move their main residence to Spain also have to expect changes in taxes. If you move completely, you will have to pay tax on company pensions and other retirement income – apart from the statutory pension – according to Spanish tax law. The allowances granted in Germany no longer apply.
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What retirees in their prime should also consider when planning to emigrate: Even if there are no major private, health or financial difficulties at the time of emigration, this can change over time. Issues such as the need for care or the death of a partner can become present. This can result in higher costs, which may throw financial calculations into disarray.
Last but not least, language skills and good local social contacts are also important in order to feel comfortable in your new home. Mobility and good connections and supplies should also be guaranteed if you become less mobile yourself. “All of these aspects must be taken into account when planning to emigrate,” says Fuchs. He also advises people to try out retired life in Spain first instead of completely tearing down their tents in Germany. Emigrant forums can also provide guidance on the advantages and disadvantages of moving to Spain when you are retired, where you can find helpful tips and insights into retired life under the Spanish sun.
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