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Your pension will continue to be paid, but taking up permanent residence in Spain often brings changes to your tax situation, health insurance and legal responsibilities. For international residents on the Costa Blanca, there are a number of factors that can have a significant financial impact.
You may well have bought your house on the Costa Blanca some time ago, and retirement is just around the corner. Your pension is still being paid from your home country. But by the time you file your first Spanish tax return at the latest, it will become clear that changing your place of residence also changes the rules of the game.
Whether your pension comes from the UK, the Netherlands, Belgium, Germany, France or another country can make a significant difference. This applies to taxation as well as health insurance and any long-term care benefits.
Many state and occupational pensions continue to be paid even if the recipient takes up permanent residence in Spain. The key factors are the regulations of the country of origin and the type of pension in question.
The pension provider must be informed of the change of address. In doing so, bank details, any certificates of life and supplementary benefits should be clarified. Not all allowances and social security benefits are paid abroad.
In the case of pensions paid in British pounds, Swiss francs or other foreign currencies, the exchange rate also affects the monthly amount in euros. Additional rules may apply to private pension schemes and one-off lump-sum payments.
Anyone living permanently on the Costa Blanca often becomes resident for tax purposes in Spain. This applies in particular if they spend more than 183 days there in a calendar year, or if the centre of their economic interests is in Spain.
Tax residents must, as a general rule, include their worldwide income in their Spanish income tax (IRPF) return. This may include pensions, rental income and investment income.
Whether Spain is actually permitted to tax a particular pension is governed by the relevant double taxation agreement. As a result, state social security pensions, occupational pensions and civil service pensions may be treated differently.
Anyone who has previously received a net monthly income of 2,000 euros cannot automatically expect to receive the same amount in Spain. The tax burden may change.
Many foreign pension providers do not deduct Spanish income tax. The money is paid out initially, but you may have to pay additional tax when you file your annual tax return.
An individual tax calculation is particularly advisable if you receive several pensions, have additional income or change your place of residence during the year.
CBM SERVICE · TAX YEAR 2026
In the Valencian Community, income tax consists of a central government component and a regional component.
Minimum personal contribution – regional contribution
Age | Annual amount |
Up to and including 65 years of age | 6.105 € |
66 to 75 years | 7.370 € |
From the age of 76 | 8.910 € |
These personal minimum amounts are not flat-rate tax-free pension limits. Separate minimum amounts apply to the state’s contribution.
Regional IRPF tax rates for 2026
General basis for assessment | Tax rate |
Up to €12,000 | 8,80 % |
€12,000–22,000 | 11,70 % |
€22,000–32,000 | 14,60 % |
€32,000–42,000 | 17,00 % |
€42,000–52,000 | 19,40 % |
€52,000–62,000 | 21,90 % |
€62,000–72,000 | 24,40 % |
€72,000–100,000 | 26,10 % |
€100,000–150,000 | 27,35 % |
€150,000–200,000 | 28,35 % |
Over €200,000 | 29,35 % |
Added to this is the state tax, with marginal tax rates ranging from 9.5 to 24.5 per cent. The tax is calculated on a progressive basis: the higher tax rate applies only to the relevant portion of income.
Source: Law 13/1997 and Law 5/2026. Further regional pay rises are planned for 2027.
For many pensioners from EU Member States and other countries with relevant social security agreements, the S1 procedure enables them to access public healthcare in Spain.
Under the relevant conditions, another country remains responsible for health insurance, whilst treatment is provided through the Spanish health system. The S1 form is applied for from the relevant insurance provider and is subsequently registered in Spain.
Relevant arrangements may apply to British pensioners. Anyone receiving pensions from several countries or who has their own insurance entitlements in Spain must clarify the matter of jurisdiction separately.
On the Costa Blanca, public healthcare is provided through the Generalitat Valenciana’s health system. The first point of contact is usually the relevant Centro de Salud. Appointments with specialists, referrals and co-payments for medication may be organised differently to how they are in your home country.
Anyone who takes medication regularly should bring medical reports and a list of active ingredients with them. Those with private health insurance must check whether their policy covers permanent residence in Spain. The European Health Insurance Card alone is not sufficient for this purpose.
EU citizens may settle in Spain under the principle of free movement. If their stay exceeds three months, they must register. Pensioners who are not in employment must, amongst other things, have sufficient financial resources and comprehensive health insurance cover.
Similar rights of residence apply to nationals of other EEA states and Switzerland. British nationals who do not have the relevant rights under the Brexit Withdrawal Agreement, and other third-country nationals, generally require a suitable residence permit. For pensioners, for example, the ‘Residencia no lucrativa’ may be an option.
In addition, you must register with the town hall (Empadronamiento). The NIE, on the other hand, is merely an identification number and does not replace either the residence registration or any required residence permit.
Bank accounts, property and investments in your country of origin do not have to be given up when you move. However, they may trigger additional reporting obligations in Spain.
Under Form 720, foreign bank accounts, property, securities and certain insurance policies may be subject to reporting requirements. The general threshold is 50,000 euros per asset category.
In the case of larger estates, the Spanish wealth tax may also be relevant. The regional regulations of the Comunitat Valenciana also apply in this regard.
Property sales and major capital outlays deserve particular attention. Following a change of residence, they may have different tax implications than before.
As long as you are healthy and mobile, the prospect of needing care seems a long way off. However, existing entitlements to care allowance or other benefits from your country of origin are not necessarily retained when you move abroad.
Spain has its own support system, the Sistema para la Autonomía y Atención a la Dependencia. Depending on the assessment and eligibility criteria, this includes, for example, home help, day care and care homes.
Under general Spanish regulations, the residence requirement is, in principle, five years, two of which must have been spent immediately prior to submitting the application. International coordination rules and statutory exceptions must be taken into account.
In the Comunitat Valenciana, the local social services (Servicios Sociales) are the first point of contact. If a person is not entitled to public support, home care or a care home place may initially need to be privately funded.
Housing costs play a part in determining how much of your pension you have left. Even a mortgage-free property incurs expenses such as council tax, service charges, insurance, maintenance and any special levies.
However, when you get older, it’s not just the price that matters. A flat without a lift, a house on a hillside or a housing estate far outside the town centre can become a problem if you are no longer able to drive.
Infrastructure and accessibility vary between Dénia, Jávea, Calp, Altea, Benidorm, Torrevieja and the inland towns. Proximity to health centres, shops and public transport therefore deserves at least as much consideration as a sea view.
Having your habitual residence in Spain may also result in changes to the legal framework governing inheritance.
Under the European Succession Regulation, the law of the country in which the deceased last had their habitual residence generally applies. Under certain conditions, it is possible to choose the law of one’s country of nationality in a will.
If you own property or assets in several countries, you should review any existing wills. Powers of attorney and living wills must also be legally valid in Spain in the event of an emergency.
The pension provider in the country of origin remains responsible for pension payments. The Agencia Tributaria provides information on Spanish tax obligations. If you have any questions about health insurance, your current insurance provider is the first point of contact.
On the Costa Blanca, the town halls are responsible for local registration. Information on healthcare is provided by the Conselleria de Sanitat, whilst the local Servicios Sociales can help with care-related enquiries.
Official information points:
After all, retirement on the Costa Blanca shouldn’t be spent at a desk, surrounded by tax notices, insurance forms and correspondence from the authorities. If you sort these matters out in good time, you’ll have more time later on for the very reason you’re living here.
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