For a while now, we’ve been telling you that having a second residency in Europe could be one of the best moves you could make.
We receive a lot of inquiries from readers asking how they can live in Italy, Spain, France, or some other country in Europe. In truth, living in Europe is the easy part. The real question is whether or not there are benefits to obtaining a second residency in a European country over somewhere like Panama or St. Lucia. Our founder, Andrew Henderson, addresses this in his book Nomad Capitalist, and the answer is both yes.. . and no.
The reality is, with a little help, you can find great European second residency and passport programs for your needs. Having a residency in Europe comes with many benefits.
For instance, thanks to the Schengen Agreement, you can travel and work in any of the other 27 member countries once you have residency in one country. However, whether or not you make these benefits work in your favor depends on where you obtain your residency. In some countries, it will work out beautifully. In others, your residency can become a complicated and restrictive obstacle.
At Nomad Capitalist, we create comprehensive solutions for second residence, offshore taxation, dual citizenship, and diversification. When you become a Nomad Capitalist client, you can benefit from Andrew Henderson’s 17-year learning cycle of going offshore.
The Spanish Entrepreneur Visa
The country is so steeped in culture and romanticism that it’s definitely hard to ignore its allure.
The Spanish government has been working to capitalize on its appeal and has made obtaining a second residency in the country relatively easy, that is, if you’re the type of person who can create jobs.
Spain is still trying to recover from the economic downturn that began in 2008 and caused unthinkable levels of unemployment among the country’s young people. Because of that, if you can start a business that creates jobs for Spanish workers (or other EU citizens in Spain), they will welcome you with open arms.
However, the first catch to the program is that the path to citizenship takes years. Becoming a Spanish citizen requires ten years of residence before applying. From there, the process can easily take two to four years. There is no “fast track” option for investors, either. It takes a high-value business owner the same ten years.
The second catch is that Spain requires that you spend a minimum of six months a year in the country to maintain your residency. Your visa will be canceled if you fail to log at least six months in Spain. In comparison, the appeal of residency programs in places like Panama and St. Lucia is that the government has set a very low (i.e., one day) requirement for you to maintain your residency. While some European countries have similarly low requirements, many do not, including Spain.
The final catch is that — conveniently for Spain — the six months required to maintain your residence is also the amount of time needed to qualify you for Spain’s near-US levels of tax compliance burdens; it is not exactly the best reason to get a second residency.
The general message is that it’s not very difficult or expensive to get a Spanish entrepreneur visa but to maintain it, you have to live there, and you’re going to have some tax problems if you do.
The Benefits of Planting Flags
Does that mean you can never live in Spain? Of course not. In fact, if you want to live in Spain, why do you want to get a Spanish visa?
The whole point of planting flags is to make things work independently. If Spain appeals to you as a place to live, live there. If the requirements attached to the Spanish entrepreneur visa make it unappealing to you, don’t get it.
As I mentioned, not every European residency program will have the same stipulations that Spain has in place. As such, what you should try and figure out is how you can get other European residencies and then go and live in Spain.
Most European countries will allow you to visit for a total of 183 days before you either have to leave or they will qualify you for taxation. The majority of the people I know who want to live in Spain are perpetual travelers and don’t plan on living there for a full twelve months, so getting a residency in Spain makes even less sense.
If you want to live in Spain — but are not averse to traveling to other countries as well — get a residency in a place like Greece or see if you qualify for citizenship by descent somewhere in Europe, and then go and live in Spain for five or six months each year.
There is no need to commit to a country that will tax you just as intensely as your current country of residence simply because you want to live there. Not anymore, at least.
Now, you have real options. Do you want to live in Spain? That’s great! Just don’t bank in Spain, and don’t get your residency in Spain. Simply live there. That’s the beauty of planting flags: You can diversify and ensure that each aspect of your life is planted where you are treated best.
Play By The Rules
Finally, at Nomad Capitalist, we don’t believe in cutting corners. You can take advantage of the fact that you can have residency in Greece and live in Spain for six months of the year, but once those six months are up, you need to move on.
There are some people who assume they can just go to Spain (or any other country) and live there for as long as they want. They figure that if they get caught, they can feed the authorities some explanation and be fine. You don’t want to do that. You want to play by the rules. The European Union is not exactly powerless.
In Spain, unlike in some other countries, immigration and tax departments of the government talk. If you file immigration paperwork saying that you spent X amount of time in the country, that information will get sent right over to the tax department.
If your records don’t match up to your account and you’ve overstayed, the tax department is going to put their hand out and say, Guess what? You are now a tax resident. We tax on worldwide income, so we need to know about your bank accounts and all the money you’re making. Oh, and please pay us for that rental property you have back home.
Now, it’s all subject to a tax treaty if you’re from the US or somewhere else, but you will be taxed. So, play by the rules. The bottom line is that easy doesn’t always mean you should take what’s being offered.
Another option if you are determined to go to Spain is the Digital Nomad Visa, which is now available for non-EU nationals wishing to work remotely from Spain. The Spanish Digital Nomad option offers certain flexibility that some other countries similar programs, such as Germany, dont have.
It is a more accessible option, where you need to show that you can support yourself in Spain, and the required amount is a minimum of $2,500 (€2,334) per month or $2,999 (€28,000) annual income. This is something that may increase in the next couple of months or definitely in the next couple of years.
There are multiple avenues to achieve European citizenship, including fast-track investment, long-term naturalization, citizenship by descent or through marriage.
Possessing any European passport significantly enhances travel freedom, given that many top-ranked passports are from European nations.
Whether you choose to speed up the process through a Golden Visa or investment schemes or take the more gradual approach by acquiring citizenship through ancestry, the possibilities are available.
However, it is important to note that these options, particularly Golden Visas, are gradually decreasing.
We encourage our clients to take action and start the process of creating their holistic offshore strategy today. The current opportunities may not be available tomorrow. Apply here to become a client and start creating your holistic global citizenship plan.