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Residency through passive income or pension: Is Spain or Portugal better?

Spain's non-lucrative visa and Portugal's D7 visa are both designed for non-EU citizens to be able to live in these Iberian countries and are ideal for pensioners, but how do they compare? Which is easier and offers more benefits?

Residency through passive income or pension: Is Spain or Portugal better?
Spain's nlv vs Portugal's D7 visa. Photo: Florian Wehde and André Lergier / Unsplash

Spain’s non-lucrative visa, also known as the NLV, is an authorisation that allows non-EU foreigners to stay in Spain for a period of more than 90 days without working or carrying out professional activities in Spain, such as retirees, by demonstrating that they have sufficient financial means. 

Portugal’s D7 visa provides residency status in Portugal to non-EU citizens, including retirees, who receive regular passive income. 

While they both sound similar at the outset, they are quite different when it comes to the requirements and what they offer.

Here’s a breakdown on Spain’s NLV vs Portugal’s D7. 

What are the income requirements?

NLV: For Spain’s NLV, in 2022 you must prove that you have a passive income of €27,792 per year. This number usually rises yearly as it must be 400 percent of the IPREM, so if you’re planning on applying in 2023, you’ll have to budget a little more.

READ ALSO: What are the pros and cons of Spain’s non-lucrative visa?

D7: For Portugal’s D7 visa, you only have to prove that you have 100 percent of the minimum wage which is currently €7,620 per year. Portugal wins hands down in this case as you’ll have to have at least €20,000 more per year if you want to move to Spain.

Can I include family members?

NLV: Yes, the NLV allows you to bring dependent family members such as a spouse and children, however, you will need an extra €6,948 per year for each family member included.

D7: Portugal’s D7 also allows you to bring family members, but again it’s a lot more affordable than Spain’s NLV. You can bring your spouse or your dependent parents for an extra €3,810 per year and your children for an extra €2,292 per year.

Can it be renewed?

NLV: The NLV visa is a one-year visa, but it can be renewed for a further two years and then another two years after that. After five years of residency, you are eligible to apply for long-term residency and won’t have to keep renewing your NLV.

D7: The D7 is initially valid for two years, unlike the NLV. Afterward, you’ll be able to renew it for an additional three years.

Can it lead to citizenship?

NLV: Yes, you can eventually apply for Spanish citizenship after 10 years, but you will need to apply for long-term residency first.

D7: Yes, after you have five years of residency, you are able to apply for Portuguese citizenship, this is half the time that it would take in Spain.

Do I have to pay tax?

NLV: Yes, if you stay more than 183 days in Spain you will become a tax resident and will have to pay tax on your worldwide income. It’s worth remembering, however, that there are double tax agreements with certain countries meaning that if your passive income has already been taxed in your home country, you won’t be taxed again in Spain.

D7: Like in Spain, once you have lived for more than 183 days in Portugal you are subject to paying tax rates there, however, Portugal offers a special Non-Habitual Resident (NHR) status, which you can apply for if you have a D7 visa. This special tax regime offers free incentives and reduced tax rates for some for their first 10 years in Portugal.

Can I work with these visas?

NLV: No, as the name suggests, it’s a non-lucrative visa and you shouldn’t be working in Spain, even if your employer is based abroad. After your first year though you are able to exchange it for a work permit or to become self-employed (autónomo) through a process called residence modification.

READ ALSO: Should I change my non-lucrative visa for another residency permit in Spain?

D7: Like the NLV the D7 is only supposed to be for passive income and you do not have the right to work in Portugal, however, if you later apply for a residence visa, then this restriction will be lifted and you will be allowed to work.

Do I need private healthcare?

NLV: Yes, you will need to apply for private health care in Spain in order to apply for the NLV. Surprisingly private healthcare can be very affordable in Spain at around €50-200 a month and the services are very good.  

D7: Portugal’s D7 also requires you to get private health insurance. Private health care in Portugal can be slightly cheaper than in Spain at between €50 to €100 per month.

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Spain is the second favourite country for Americans to move to

A study based on Google searches reveals that Spain is the second most popular destination of choice for US nationals looking to move overseas, and it’s the favourite in two states in particular.

Spain is the second favourite country for Americans to move to

Spain is the second-most visited country in the world just behind France, with a record 83.7 million international tourists visiting España in 2019. It is also among the EU countries with the biggest foreign resident populations, numbering around 6 million

So it’s perhaps not surprising that the country’s many attractions, from the weather and culture to the quality of life, have also proven a big draw for Americans.

According to a study by American insurance company Home Shield based on Google searches, Spain is the second most popular country for US nationals to move to.

The first is Canada, which is most likely due to the fact it’s next to the US and it shares the same language and has a similar culture.

“People in 31 cities, mostly in Texas and California, are currently looking for information on how to move to Spain,” American Home Shield revealed.

People in Tulsa, Tampa, Stockton, Santa Ana, San Jose, San Francisco, San Antonio, Riverside, Plano, Phoenix, Orlando, Oakland, New York, Miami, Los Angeles, Las Vegas, Laredo, Long Beach, Houston, Glendale, Fresno, Fort Worth, El Paso, Dallas, Corpus Christi, Chula Vista, Bakersfield, Austin, Arlington and Anaheim put in more Google searches for “moving to Spain” than for any other country. 

Texas and California along with Florida are among the US states where you’ll find the most Spanish speakers, so it’s perhaps understandable that people from there would want to look for a country where they can already speak the language.  But Spain was also the most searched relocation country in Georgia, Arkansas, New Hampshire and North Dakota.

Many Americans have already made the move over here and Spain is the European country with the most US residents.

READ ALSO: Six hard facts Americans should be aware of before moving to Spain 

Spain saw a 13 percent increase in the number of US citizens moving to Spain between 2019 and 2021. The latest data available from Spain’s National Statistics Institute (INE) shows there are a total of 39,812 US nationals living in Spain.  

The current strong dollar against the euro could also be influencing why Spain is so high on the list, as evidenced by the spike in US tourists who came to Spain this summer. In June alone, more than 377,000 visited Spain, an 86.9 percent rise compared to the same month in 2019, a pre-pandemic year.

It’s not just Americans who want to move to Spain, however. According to a study by comparison site Compare the Market, Spain is the third most popular country in the world for people to move to.

For citizens from 12 different countries, including Sweden, Finland and the Netherlands, Spain is their top choice when it comes to deciding where to move to. 

Where do Americans choose to live in Spain?

Unlike most Europeans who favour the coast when they move to Spain, Americans prefer the inland capital region of Madrid.

According to the latest data from the INE as of 2021 there were a total of 11,717 Americans living in the region of Madrid. This was followed by Catalonia with 8,802 US citizens and then Andalusia with 6,658.

READ ALSO: What Americans moving to Spain wish they’d brought with them

How can Americans move to Spain?

Given the high unemployment levels, employment rules and great difficulties in getting some US professional qualifications recognised in Spain, getting a work visa for Spain isn’t easy, so most Americans opt for a different way.

There are several ways for Americans to be able to move to Spain, but one of the most popular and easiest is the non-lucrative visa (NLV). In order to be eligible, Americans need to prove they have a total of €27,792 ($31,390) for one year, an amount which rises if you include other family members. You also need to show that this money is from passive income, as you’re not allowed to work in Spain while on the NLV either for a Spanish employer or a US one.

Another way is the golden visa, which grants you residency in Spain if you invest €500,000 in property in Spain.

Spain recently announced the approval of its Startups Law which also includes a digital nomad visa which will be available from 2023. Find out more about it here