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While many British expats feel increasingly unwelcome in Spain due to new tax policies, one region—Basque Country—continues to offer generous tax incentives, including up to a 50% tax break for highly skilled foreign workers.
Key Highlights – What You Need to Know
Spain’s planned 100% tax on properties bought by foreign nationals outside the EU has created a challenging landscape for British expats. However, the Basque Country is bucking the trend with a unique and attractive tax scheme designed to draw highly skilled professionals. With tax breaks up to 50% on earnings and additional deductions, this region is offering significant financial advantages to foreign workers, especially those from the UK.
Tax Breaks for Highly Skilled Foreigners in the Basque Country
The Basque Country, including provinces like Biscay, Álava, and Gipuzkoa, enjoys fiscal autonomy thanks to a historic agreement with Spain. This means it can offer tax policies independent from Madrid, and the benefits are clear for foreign workers, especially highly skilled professionals.
For those employed in roles within science, finance, commerce, or high-level management, tax discounts of up to 30% of their salary can be claimed for 11 years. Additionally, a tax-free personal allowance of €20,000 (£16,776) helps offset living expenses, making it an attractive option for those seeking to move to Spain.
Eligibility & Benefits
To take advantage of these tax breaks, applicants must secure a job in the Basque Country or establish a company in a relevant field. This program is open to professionals and entrepreneurs from abroad, though they must not have been tax residents of Spain in the last five years.
The financial perks of the program are substantial. A worker with a salary of €80,000 (£67,907) could see their take-home pay increase by over €11,000 annually when utilizing the tax exemptions and allowances. For families, this tax relief can provide an additional €200 to €300 per month, helping to offset the costs of living and raising children.
Key Features of the Basque Tax Scheme:
- Up to 50% discount on taxable earnings for highly skilled workers.
- Personal tax-free allowance of €20,000, €4,200 higher than in the UK.
- 20% tax-deductible allowances for housing, children’s education, and relocation expenses.
- 11-year duration of tax benefits, making it an attractive long-term plan.
The Impact of Brexit on British Expats
For British expats like Philip Martin, the tax breaks were a welcome surprise upon moving to Spain. Philip, a forest ecologist who relocated from Cambridge to the Basque region, noted that the tax relief provided additional monthly funds, which was particularly helpful for supporting his family. Though the tax incentives were not a primary motivation for his move, they certainly added value to his decision to emigrate.
“I didn’t know anything about the tax situation before I moved here,” said Martin. “But the tax breaks have definitely helped with the additional costs of raising a family.”
Property Taxes and Real Estate in the Basque Country
Unlike the rest of Spain, where foreign buyers from outside the EU face a 100% property tax, the Basque Country’s real estate tax remains at 7%, which makes buying property more appealing for those considering relocation. This exemption further strengthens the region’s appeal as a destination for expats looking for both favorable tax conditions and more affordable property.
Expert Opinions on the Scheme’s Effectiveness
According to Ivan Jimenez, managing director of Bizkaia Talent, the Basque tax program has successfully attracted professionals and entrepreneurs to the region. “The tax break helps a lot because you end up with an increase of approximately 25% of your net salary,” he explained.
The Basque government’s fiscal autonomy has allowed the region to implement policies that differentiate it from the rest of Spain, making it a more attractive destination for highly skilled workers and entrepreneurs from abroad.
The Basque tax scheme is a game-changer for skilled professionals seeking opportunities in Europe. With tax incentives like these, it’s no wonder we’ve seen a rise in foreign talent coming to the region.
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