The Cost of Living in the Canary Islands – Including Taxes and Visa Routes for Expats

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The Cost of Living in the Canary Islands
Including Taxes and Visa Routes for Expats
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The archipelago of islands that make up the
Canaries has long attracted expats from around
the world, looking for beautiful beaches, a
relaxed pace of life and friendly communities
suited to family living. While the Canaries are
an autonomous region of Spain, geographically,
the islands are closer to Africa resulting in a
warm climate year-round. Whether you plan to
retire to Gran Canaria, take advantage of the low
house prices in Lanzarote or settle down in the
rustic, peaceful settings of the smaller islands,
such as El Hierro and La Gomera, creating a
careful budget to ensure you have full control
over your relocation and living costs, is
key. Chase Buchanans Canary Islands team, based
in Tenerife, have put this article together to
explore some of the primary living costs you
should consider, as well as an overview of the
tax environment and potential outgoings linked
with visas for foreign nationals.
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Canary Islands Average Living Costs
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One of the first aspects to bear in mind is that
the Canary Islands include eight habitable
islands. There are, therefore, variances in the
living costs between the larger, more populated
islands such as Fuerteventura and Tenerife and
smaller islands like La Graciosa. Irrespective
of where you choose to live, the region is
significantly more affordable than the UK, the US
and much of Northern Europe, with only slightly
higher prices around the tourist areas. Compared
to London, even the biggest cities offer low
living costs. As a quick comparison Las Palmas,
in Gran Canaria, is 40.1 less expensive than the
British capital, with property rentals costing
71 less.
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Santa Cruz, in Tenerife, is equally affordable,
with general living costs 47.5 lower and rental
prices 72.6 lower. A family of four relocating
to Tenerife would need an average budget of
2,148 (1,875) per month to live comfortably,
excluding accommodation, rising slightly to
2,382 (2,078) in Gran Canaria. A single person
would need a rough monthly budget of between 598
(522) and 661 (577), respectively. If you
choose to purchase a home or retire to one of the
smaller islands within the archipelago, you may
find that properties are less widely available.
However, the lower demand for holiday rentals
makes the property market considerably more
accessible from a cost perspective.
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Budgeting for Life as an Expat in the Canary
Islands
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Public transport is widely available, ranging
from buses and taxis to ferries and
island-hopping flights. Most expats choose to
purchase a car, although you can also hire a
vehicle or even ship your existing car. Shipping
companies charge roughly 1,000 to 1,800, and
you can drive for six months before replacing
your foreign registration plates. Expats should
note that cars less than six months old will
attract much higher customs levies than older
vehicles, and you will need to pay import duty of
up to 13 of the vehicles value. Families with
children should also budget for education costs,
depending on whether they anticipate enrolling
their children in a local, private or
international school. Education is compulsory up
to age 16 in Spain, with free tuition at state
schools for residents.
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International schools often provide bilingual
classes and follow the UK National Curriculum or
International Baccalaureate. Many provide tuition
towards the bachillerato the qualification
children need to apply to a Spanish
university. While costs will differ between
independent Spanish private schools,
international schools and higher education
facilities, the average price of a private school
placement is around 7,200 (6,260) per
year. The British School of Gran Canaria charges
6,038 (5,249) a year for primary school
students and 7,800 (6,780) a year for
sixth-form pupils. Fees at the British School of
Tenerife range from 5,375 (4,672) a year for
nursery places to 6,085 (5,290) for sixth-form
tuition.
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Planning for Tax Obligations Overseas
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Just as it is important to budget for living
costs, from grocery shopping to school fees,
transport and accommodation, expats should
consider their tax profile and how their
liabilities may change following an international
move. Because the Canary Islands are an
autonomous region, the tax rates payable on
income, business profits and pensions may differ
from other areas in Spain. In 2023, the main tax
rates you may need to be aware of
include Income tax bands range from 18.5 on
incomes of up to 12,450 (10,800), extending to
an upper tax bracket of 50.5 on earnings of
300,000 (261,000) and above. Flat-rate
non-resident tax rates normally based on 24.
Expats relocating to Spain from other EU
countries pay a reduced 19 tax.
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Reduced business tax rates, with a 4 corporation
tax levied in the Canary Islands Special Zone
(ZEC), which is favourable when compared to the
25 business tax rate in mainland Spain. Part of
the reason goods and services in the Canary
Islands are more affordable is that the General
Indirect Tax (IGIC) is also lower, with a current
sales tax rate of 7. Should you need advice
around your tax liabilities related to
investments, assets, property and other wealth,
we advise contacting the Chase Buchanan team for
a more detailed overview of your finances and how
your tax residency position may impact your
reporting obligations. Our earlier article
Spanish vs Canary Islands Tax Policies is also a
useful resource and explains some of the other
variances you should be aware of.
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Canary Islands Visa Options for British Nationals
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Finally, as an expat planning to relocate, wed
always suggest you review the types of visas,
residence permits, and work permits you may be
eligible for. Visas often affect the tax bands
you will fall into, particularly if you are
unsure whether to apply for long-term residency
or remain a non-resident for tax purposes. Any
non-EU national living or working in the Canary
Islands for 90 days or more must have a valid
permit. There are temporary residency options
which allow you to remain there for up to five
years, whereas a long-term or permanent residency
visa means you qualify for the same tax
treatments and the right to work as a Spanish
resident.
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The non-lucrative visa is a popular option, which
allows UK citizens to live in Spain, provided
they can show they have the financial resources
to support themselves and any family members
relocating with them. Expats must invest in the
Spanish economy, with many opting to purchase a
home worth 500,000 (435,000) or above. If you
apply for this visa, you should ensure your
budget incorporates the cost of buying property
and other expenses linked with the buying
process, such as estate agency fees and ongoing
property taxes payable annually. For more
information about the cost of living in the
Canary Islands, applying for a long-term visa, or
planning your relocation budget, please get in
touch with the Chase Buchanan Wealth Management
team at your convenience.
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