The number of foreign residents living in Spain is in decline, especially in resort areas like the Costa Blanca. This is bad news for the Spanish coast, and bads news for Spain. The most likely cause of this reverse is Spanish Government policy.
The latest census figures from the National Institute of Statistics (INE) reveal the foreign resident population in Spain fell by 128,372 last year, a decline of 9%. The chart above illustrates how the foreign resident population has been waning since 2012.
After last year’s decline we started the year with 4,601,272 foreign residents officially living in Spain, in an overall population of 46.5 million. The drop in foreign residents pushed down Spain’s population by 99,439, despite an increase of 28,933 in the native population
Excluding Moroccans and Rumanians, both of which groups are economic migrants with more than 700,000 residents in Spain each, the British are the biggest group of expats, followed by the Chinese (also economic migrants), Germans, and French.
How have the numbers changed over the last 10 years? The trend is clear. Overall foreign resident numbers steadily increased to 2012, and then declined every year since driven by a big drop in expats from the EU.
The number of EU nationals living in Spain fell by 111,526 to 1,835,584 (-5%), whilst other nationalities fell by 16,846 to 2,765,688. British expats fell 6% last year to 283, 243, and Germans by 7% to 130,911.
At the same time some groups of economic migrants like the Chinese increased (+8,023, +3%), followed by Ukrainians (+7,850, +3%), and Moroccans (+2,542), but not enough to compensate for the big fall in EU expats.
WHAT EXPLAINS THE BIG FALL IN EU EXPATS?
The big fall in EU expats registered on the Padrón will be partly due to reporting issues during updates, with some expats failing to register by mistake or unaware of the reasons for doing so. And recent updates to the Padrón might simply recognise the fact that the it was inaccurate before. However I suspect the main reason for the falling EU expat numbers is the worldwide asset declaration (modelo 720) obligation that Spain introduced in 2012. Expat numbers were growing until 2012 when this law was passed, and have fallen ever since. So Spanish Government fiscal policy is driving away EU expats, and this is clear from these numbers.
The worldwide asset declaration obligation was introduced to clamp down on corruption and fiscal evasion by locals, but the main victims are EU expats, who are either leaving Spain, choosing not to come in the first place, arranging their affairs to avoid being fiscal residents, or simply dropping off the radar. All of this leaves Spain worse off in every respect. I suspect Spain is losing hundreds of millions, if not billions in lost taxes and economic activity, but nobody knows for sure because it has never been studied.
Spain badly needs all the economic growth it can get, and attracting wealthy northern Europeans to retire to Spain should be a priority. Expats buy homes and spend their money on goods and services in Spain. It should be rolling out the red carpet to boost this expat population as much as possible. But with badly drafted and ill-thought through policies like this, Spain will never fulfill its potential as the Florida of Europe.
And this is a disaster for provinces like Alicante (home to the Costa Blanca), which benefit from large expat communities, in particular the British. With a smaller population these regions will get less public money and suffer lower economic growth as a consequence.
Furthermore, a declining population compounds Spain’s problems. It pushes up the debt per capita ratio and makes it harder to grow the economy, which also puts pressure on the debt/GDP ratio. Spain is left with fewer people to pay an increasing amount of national debt.
Thoughts on “EU expats deserting Spain thanks to Government policy”
It is not only Modelo 720 which is driving expats away, there is also the “solar tax”, restrictions on short term rentals etc etc. Personally I’m now looking towards Portugal which is much more welcoming, particularly with their Non Habitual Residents scheme.
Mark Stücklin says:
Baromi I agree with you. It’s not just the Modelo 720, but I think it’s the worst of a rash of bad laws that turn potential expats off Spain.
We have been in the Valencia region for nearly 14 years which has largely been wonderful.
But we have had a running battle with tributaria and I now feel more likely than not we will change our fiscal base away from Spain to our house in Britain. I know tributaria are desperate for money but as your article aptly points out the bigger picture means that well off foreign residents can contribute a considerable amount to the economy.The tributaria policy of hounding law abiding residents rather than under the radar crooks is the root of the problem.
curious bystander says:
It’s a tragic position that the Spanish have brought on themselves. For 25 years I’ve planned to get a place in Spain to spend a good part of my retirement – even spent 15 years learning the language. Now I’m on the point of retiring and with the finances all in place, I look at the situation and think – no chance. Not Spain
Chris Nation says:
I think passing on these perfectly sound comments to Spanish politicians would have the same level of impact as writing to the local US ambassador, whatever country you live in, suggesting that there should be drastic legislation to control firearms in the USA. At bottom, “it’s how we do things here”.
The Spanish do not do joined-up politics. Politicians appear to be particularly easy meat for business lobbying. Not difficult to work out why – Castellan Airport, anyone?
I was determined to do things the northern European way when I bought my flat. Local practices made short work of my intentions and, in the face of TINA (Mrs T’s famous”There Is No Alternative”), my principals. Everybody said, “Es normal”.
Well, if that’s the way they play it here, I’ll do it their way from no on.