Cost of Living in Spain

Spain can leave you spellbound with the aroma of garlic and olive oil, especially if you're in the province of Andalusia. And luckily, you won't have to pay a fortune to partake of such tastiness.

One reason to smile about Spain is the affordability of food. Spanish cuisine is unpretentious, the dishes are scrumptious and the colorful ingredients make your mouth water.

On average, food for two people will cost around 350 Euro/month. A good lunch out, menu del dia, is 5-9 Euro. A glass of beer or wine at a bar is around 1.50 euro. A tapa, if it does not comes free with a drink, costs you only 1.40-2 euro.

Despite rocketing housing prices and the highest inflation in the EU at 3.7 percent, compared to other European nations they are still cheap. Electricity bills for a household of two costs about 40 euro per month, add an additional 3 percent if you have air conditioning. The basic charge for a residential phone line is 25 euro per month, plus call charges.

Gas bills for a two-person household with a gas water heater and a gas stove, are about 40 euro per month. Your furnace may also run on gas, costing an additional 35 euro a month during the winter. Water bills are generally included in the maintenance fees of an apartment.

"Much cheaper in almost all areas, council tax is only 15-20% of what we paid in the UK, petrol/diesel half price."- John Parker, Expat in Spain

In Spain, VAT (Value-Added Tax) is known as IVA, Impuesto sobre el Valor Añadido, and is generally charged at 16 percent, but varies depending on products and services. A rate of 7 percent will be added to the listed price of accommodations and restaurants. To inquire whether it is included just say "Está incluido el IVA". If you are a non-EU resident, you can claim back the tax on purchases made in excess of 90.15 Euro, but make sure to ask for tax-free receipt at the point of sale and have it refunded within three months of leaving Spain.

"It’s definitely less expensive in Spain than in the USA, and the difference is even more marked between economically depressed Seville and the booming Bay Area of California."- Karen McCann, Expat in Seville, Spain

You will usually need to file a tax return in Spain if earnings are more than €22,000 per year; you receive a rental income of more than €1,000 and/or receive a capital gains and savings income of more than €1,600. The Royal Decree 687 of 2005, a new tax regime for expatriates in Spain, states that expatriates are subject to a special flat tax rate of 25 percent for all Spanish income sources, and will be taxed as a non-resident on all income, capital gains and wealth taxes. To check eligibility for this special tax rate and for other tax inquiries, visit the AEAT (Agencia Estatal de Administración Tributaria - Spanish Tax Agency), but if you're still struggling with Spanish ask someone for help.

Inflation has increased by about 10 percent per year. Although official inflation is somewhere around 3.5 percent, in the major cities it is actually much higher. Every country has its downside but expats in their droves still choose to live in Spain. In Spain, the upsides dominate!