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The idea of becoming a citizen of the European Union appeals to many of us. Holders of this valuable passport enjoy the freedom of living and working in any member country, as well as the ability to move assets and holdings between countries with ease.

It is not a difficult process to become such a citizen. You must simply become a citizen of one of its countries. Spain is one of the most attractive options. It offers year-round sunshine, one of the lowest costs of living in Europe, and many cultural and entertainment possibilities, making its residency requirements extremely easy to bear. Read on for details on how to become a Spanish citizen.

Post-Franco Spain is more popular than ever. The song goes "the sun is always shining in Spain," but there's more than just good weather to be happy about here.

The integration of Spain into the European Union has created another gateway to European citizenship.

It used to be that marriage provided the easiest means to citizenship in Spain. Under the old law, foreigners were able to apply if they were or had ever been married to a Spaniard, even if the marriage had been dissolved.  Now, the legislation has tightened the rules and a foreigner must be married to a Spaniard at the time of application and the marriage must have been in existence for at least one year.

Alternatively, you can still acquire Spanish citizenship if you were born in Spain or in certain Spanish territories at certain times. Or if one of your parents was born in Spain you can claim citizenship. To find out whether you might qualify, consult a respected Spanish lawyer, we recommend Malaret & Associates, 104 Pasedo de Gracia, 08008 Barcelona, tel. (34-32) 171999, fax (34-34)15-1546; they have practical experience in nationality issues. Your embassy or consulate can provide you with a list of legal offices in different cities.

Citizens of Spain's former colonies can apply for a Spanish passport after only 2 years of residence
Ordinarily, you must first be a resident in Spain for a staggering 10 years before you can be naturalized. Refugees are granted citizenship after only five years residence. And citizens of some of Spain's former colonies can apply for a Spanish passport after a period of only two years of residence. As there is no shortage of citizenships available from the former Spanish colonies, this can prove an easy path into the EU. Former Spanish colonies include most of Central and South America, except Brazil, which was a colony of Portugal. It is worth noting also that those of Spanishjewish descent can also apply for a Spanish passport after two years of residence. Purchasing a home is not a requirement for obtaining citizenship. And with or without citizenship you'll likely have the legal right to work, though you may have to prove six months of residence.

To become a citizen, you will be expected to become a reasonable Spanish speaker and to maintain a real presence in the country. However, during your period of residence, which will be between 2 and 10 years depending on which category you fall under, your travel will be totally unrestricted. No one will count the days you are away, and, because you will be living in the EU, your movements through member countries will be entirely painless.

While there are no restrictions on travel during the required residence period, token residence is not acceptable. The Spanish police keep close tabs on foreigners and will actually visit your home and interview neighbors to make sure you really live there and are behaving yourself. It is worth remembering that the authorities will not hesitate to expel any resident alien they consider undesirable. But there's no need to worry. It's relatively easy to prove that you are living in the country through a renta, a permanent residence income-tax form. All permanent residents also have an ID called an NIF that identifies them as Spanish taxpayers to EU tax officials.

Taxation in Spain
If you're a permanent resident of Spain, you'll be taxed on your worldwide income at rates in excess of 50 %. Income is established by authorities based upon your home, car, and lifestyle. It's not surprising then that many wealthy Spanish passport holders establish legal residence in a tax haven.

Spain has tax treaties with many non-EU countries, including the US and Switzerland. These treaties tend to allow individuals to pay taxes in the country where the rate is lower. Wealthy foreigners are therefore advised to consider Spain as a fine place to spend some leisure time but not as a place to live tax-free after acquiring a passport.

Taxation on income and capital gains for nonresidents extends from 20 percent to 50 percent. Tax laws effective since 1992 state that individuals will be considered resident if they stay in the country for longer than 183 days annually or if their main center of professional or business activities for economic interest is in Spain. If your spouse or dependents remain resident, you will be considered a resident unless you can prove you were a resident for more than 183 days in another country. Temporary absences will be included in the authorities' calculations.

Income obtained by nonresidents is deemed to be earned on the date it became claimable or when it was effectively collected. Unless you have a permanent establishment, you must appoint a fiscal representative in Spain and notify the tax authorities. Nonresidents that own only one holiday home need not worry about this requirement. Tax-haven corporations that own villas are charged with a special tax of 5 percent of each villa's value per year.

Despite these tax implications, a Spanish passport is a very good one to hold. A Spaniard can travel visa free to a dozen more places than an American can. In addition, Spain has a superb relationship with its former colonies in the same way the UK does with the Commonwealth. And remember, Spain does not tax its nonresident citizens.

Bob's property pick of the month
When I heard we were devoting this month's issue to Spain, I quickly rang my friend Malcom Williams who told me about an incredible property just 30 minutes away from the coastal town of Malaga.

This charming small cottage in an exceptionally pretty area consists of two rooms plus a large stable and outbuildings to convert. There is 8,000 sq. meters of flat and gently sloping land with many olive, almond, and fruit trees. There's also a lovely fenced garden. The property is set in a quiet hamlet 10 minutes from Colmenar. They are asking $46.052.

Contact Malcolm at Images of Andalucia, Tara, Ctr Colmenar, Solano 29170 (Malaga), tellfax (34-52)1111-78.

Annual taxes
Once you've bought a home, annual rates and property taxes aren't overwhelming. The municipal tax, payable at the local town hall, is currently 0.7% of the value of a property Annual rates are typically as follows: village houses, approximately 8,000 pts; ($52) per annum; two-bedroom apartments, 25,000 pts ($164) and three-bedroom villas, 37,500 pts ($246).

Residency requirements
EU nationals can remain in Spain without a residency permit for six months, non-EU nationals for three months. Basic requirements for obtaining a permit are the following: four passport photos, a residency visa from the Spanish Consulate in your home country, proof of income or pension, the form El 11 endorsed by Spanish health authorities or proof of private medical insurance, a certificate that you are registered with your own consulate in Spain, an escritura or a rental contract. The fee is 935 pts ($6.15).

Recommended reading
This article is adapted from The Passport Report published by Scope International. It is the best resource available on the benefits and how tos of obtaining a second passport. It normally sells for $100 but we've arranged a 25% discount for IL readers.

For a copy, call (600)851-7100 or fax (410)223-2696; the cost is $75, including shipping and handling.

Step-by-step buying in Spain
Most property agents will guide you through the tangled web of red tape. Note that legal transactions, fees, purchase taxes, and local taxes will increase the initial price by between 8% and 10%. Completion of the entire purchase process normally takes between four and six weeks.

A property buyer also needs to open a Spanish bank account and obtain a fiscal identity number.

It's vital to ensure that all previous taxes and utility bills have been paid and that there are no debts outstanding against a property-you'll be liable for them. Records may be checked against a property register in the local town hall. If your agency doesn't have its own legal department, you can undertake a search yourself or engage a notary to act on your behalf.

If you haven't engaged a notary to conduct a search before parting with your holiday deposit, you will certainly require one to set up a contract and draw up the title deeds. A nonrefundable 10% deposit is normally paid then, on exchange of the initial private contract. Notary expenses are officially controlled, and the minimum fee is 15,000 pts ($198) for transactions below 1 million pts ($6,578).

During the ensuing 30-day period and prior to the signing of the public deed (the escritura), have a lawyer check the contract. His duties also include taking the title deed and receipt of all taxes paid to the tax office. The fee for inserting the property in your name in the official register is charged when full payment has been made.

Taxes are equal to 7% of the value of the property plus 0.5% for a legal-proceeding fee if you buy through a realestate agency. Otherwise, you must pay a 6% property-transfer fee.

Although it's impossible to give exact figures for additional costs, this is what you can expect to pay in fees and taxes on an 18 million pts ($118,421) home:

Transmission taxes and

Sundry expenses: 1,466,350 pts ($9,647)

Notary fees: 111,737 pts ($735)

Lawyer fees: 40,600 pts ($267)

Property Register- 54,691 pts ($359)
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1,673,378 pts ($11,009)
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PERSPECTIVE

Dear reader,

This issue focuses on the Motherland and not the colonies. We are visiting not Mexico, Honduras, or Guatemala, as is our wont, but Spain.

Some readers reproach us for being over enthusiastic about el cheapo semisavage Latin American destinations. This issue is about an el barato civilized European destination.

We explore Spain with the usual International Living thoroughness, from the offshore Balearic Island of Menorca to the uplands of Malaga. We found real estate bargains galore, but did not stop at that.

We teed off at dozens of golf courses in the interest of our duffer readers, carefully surveying the sand traps and scenery.

We have in this issue a firsthand account of how you can build your own dream castle (or house) in Spain based on interviews with a couple who did this. Spain is a backdoor to citizenship in the European Community, subject of an expert report, also in these pages. If you are of the right background, you can get Spanish nationality quickly, which will give you the right to work and live anywhere in the European Community.

To incorporate or set up a business in España, there are complex rules we summarize in this issue. And to invest in Hispanic banking-from Puerto Rico to Tierra del Fuego to Spain itself, we reprint one of my articles in here as well.

Why is Spain such a good buy now? The answer is that el barato prices will not last long. Right now, Spain is the home of a currency people do not take seriously, the Spanish peseta. In 15 months time, Spain and countries north and east and west of it will have a new currency, the Euro.

There will be no more Spanish pesetas after European Monetary Union takes place. After the switchover, mortgage interest rates in Spain will come down to northern European levels-and prices for real estate and other goods will inch up toward northern European levels too. The peseta will be an historic remnant.

Since most of our readers are not qualified for European mortgages, we have no reason to wait for the EMU to begin. The time to buy is now.

Since Spain is Europe's primary vacation destination, you can expect a massive inflow of new holidaymakers, new time-share purchasers, new real estate investors, from Ireland, Germany, the Low Countries, France, and Scanadinavia. These folks are desperate for sun, sea, and sand, and perhaps a bit of exotica.

They will not have to change money after mid-1 999 when they cross the border into Spain. They will be using Euros at home too. The money they spend on vacation will be the same as they use in the supermarket at home.

So there should be a pickup in tourist numbers and their willingness to spend.

We think Spain is due to boom because of European integration, and advise getting your stake there before it happens.

We feel so strongly about Spain that we've scheduled a tour to its beautiful south em region and the Balearic Islands for May 18-27. To join us, call our Discovery Tour Director Barbara Perriello, (800)926-6575.

Vivian Lewis - Consulting Editor