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Pensions. Tax.

Posted: Sun Sep 12, 2021 3:03pm
17 replies460 views7 members subscribed
Ang and pete

Posts: 5

Location: Camposol

Joined: 20 Jul 2021

Do you have to pay tax on English state pension in Spain?

Also on Civil service pension.?

Thanks.

Will60

Posted: Sun Sep 12, 2021 9:01pm

Will60

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Joined: 10 Feb 2020

Posted: Sun Sep 12, 2021 9:01pm

If you are granted Residencia/TIE ... you become tax-Resident after a period of time.

When you are tax-Resident, you pay tax on your UK State pension, but not on your UK Civil Service pension

You must submit a tax return each year.

Ang and pete

Posted: Sun Sep 12, 2021 9:50pm

Ang and pete

Original Poster

Posts: 5

Location: Camposol

Joined: 20 Jul 2021

Posted: Sun Sep 12, 2021 9:50pm

Will60 wrote on Sun Sep 12, 2021 9:01pm:

If you are granted Residencia/TIE ... you become tax-Resident after a period of time.

When you are tax-Resident, you pay tax on your UK State pension, but not on your UK Civil Service pension

You must submit a tax return each year.

Thank you for your reply

PhilTox

Posted: Sun Sep 12, 2021 11:13pm

PhilTox

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Joined: 1 Oct 2018

Posted: Sun Sep 12, 2021 11:13pm

Will60 wrote on Sun Sep 12, 2021 9:01pm:

If you are granted Residencia/TIE ... you become tax-Resident after a period of time.

When you are tax-Resident, you pay tax on your UK State pension, but not on your UK Civil Service pension

You must submit a tax return each year.

Are you sure about that? I'm under the impression that you declare your state pension as counting for taxation in either UK or Spain, without there being any double taxation. Do not now about a civil service pension as I do not have 1.

LeginSenoj

Posted: Mon Sep 13, 2021 7:12am

LeginSenoj

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Posts: 171

173 helpful points

Location: Camposol

Joined: 29 May 2018

Posted: Mon Sep 13, 2021 7:12am

Hi there,

I am a tax resident in Spain. I have a government pension and my state pension. My government pension is taxed in the UK under the double tax agreement between the UK and Spain. Since receiving my state pension, although it should not be liable to tax in the UK, my government pension tax in the UK, was increased to reflect that my total pension income meant, tax was payable. In Spain, there are two returns to do, the first is a declaration of global assets. The second is the annual tax return. In Spain you may be taxed as an individual, or If married, as a couple. The tax allowance in Spain is much lower than in the UK, so if you are married and there is only one income, there may be advantages to being taxed jointly. You can obtain a declaration from the Spanish Tax authorities, confirming that you are a tax resident in Spain. You send that to HMRC and will receive a refund of the tax that you have paid on the element of your state pension in the UK, since you have been a tax resident in Spain. You are likely to pay more tax on your global income in Spain, as the allowances are lower. Please take advice from a tax specialist, as everyone’s situation is different. Good luck and I hope this is useful.

Ang and pete

Posted: Mon Sep 13, 2021 8:31am

Ang and pete

Original Poster

Posts: 5

Location: Camposol

Joined: 20 Jul 2021

Posted: Mon Sep 13, 2021 8:31am

LeginSenoj wrote on Mon Sep 13, 2021 7:12am:

Hi there,

I am a tax resident in Spain. I have a government pension and my state pension. My government pension is taxed in the UK under the double tax agreement between the UK and Spain. Since receiving my state pension, although it should not be liable to tax in the UK, my government pension tax in the U...

...K, was increased to reflect that my total pension income meant, tax was payable. In Spain, there are two returns to do, the first is a declaration of global assets. The second is the annual tax return. In Spain you may be taxed as an individual, or If married, as a couple. The tax allowance in Spain is much lower than in the UK, so if you are married and there is only one income, there may be advantages to being taxed jointly. You can obtain a declaration from the Spanish Tax authorities, confirming that you are a tax resident in Spain. You send that to HMRC and will receive a refund of the tax that you have paid on the element of your state pension in the UK, since you have been a tax resident in Spain. You are likely to pay more tax on your global income in Spain, as the allowances are lower. Please take advice from a tax specialist, as everyone’s situation is different. Good luck and I hope this is useful.

Very helpful.When we move to Spain hopefully later this year we will take advise.Just wanted to be prepared.Thanks.

crissywissy

Posted: Mon Sep 13, 2021 9:35am

crissywissy

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Joined: 26 Sep 2015

Posted: Mon Sep 13, 2021 9:35am

Leginsenoj is correct…..although your civil service pension is taxed at source it is added to your total income and may take you into a higher tax band in Spain.

Worldwide assets (other than in Spain) over 50K have to be declared along with a tax return

PeterC

Posted: Mon Sep 13, 2021 5:25pm

PeterC

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Location: Los Alcázares

Joined: 10 Nov 2016

Posted: Mon Sep 13, 2021 5:25pm

A civil service pension must be declared on your Spanish tax return, but in the correct box, saying it is exempt.

Be aware that most gestors & abogados are incompetent, and will cheerfully put it along with other income, costing you a lot in tax. They don’t care as they are only interested in ripping off clients with their fees, and are not paying the tax anyway. It takes less than 30 minutes to do a simple return, and the Agencia Tributaria will help anyone to do it, at no cost.

Bob1

Posted: Wed Sep 15, 2021 7:52pm

Posts: 24

4 helpful points

Location: Totana

Joined: 15 Feb 2021

Posted: Wed Sep 15, 2021 7:52pm

LeginSenoj wrote on Mon Sep 13, 2021 7:12am:

Hi there,

I am a tax resident in Spain. I have a government pension and my state pension. My government pension is taxed in the UK under the double tax agreement between the UK and Spain. Since receiving my state pension, although it should not be liable to tax in the UK, my government pension tax in the U...

...K, was increased to reflect that my total pension income meant, tax was payable. In Spain, there are two returns to do, the first is a declaration of global assets. The second is the annual tax return. In Spain you may be taxed as an individual, or If married, as a couple. The tax allowance in Spain is much lower than in the UK, so if you are married and there is only one income, there may be advantages to being taxed jointly. You can obtain a declaration from the Spanish Tax authorities, confirming that you are a tax resident in Spain. You send that to HMRC and will receive a refund of the tax that you have paid on the element of your state pension in the UK, since you have been a tax resident in Spain. You are likely to pay more tax on your global income in Spain, as the allowances are lower. Please take advice from a tax specialist, as everyone’s situation is different. Good luck and I hope this is useful.

That is very interesting. I have a civil service pension which is taxed in UK but not in Spain. I am taxed here on my state pension. Will the UK authorities really reimburse me the amount paid to Spain? Seems very generous of them. I don’t dispute what the writer says just a little sceptical. Thanks for the article. 

PeterC

Posted: Wed Sep 15, 2021 8:45pm

PeterC

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Posts: 1598

972 helpful points

Location: Los Alcázares

Joined: 10 Nov 2016

Posted: Wed Sep 15, 2021 8:45pm

“have a civil service pension which is taxed in UK but not in Spain”

The law changed in 2015: previously a Crown pension was not declared, but from FY 2017 it had to be. Many gestors have not caught up with this, and of course they are not responsible for your return - or any fines for getting it wrong!

I do not understand this: you must declare all and any income as a Spanish tax resident. If you are foolish enough to declare a UK Civil service (“Crown”) pension in the same way as all other income you will pay tax on it. If you declare it a exempt then it affects your tax bill but not currently as badly as it would if you put it in the wrong box. Try entering your other income (A) without the Crown pension and see what your tax bill is, then (B) add it to you other income and see what your figure is, then (C) finally enter your other pensions as in (A) but put the Crown in Box 525 and look at the result.

Be very careful that it truly is a Civil Service pension, as many pensions that people think are Civil Service are not accepted as such by the Hacienda - e.g some teachers, nurses from the private sector and so on. You may well be hauled up by the tax authorities to prove the validity (as we have been in the past, passing with flying colours). It is a very good idea to have a digital certificate and opt to be notified of any communications from tax authorities - we were in the UK when they sent notice to attend their offices within 14 days, with fines for non-attendance, but because we knew of the summons we were able to arrange an appointment after we had cime back home.

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