Tax queries

Once you are tax resident you declare all incomes from anywhere in the world, and any assets held outside Spain worth over €50,000 - e.g. pension funds, housing, savings. The incomes are submitted from now until the end of June, the assets at the end of the year.

We will not have any “incoming” income (Until we take our pensions in 2035) and will have no assets. The only money we have will be what we bring with us, we will not be adding anything to the money we bring with us to Spain, in this instance we do not have to pay tax as I understand it?

In general, that is correct.

Peter C refers to the Modelo 720 form, which you need to submit to declare worldwide assets outside Spain (this excludes pensions), but, generally, you won't be taxed on these unless they amount to more than €2 million.

As you won't have an 'income' you won't pay tax in Spain, but you will still have to complete a tax return.

Assuming that you are moving from the UK, then you will need a Non Lucrative Visa - part of which requires you to provide proof of means (enough money to live), which is currently approx. €34,500 pa for a couple. This is required for the first five years, after which you can apply for permanent residency and the means requirement stops.

If you are planning to sell a property in the UK to fund this move, please take professional advice, as you could become liable for Capital Gains Tax in Spain, if you move here in the same tax year as when you sell the UK property.

Hope this helps - and happy to answer any additional questions...

I do not understand if you have to show an income of 35k per annum why this should not be declared? Although currently assets declared on Modelo 720 are not directly taxed there are hefty fines for not declaring them...anyone care to take a bet on if/when a tax is introduced?

Dear Peter C,

Many thanks for your reply and this does seem to fall in line with the legal tax/advice we have also received from some of the lawyers dealing with expatriates

The main concern for us was having to declare tax on money in our bank account(s) which will have now added income but this has been clarified as not being an issue, it appears to be only "income" received through various channels

Is there a generic taxation figure on actual Pension when finally received/drawn down?

Best regards 

I believe you only have to declare "incoming" income to your already existing bank account value/balance, be it savings added/investments added/pension added etc

Although you are correct, the uncertainty is when/if they do start to force declarations on your initial €30k to start off with in the country. The rules could change at any time and this is what we are unsure of and is holding us back a little at present on actually going ahead with relocation plans

Dear RichT,

Many thanks for your help and comments

The €35k pa isn't 'income', it's described as means of maintenance' and, as you are not allowed to work when holding a NLV, you need to demonstrate that you have this in savings, shares, bonds, rental income from a property that you rent out, pension, etc.

However, you do need to declare on your income tax return in Spain (from the above) rental income, pension income, interest on savings, dividends on shares, etc. The only area that is exempt is the initial capital value in your savings, shares, etc.

Pensions are taxed differently depending on if they are 'government pensions' (e.g. Police, Armed Forces, etc.) or private / workplace pensions. Pensions are taxable in the UK too, if you receive over the personal allowance limits and, broadly speaking, the same applies in Spain.