[LindaHaydon]

Hi Everyone,

I am some what confussed about my tax as a Spanish resident. I am a pensioner who recieves a UK state penion and a small Teacher's pension. I have been told that if you receive a govenment pension it is exempt from Spanish tax.

Could anyone clairify is, would appreciate your help

Thank you, Linda

 

[Lynn R]

UK Government pensions are taxable only in the UK - a list of the types of pensions which come into this category is shown here, and teachers' pensions are included.

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm343040

Under the Spain/UK Double Taxation Treaty such pensions do, however, have to be included on your Spanish income tax return in a separate category from your state pension, as "renta exenta" ie exempt income. That can result in people paying a higher rate of tax on their other taxable income, but in your case if you only have a UK state pension in addition to the teachers' pension that should not apply.

 

[Pipeman]

Slightly off topic, but if you are not yet of retirement age (61) and are living off savings you only pay tax on the interest on the savings (no other income) ?

For example, 300k savings at 10% (to make the sum easier) giving 30k interest, only the 30k is taxable ?

I thought I had fully "got" this but lockdown has made my noggin fuzzy

 

[Alcalaina]

Slightly off topic, but if you are not yet of retirement age (61) and are living off savings you only pay tax on the interest on the savings (no other income) ?

For example, 300k savings at 10% (to make the sum easier) giving 30k interest, only the 30k is taxable ?

I thought I had fully "got" this but lockdown has made my noggin fuzzy

That's correct. The current rate is (I think) 19% on interest payments up to €6,000, 21% between €6,000 and €50,000, and 21% above that.

 

[Pipeman]

Thanks

 

[Juan C]

If your crown pension and other pension exceed the Spanish tax free allowance, you will pay some tax in spain.

In my case I pay tax on all my income excluding my crown pension, in Spain. I have no tax free allowance left in Spain. Because I declare my crown pension I start paying tax at around 29% from the first euro.

 

[Lynn R]

If your crown pension and other pension exceed the Spanish tax free allowance, you will pay some tax in spain.

In my case I pay tax on all my income excluding my crown pension, in Spain. I have no tax free allowance left in Spain. Because I declare my crown pension I start paying tax at around 29% from the first euro.

My income (excluding my Crown Pension) exceeds the tax free allowance in Spain. I declare my Civil Service pension as exempt income and I do pay a small amount of tax in Spain but it certainly isn't charged at 29%. I don't know where you get the 29% from, as it doesn't correspond to any of the income tax rate bands.

https://www.spenceclarke.com/wp-content/uploads/guides/spanish-tax-guide-2019.pdf

As the OP stated that she has only the UK state pension in addition to her teacher's pension, she will not be in the position you describe anyway.

 

[Juan C]

thanks Lynn

Sorry but I did say around 29%. That was the rate for me, the first year it became a requirement to declare the crown pension.

I see the bands have changed slightly. It is 30% at my income level, for this year.

From your table that would seem to be 15% State tax plus 15% Andalucía tax.

Or 30% from https://spainaccountants.com/tax-rates

 

[mrypg9]

My advice to anyone unsure about tax would be to find yourself a local Spanish accountant recommended by local business people and taxpayers in general. Not a gestor.
These local accountants are usually well-known as 'fixers in the local community and are also usually well-known at the local tax offices.

My accountant is called Aurelio. Nothing like the accountant we had in the U.K. He smokes those vile cigarillos, wears dark glasses indoors summer and winter and rolls up his sleeves with garter-like bands to hold them in place. He looks like a Las Vegas gambler circa 1940. Not a word of English.

He's not 100% kosher. When he told Sandra how much tax she should pay he said 'What do you want to do?' and seemed surprised when she said 'Pay it of course'. He then said 'How much?' and shook his head as if amazed when she replied 'All of it'.

But once we made our views on tax obligations clear he was very efficient in sorting out our somewhat complicated taxes.

He once charged me 25 euros for doing my tax return. I think he feels sorry for our naïve honesty. I'm still waiting to be billed for the sorting out of the 36000 euro fine plus late tax payment I was mistakenly asked for. When I asked him how much I owed him he replied 'How much money have you got?'

It's good to have an Aurelio, however eccentric he may seem.

 

[Alcalaina]

It's good to have an Aurelio, however eccentric he may seem.

Mine is called Jesús. He was a bit bemused at first that we weren't looking for loopholes but now he thinks we are model citizens, and as he's related to half the village that's good for our street cred. He's a gestor but I can't really see what difference it makes, he knows the system inside out. And he only charges €20. Jesus saves!

 

[stevesainty]

If your crown pension and other pension exceed the Spanish tax free allowance, you will pay some tax in spain.

In my case I pay tax on all my income excluding my crown pension, in Spain. I have no tax free allowance left in Spain. Because I declare my crown pension I start paying tax at around 29% from the first euro.

I am sorry Juan C, but your second statement is slightly misleading. Apart from the earned income allowance in Spain that can be completely eroded by the level of your income, the standard 2,000 euro allowance and your personal allowances are both applied to reduce the calculation of your tax. You pay your tax at the appropriate rate through all the tax bands that your income falls within, starting at 19%.

 

[Boddis]

My advice to anyone unsure about tax would be to find yourself a local Spanish accountant recommended by local business people and taxpayers in general. Not a gestor.
These local accountants are usually well-known as 'fixers in the local community and are also usually well-known at the local tax offices.

My accountant is called Aurelio. Nothing like the accountant we had in the U.K. He smokes those vile cigarillos, wears dark glasses indoors summer and winter and rolls up his sleeves with garter-like bands to hold them in place. He looks like a Las Vegas gambler circa 1940. Not a word of English.

He's not 100% kosher. When he told Sandra how much tax she should pay he said 'What do you want to do?' and seemed surprised when she said 'Pay it of course'. He then said 'How much?' and shook his head as if amazed when she replied 'All of it'.

But once we made our views on tax obligations clear he was very efficient in sorting out our somewhat complicated taxes.

He once charged me 25 euros for doing my tax return. I think he feels sorry for our naïve honesty. I'm still waiting to be billed for the sorting out of the 36000 euro fine plus late tax payment I was mistakenly asked for. When I asked him how much I owed him he replied 'How much money have you got?'
Tax accountant near me price company Your Books On Time.
It's good to have an Aurelio, however eccentric he may seem.

Yes, I agree with you here

 

[mrypg9]

My income (excluding my Crown Pension) exceeds the tax free allowance in Spain. I declare my Civil Service pension as exempt income and I do pay a small amount of tax in Spain but it certainly isn't charged at 29%. I don't know where you get the 29% from, as it doesn't correspond to any of the income tax rate bands.

https://www.spenceclarke.com/wp-content/uploads/guides/spanish-tax-guide-2019.pdf

As the OP stated that she has only the UK state pension in addition to her teacher's pension, she will not be in the position you describe anyway.

It depends on the level of your pension. I took out AVCs in addition to my Teachers Pension which plus my SRP at basic rate makes me liable for tax in Spain as well as in the UK. The rate certainly isn’t normally as high as 29% for most people in receipt of these pensions but that depends on your pension income. Until changes were made a few years ago, Crown pensions were based on final salary and up to 50% of years of service. A senior Government Civil Servant, high- ranking military or police officer or Head Teacher andSenior Management in large comprehensive schools could enjoy pension levels beyond average and certainly mode national income and w attract a higher rate of tax in Spain.