# Spanish tax question/problem!



## passiflora (Jun 28, 2012)

We are Spanish residents but pay UK taxes. We are now in the Spanish tax system,La Renta, and last year had no problems but this year our Spanish accountant tells us we have to pay Spanish tax on our UK pensions. We have already paid the tax in the UK but he still insists we have to pay it here. Our UK accountants says this isn't right, EU law is that one pays taxes in one country only. Has anyone else come across this problem?


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## snikpoh (Nov 19, 2007)

passiflora said:


> We are Spanish residents but pay UK taxes. We are now in the Spanish tax system,La Renta, and last year had no problems but this year our Spanish accountant tells us we have to pay Spanish tax on our UK pensions. We have already paid the tax in the UK but he still insists we have to pay it here. Our UK accountants says this isn't right, EU law is that one pays taxes in one country only. Has anyone else come across this problem?


If your pension is NOT a state pension, then YES, you must pay tax in the country you reside in!


However, your UK accountant is wrong!


You have paid tax in UK and are now being taxed here - this is correct but you get an allowance for all the tax that you've paid in UK. So, you might even get a tax rebate!


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## Stravinsky (Aug 12, 2007)

passiflora said:


> We are Spanish residents but pay UK taxes. We are now in the Spanish tax system,La Renta, and last year had no problems but this year our Spanish accountant tells us we have to pay Spanish tax on our UK pensions. We have already paid the tax in the UK but he still insists we have to pay it here. Our UK accountants says this isn't right, EU law is that one pays taxes in one country only. Has anyone else come across this problem?



I guess you may not have researched the tax system originally. You say you are Spanish residents, and assuming you have been here for a while, you are therefore Spanish tax residents. Therefore your UK pensions (unless they are government pensions) are taxable here in Spain, not in the UK. There is a reciprocal tax system between the Uk and Spain which means you wont pay twice, but the Spanish system will require the difference between the UK andf the Spanish tax rate, if it is higher

In general, all your worldwide income is declarable in Spain one you are a resident and subsequently tax resident. You have no choice on this matter unfortunately.


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## passiflora (Jun 28, 2012)

Thankyou for the reply. My accountant obviously isn't as au fait with things as he thinks he is! Will see what our Spanish one has to tell us next week.


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## Stravinsky (Aug 12, 2007)

passiflora said:


> Thankyou for the reply. My accountant obviously isn't as au fait with things as he thinks he is! Will see what our Spanish one has to tell us next week.



I think the trouble is that not all UK accountants are au fait with the Spanish tax system, and not all Spanish accountants are with the UK system.

The point is, that you are now a Spanish Tax payer / resident. You should, by now, be "deregistered" for tax in the UK. Therefore unless there are other circumstances, the only advice that matters is from a good Spanish tax gestor / accountant.

To de register (and the form no may have changed) you take form FD9 to the Hacienda with all the nomal paperwork, and if possible last years tax return. The forms eventually go to HMRC in Cardiff and you get zero rated for tax in the UK. Then you don get this double tax hassle any more.

If you have a government pension in there anywhere, then this remains taxed in the UK. You get the UK tax allowance for it, and your State pension gets the Spanish tax allowance


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## passiflora (Jun 28, 2012)

*Tax in Spain.*



Stravinsky said:


> I think the trouble is that not all UK accountants are au fait with the Spanish tax system, and not all Spanish accountants are with the UK system.
> 
> The point is, that you are now a Spanish Tax payer / resident. You should, by now, be "deregistered" for tax in the UK. Therefore unless there are other circumstances, the only advice that matters is from a good Spanish tax gestor / accountant.
> 
> ...


OK Thanks for the explanation. Guess we'll have to do that then. Will discuss it with our man next week.


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## 90199 (Mar 21, 2010)

I have had the self same problem, a Gestor told me that we did not need to make a tax return in Spain, because all our earnings were in the U.K. and taxed there.

Well I wasn't happy with that so this year, we made an appointment at the tax office, they filled out our tax return, gave us a refund on our joint bank account charges, took details of our P60, made further enquiries from the main office in Tenerife. A few weeks later they called us in signed and stamped my form to have O.A.Pension transferred to the Spanish system and told us to come back next year.

I cannot complain to the gestor, sadly he died.


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## Barry Davys (Aug 2, 2008)

A note on the Spanish tax system which I hope people will find helpful. Broadly speaking the system itself is not too complicated. It is the way that it is "implemented" that gives rise to the uncertainty.

The first thing to understand is that if live in Spain more than 183 days a year you will definately be Spanish Tax Resident. You have to make a return in Spain of your worldwide income. Using Spanish Tax rates the amount of tax due will be calculated, taking into account your personal allowances. From this figure will be deducted any take that you have already paid in Spain AND in any country that has a double taxation agreement with Spain. 

EG Total tax due
- Tax already paid

If this leaves a positive figure, you will have to pay that to the Hacienda. If it is a negative figure you MAY be able to reclaim it.

This is obviously a very simplified explanation, but I hope it helps.


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## passiflora (Jun 28, 2012)

Barry Davys said:


> A note on the Spanish tax system which I hope people will find helpful. Broadly speaking the system itself is not too complicated. It is the way that it is "implemented" that gives rise to the uncertainty.
> 
> The first thing to understand is that if live in Spain more than 183 days a year you will definately be Spanish Tax Resident. You have to make a return in Spain of your worldwide income. Using Spanish Tax rates the amount of tax due will be calculated, taking into account your personal allowances. From this figure will be deducted any take that you have already paid in Spain AND in any country that has a double taxation agreement with Spain.
> 
> ...


OK thanks for that. Will see what our accountant says when we see him.,


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## passiflora (Jun 28, 2012)

Saw our accountant yesterday and all has been explained about what we have to do, which is,of course, to fully embrace the Spanish tax system for better or worse!! As residents in Spain we have to de-register in the UK and join the system here. Everything is included apart from a government pension as advised in a reply on here. He also told us that some regional governments have started to claw back back tax from UK/European residents who live here but have not joined the Spanish tax system. They can only go back 4 years but it has already started to happen in Alicante so I guess some people will be a bit poorer soon as they also have to pay a penalty as well as back tax.


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## Stravinsky (Aug 12, 2007)

passiflora said:


> They can only go back 4 years but it has already started to happen in Alicante so I guess some people will be a bit poorer soon as they also have to pay a penalty as well as back tax.



Well, to be honest people are told so many times that if they live in Spain they pay taxes in Spain. Then they ignore it and eventually the consequences catch up with them. I'm afraid I have no sympathy

_You _have discovered what should be done and are doing something about it ..... well done


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## xabiaxica (Jun 23, 2009)

Stravinsky said:


> Well, to be honest people are told so many times that *if they live in Spain they pay taxes in Spain*. Then they ignore it and eventually the consequences catch up with them. I'm afraid I have no sympathy
> 
> _You _have discovered what should be done and are doing something about it ..... well done


or should at least make a declaration - they might not have to actually _pay_ anything


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## NickZ (Jun 26, 2009)

passiflora said:


> Our UK accountants says this isn't right, EU law is that one pays taxes in one country only. Has anyone else come across this problem?


If in doubt the thing to do is tell your accountant that you're unsure of your tax residency. If he looks at you like a three headed alien you need somebody new. If he waves it off you might need somebody new.

Then get it in writing so you've got somebody to take responsibility

BTW it's not EU law. All the OECD countries have tax treaties. Some of the Spanish treaties predate Spain entering the EU. IIRC the third section (might be fourth) of all treaties deals with tax residence. 

The treaty then provides some special treatment for some types of income. This can distort things in a different direction.


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## NickZ (Jun 26, 2009)

Stravinsky said:


> Well, to be honest people are told so many times that if they live in Spain they pay taxes in Spain.


Even if they just own property. The imputed income creates a liability.


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## xabiaxica (Jun 23, 2009)

NickZ said:


> Even if they just own property. The imputed income creates a liability.


yes, non-resident tax liability on the property


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## Stravinsky (Aug 12, 2007)

NickZ said:


> Even if they just own property. The imputed income creates a liability.


Yes, the point though is that I have been telling people to put in zero tax returns for years ..... some people just dont have enough income, or maybe have a govt pension taxed in the UK. Just doing this, for €50 a year, gives you a lot of credibility in the respective tax systems. You're in the system, band it can help you in the future, as people are now beginning to discover


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