# starting the process



## notmrsw (Nov 12, 2011)

Hi everyone, I am in the very early stages of making the move to Spain, won't happen for at least 18 months due to work and family situations but the more research I do, the better. My first question is about tax. I will recieve a private pension, I understand that if I spend more than 184 days per year in Spain then I will be liable for tax, how is this paid?
thanks in advance for any help


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## Alcalaina (Aug 6, 2010)

notmrsw said:


> Hi everyone, I am in the very early stages of making the move to Spain, won't happen for at least 18 months due to work and family situations but the more research I do, the better. My first question is about tax. I will recieve a private pension, I understand that if I spend more than 184 days per year in Spain then I will be liable for tax, how is this paid?
> thanks in advance for any help


You can be resident in Spain full time and still have the tax on your pension deducted in the UK. You would only need to pay tax in Spain if you were earning money in Spain, either from a job or from property rental.


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## CapnBilly (Jun 7, 2011)

Alcalaina said:


> You can be resident in Spain full time and still have the tax on your pension deducted in the UK. You would only need to pay tax in Spain if you were earning money in Spain, either from a job or from property rental.


I'm sorry, but this is completely wrong. If you are a Spanish tax resident then you are liable to pay Spanish tax on your worldwide income.

However If you have a pension which is a UK government occupational pension then under the dual taxation agreement government pensions can only be taxed in the country of source. If your pension is a private or state pension then it is liable for tax in Spain, and you will receive allowances.

If it is a private pension then you will need to apply to HMRC for it to be paid gross, but you will need a form stamped by the Hacienda (spanish tax office). They will normally only do this following the submisson of your first tax return, so you will need to complete this, pay the tax and then submit the form to the HMRC which includes a claim for a refund of the tax you have paid in the UK. Until recently people just used to pay the difference ie offset the uk tax they had paid, but the Hacienda are now insisting you pay in full and claim the uk tax back. There's no problem claiming back from HMRC.

Spanish tax is by self assessment in the year following, so returns for 2011 are due for submission in 2012 around May time. You can do it yourself online, but you may be better getting help with the first one, particularly as you have to register as a tax resident first (modelo 030). There's plenty of help available.


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## jojo (Sep 20, 2007)

CapnBilly said:


> I'm sorry, but this is completely wrong. If you are a Spanish tax resident then you are liable to pay Spanish tax on your worldwide income.
> 
> However If you have a pension which is a UK government occupational pension then under the dual taxation agreement government pensions can only be taxed in the country of source. If your pension is a private or state pension then it is liable for tax in Spain, and you will receive allowances.
> .


I dont know much about tax, but I'd have said your comment and the one you say is wrong are saying exactly the same????????


Jo xxx


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## CapnBilly (Jun 7, 2011)

jojo said:


> I dont know much about tax, but I'd have said your comment and the one you say is wrong are saying exactly the same????????
> Jo xxx


Err, no. 



CapnBilly said:


> If you are a Spanish tax resident then you are liable to pay Spanish tax on your worldwide income.
> .


is completely different from



Alcalaina said:


> You would only need to pay tax in Spain if you were earning money in Spain, either from a job or from property rental.


Mine says you have to pay Spanish Tax on worldwide income, so private or state pension, dividend income, bank interest etc. whereas Alcalaina says you only need to pay tax on money you earn in Spain.


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## Alcalaina (Aug 6, 2010)

Sorry for any confusion, I was simply trying to reassure Not Mrs W that her UK private pension doesn't have to be declared and taxed in Spain, even if she lives here more than half the year.

I should shut up and leave it to the experts!


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## 90199 (Mar 21, 2010)

I have a pension, it is paid and taxed in the U.K. This cannot be changed.


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## Guest (Nov 20, 2011)

When I arrived in Spain 6 and a bit years ago I wanted to do everything correctly. The UK tax authority sent me a booklet of forms that I had to fill in, both in Spanish and English and submit it to the Spanish tax authority. I did this but nothing happened. I got a friend who is a Spanish tax lawyer to write a letter for me and I took it to the offices of the tax people. I have never been treated so rudely. The 'lady' in the office read my letter, ripped it up and threw it in my face and told me to get out and not waste her time! I have a state pension, a National Health Service pension and a local authority pension - I pay tax on them all in the UK before it is transferred to my Spanish bank account. I am not prepared to go through any of that nonsense again with the Spanish tax people so I just do nothing - I tried my best - can't do more than that.


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## CapnBilly (Jun 7, 2011)

Hepa said:


> I have a pension, it is paid and taxed in the U.K. This cannot r be changed.


Then it must be a government occupational pension. (which includes civil service, local authority. police, fire, forces etc),


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## CapnBilly (Jun 7, 2011)

4tunate said:


> When I arrived in Spain 6 and a bit years ago I wanted to do everything correctly. The UK tax authority sent me a booklet of forms that I had to fill in, both in Spanish and English and submit it to the Spanish tax authority. I did this but nothing happened. I got a friend who is a Spanish tax lawyer to write a letter for me and I took it to the offices of the tax people. I have never been treated so rudely. The 'lady' in the office read my letter, ripped it up and threw it in my face and told me to get out and not waste her time! I have a state pension, a National Health Service pension and a local authority pension - I pay tax on them all in the UK before it is transferred to my Spanish bank account. I am not prepared to go through any of that nonsense again with the Spanish tax people so I just do nothing - I tried my best - can't do more than that.



Well, I appreciate why you say this, the Hacienda are not the most friendliest of places, which is why I recommended in my other post that you paid a professional to establish your residence first. It doesn't usually cost much if your affairs are relatively straightforward, about €50/60.

However, just to be clear, it is your responsibility to ensure that you pay your taxes, if they catch you they won't be sympathetic, unless you have something in writing. 

In terms of your pensions, the local authority pension is only taxable in the UK. The NHS pension may not be subject to the double taxation agreement (DTA) in which case you may need to declare it and pay tax here. Only HMRC can tell you this, although I have a vague recollection of once finding a website where you could enter you organisation and it told you, but I couldn't find it again when I searched earlier today. I suspect it is subject to the DTA, and therefore your state pension is the only one that should be taxed in Spain (there is no choice about this). It may be that the 'lady' in the tax office knew this, based on your form, and assuming you don't have any other income, realised you would be submitting a nil return, which is why she treated you rudely.

Anyway, from a personal perspective I would be pursuing this for 2 reasons

1. Depending upon how much your occupational pensions are in value, it may be costing you money. If we assume that both your occupational pensions are taxable in the UK, then as they are subject to UK taxation, you will receive a personal allowance (for 2011/12 it £7,475 if you are under 65 and £9,940 + over 65 (less age related income). This allowance is offset against your pensions and you pay tax on any excess (or not as the case may be). In your current circumstances your state pension is also added to the total, and you pay tax on some or all of this. 

However, as I said earlier your state pension is subject to spanish tax, and because your UK government services pensions can ONLY be taxed in the UK, they are ignored, so your state pension is subject to tax, and because of this you will receive the spanish tax allowance, which a base of €5,151 plus €4,080 if your taxable income is below €9,180 (which if its a basic state pension it will be). 

If your taxable income is above this because you have other income (say interest or dividends) then the €4,080 is on a sliding scale down to minimum of €€2,652 for taxable income over €13,260)

PLUS, if you have a married partner, then unless they declare separately, you can add an additional allowance of €3,400.

I'll leave it to you to work out your own personal circumstances, but the combined value of all your income is over the UK tax allowance, then it's costing you money, AND you are still liable for spanish tax.

PS As the economic climate has changed (and revenue has dropped) the Hacienda are putting more resources into chasing people. did you know that the electric companies now have to provide a return of usuage to the Hacienda, so they can see whether your house is occupied, and if so either 

a) you are a resident, and possibly should be submitting a return or 
b) you are a non-resident, but you let your property out, in which you should be declaring rental income or 
c) you are a non-resident who doesn't let your property out, but you should be submitting a Form 210 and paying non-resident tax on the deemed income.

2. This may not apply to you, but spanish Inheritance tax (IHT) can be quite punitive. The national allowances are quite low, but some, but not all the regional allowances are quite generous. This is particularly relevant if you live in one of the generous regions, such as Madrid, Valencia and others, where after the national allowance, they give relief of 99% if the beneficiary is a resident of the region (remember IHT is payable by the beneficiary, not the estate as in the UK). Residency in this circumstance means fiscal residency (normally for 5 years in Valencia, which is where I live, but I assume its the same for others), which is demonstrated by submitting tax returns, even nil returns. 

Sorry for the long reply.


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## jojo (Sep 20, 2007)

CapnBilly said:


> Err, no.
> 
> 
> 
> ...



Still seems the same, you go into more detail of the difference between tax resident and UK pension!

Jo xxx


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## notmrsw (Nov 12, 2011)

*thanks*

:clap2: For the information everyone
I will be in receipt of an nhs pension-just above the uk tax threshold, my old age pension will not be payable until I have been in Spain for a few years. OH gets his 3 years after our planned move. He also has an nhs pension, we will have no other income-apart from handouts from our daughter. I'm going to make mistakes along the way-no doubt, but I do not want to cross the taxman
Back to work now to build up the pension fund for the move.


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## Alcalaina (Aug 6, 2010)

notmrsw said:


> :clap2: For the information everyone
> I will be in receipt of an nhs pension-just above the uk tax threshold, my old age pension will not be payable until I have been in Spain for a few years. OH gets his 3 years after our planned move. He also has an nhs pension, we will have no other income-apart from handouts from our daughter. I'm going to make mistakes along the way-no doubt, but I do not want to cross the taxman
> Back to work now to build up the pension fund for the move.


Good for you. We are in a similar position, took early retirement, living on private pensions plus what's left of our savings, and still three years away from state pension. We live pretty reasonably on not very much - certainly better than we could in the UK - but then most of the things we enjoy doing here don't cost anything!


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