# income tax



## caravan (May 18, 2014)

am I correct in thinking that the tax arrangement for uk expats living in spain is still in place ie tax on private pensions paid at source in the uk and not again in spain 
because i have heard that this is about to change.
can anybody please enlighten me on this subject. I would be grateful as it may be a factor in future plans 

I expect this may have been talked about before but icannot find it I hope someone has up todate information


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## 90199 (Mar 21, 2010)

Just completed tax returns using a tax advisor. Govt. pension is taxed in the U.K. only, O.A.P. is taxed in Spain, but no tax paid because it is under the Spanish threshold.


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## extranjero (Nov 16, 2012)

caravan said:


> am I correct in thinking that the tax arrangement for uk expats living in spain is still in place ie tax on private pensions paid at source in the uk and not again in spain
> because i have heard that this is about to change.
> can anybody please enlighten me on this subject. I would be grateful as it may be a factor in future plans
> 
> I expect this may have been talked about before but icannot find it I hope someone has up todate information


Previously government pensions were invisible to the Spanish tax office.
Next year, although they remain liable for UK tax only, they will have to be declared on the form in an exemption box.
It won't be taxed in Spain, but will be taken into account when working out the tax base, leading ultimately, some think, to higher tax.


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## caravan (May 18, 2014)

Thank you so much! that is most helpful! We can now investigate moving !


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## thrax (Nov 13, 2008)

extranjero said:


> Previously government pensions were invisible to the Spanish tax office.
> Next year, although they remain liable for UK tax only, they will have to be declared on the form in an exemption box.
> It won't be taxed in Spain, but will be taken into account when working out the tax base, leading ultimately, some think, to higher tax.


That is correct. Although government pensions are exempt for tax purposes in Spain they have to be declared so that any state and private pensions, taxed in Spain, are added to give a total income (for pensions) to determine at what level you start paying tax in Spain.


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## ddrysdale99 (Apr 3, 2014)

Didn't the OP ask about a PRIVATE pension? All the answers seem to be about State or Government employee pensions.
Or should I go back and re read the thread?


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## extranjero (Nov 16, 2012)

ddrysdale99 said:


> Didn't the OP ask about a PRIVATE pension? All the answers seem to be about State or Government employee pensions.
> Or should I go back and re read the thread?


I got the impression that caravan meant government pensions, because changes were mentioned, and it is Government pensions that are due to change.
Perhaps caravan will clarify?


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## caravan (May 18, 2014)

it is my state retirement pension that I meant. So.... is this going to change?? Are we going to be taxed on that?


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## caravan (May 18, 2014)

Oh no... re reading rep Power, I think I may be worrying about nothing! The more things you try and sort things out, the more things crop up that stop you trying to make a change of life and then you end up doing nothing !


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## extranjero (Nov 16, 2012)

caravan said:


> it is my state retirement pension that I meant. So.... is this going to change?? Are we going to be taxed on that?


Your state pension is paid gross. It's only when, with other pensions, it brings your income above the tax threshold that you are liable for tax.
When you move to Spain you will have to register on the Spanish tax system,
The double taxation treaty will ensure you only pay tax in Spain, unless you receive a government pension, which I described earlier.


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## Williams2 (Sep 15, 2013)

Hepa said:


> Just completed tax returns using a tax advisor. Govt. pension is taxed in the U.K. only, O.A.P. is taxed in Spain, but no tax paid because it is under the Spanish threshold.


Just out of interest - how many Expat's filled in their 2013 Tax Returns online,
rather than using a Tax advisor. Bearing in mind that Tax Advisors charge a
fee for their services - whereas online it's free.

Note - the deadline for Online Tax Returns expired yesterday, 30th June 2014.


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## Lynn R (Feb 21, 2014)

Williams2 said:


> Just out of interest - how many Expat's filled in their 2013 Tax Returns online,
> rather than using a Tax advisor. Bearing in mind that Tax Advisors charge a
> fee for their services - whereas online it's free.
> 
> Note - the deadline for Online Tax Returns expired yesterday, 30th June 2014.


Anyone who doesn't feel confident to complete it online can also obtain a cita previa at their nearest Hacienda office (phone number given in this article):-


Cita previa para la declaración de la renta: cómo, dónde y cuándo pedirla | Economía | Cinco Días

where they will complete it online for you, free of charge. You will need to speak Spanish or have a Spanish speaker with you though, most probably.


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## caravan (May 18, 2014)

thanks every body


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## xabiaxica (Jun 23, 2009)

Williams2 said:


> Just out of interest - how many Expat's filled in their 2013 Tax Returns online,
> rather than using a Tax advisor. Bearing in mind that Tax Advisors charge a
> fee for their services - whereas online it's free.
> 
> Note - the deadline for Online Tax Returns expired yesterday, 30th June 2014.


my gestor does mine 

he rang me the other week to say 'we need to discuss your tax return'

I went in, sat down, & he showed me the online thingy with this big number at the bottom

he looked really serious... I said - please don't say I have to pay that 

he kept looking serious - then he broke into a huge  - no, he said - that's your rebate!!

it was in my account yesterday morning


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## extranjero (Nov 16, 2012)

Seeing how different accountants 
made the amount of tax I had to pay wildly different, I would not be willing to do it myself.
Different accountants seem to treat certain kinds of pensions differently


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## larryzx (Jul 2, 2014)

caravan said:


> .............. ie tax on private pensions paid at source in the uk and not again in Spain ............


If you are British (double taxation agreements with other countries can vary) all income Worldwide is taxed in Spain if you live here, with the exception of UK Government employee pensions i.e. military, police etc. All other income including private pensions, OAP, Premium Bond winnings etc must be declared in Spain and if above the tax free allowance, taxed in Spain 

There is choice where you pay tax.

If you have paid in UK that is no excuse for not paying in Spain, as you should have notified HMRC that you have moved to Spain, who will have sent you paperwork, which you present to Hacienda, and they return to UK. You are then correctly registered as Tax Resident in Spain and not in UK.

As mentioned the change in declaring the UK Government Employee Pensions will apply from the next tax declaration


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## Lynn R (Feb 21, 2014)

extranjero said:


> Seeing how different accountants
> made the amount of tax I had to pay wildly different, I would not be willing to do it myself.
> Different accountants seem to treat certain kinds of pensions differently


Unless I'm missing something, that seems to suggest that you would be just as well off doing it yourself as paying a "professional" to complete it!


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## Alcalaina (Aug 6, 2010)

Williams2 said:


> Just out of interest - how many Expat's filled in their 2013 Tax Returns online,
> rather than using a Tax advisor. Bearing in mind that Tax Advisors charge a
> fee for their services - whereas online it's free.
> 
> Note - the deadline for Online Tax Returns expired yesterday, 30th June 2014.


We use a gestor, it costs €20 and is worth every cent. It would cost us that to drive 40 km to the nearest AT office and park the car. I've wasted so many hours trying to get things to work on the AT Sede Electronica I've given up - also the gestor can answer any queries on the spot.


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## Alcalaina (Aug 6, 2010)

xabiachica said:


> my gestor does mine
> 
> he rang me the other week to say 'we need to discuss your tax return'
> 
> ...


We had to pay some tax this year for the first time, instead of the usual rebates, because of a fixed term deposit which matured last year. The gestor beamed, shook our hands and congratulated us for paying our taxes in Spain!


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## larryzx (Jul 2, 2014)

Tax Declarations.

I used to use my bank. They will (I never had a problem) do it for free.

I have also in previous years, made an appointment with Hacienda and they have done the declaration, free.

However, I would I not expect the bank employee, and maybe a clerk at Hacienda, to necessarily know all the angles, so when my declaration became a little more complicated I stared using a Gestor.

My wife has property in the Philippines, she thus has to pay ‘second home tax’ in Spain, on that (all ‘second’ properties within or outside Spain is liable, including property in UK). This year the gestor took the total value (declared purchase price) multiplied by 1.1%. to assess the tax due. When I checked with Hacienda, I found that 50% of the declared purchase price is the starting figure. Had I not checked, my wife would have paid twice the tax due.


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## Lynn R (Feb 21, 2014)

And the good news, of course, is that most Spanish residents will pay less tax from next year due to the reform of the fiscal system:-


http://news.kyero.com/2014/06/spanish-government-announces-new-tax-reforms/14637


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## extranjero (Nov 16, 2012)

Lynn R said:


> Unless I'm missing something, that seems to suggest that you would be just as well off doing it yourself as paying a "professional" to complete it!


No, because I and most other people have no idea about different categories of pensions and how they are treated.
Yes we should be able to trust professionals to do it properly, but much of the advice on tax has, like on other things in Spain, been deeply flawed.


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## larryzx (Jul 2, 2014)

I met someone this morning who has lived in Spain 15 years as 'resident'. 

He has a Government employee pension (ex-prison officer) and an OAP. He said he was advised that he should declare all the income in UK as he only rents here.

Had he declared as legally required to do, his Gov pension in UK and his OAP in Spain, he would for 15 years have enjoyed the tax free allowance in UK on his Gov Pensions and the tax free allowance in Spain on his OAP..

Assuming his OAP is £6,000 pa. I reckon he has paid around 20% tax each year on all his OAP, i.e. £18,000 in 15 years, more in income tax than he would have done, had he declared his OAP in Spain. 

He will still not accept that he has been doing it wrong, as he was ‘advised by a gestor’ !!! 

Very expensive wrong advice.


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## extranjero (Nov 16, 2012)

larryzx said:


> If you are British (double taxation agreements with other countries can vary) all income Worldwide is taxed in Spain if you live here, with the exception of UK Government employee pensions i.e. military, police etc. All other income including private pensions, OAP, Premium Bond winnings etc must be declared in Spain and if above the tax free allowance, taxed in Spain
> 
> There is choice where you pay tax.
> 
> ...


" There is choice where you pay tax"- Shouldn't this have read There is NO choice where you pay tax?


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## larryzx (Jul 2, 2014)

extranjero said:


> " There is choice where you pay tax"- Shouldn't this have read There is NO choice where you pay tax?


Well spotted Extranjero. 

As you say of course is should have read 
*
"There is NO choice where you pay tax"*


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## spanishguy (Jul 4, 2014)

20€!!! Wow I just paid mine 65€. I now see that she just did it online. She also gave me a F1 form to fill in to claim back my tax paid in UK but never gave me the address to send it. Has anyone had to do this? I have paid for the last year here now (double what I paid in UK) so need to get something back....hopefully. Any help would be appreciated.


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## extranjero (Nov 16, 2012)

spanishguy said:


> 20€!!! Wow I just paid mine 65€. I now see that she just did it online. She also gave me a F1 form to fill in to claim back my tax paid in UK but never gave me the address to send it. Has anyone had to do this? I have paid for the last year here now (double what I paid in UK) so need to get something back....hopefully. Any help would be appreciated.


Normally, the address is somewhere on the form.
If 65 euros tax is double what you are paying un UK, you must be very happy.


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## extranjero (Nov 16, 2012)

Lynn R said:


> And the good news, of course, is that most Spanish residents will pay less tax from next year due to the reform of the fiscal system:-
> 
> 
> http://news.kyero.com/2014/06/spanish-government-announces-new-tax-reforms/14637


With the exchange rate, and the fact that Govnt pensions are going to be used to determine the tax base, Surely many will pay more?


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## mrypg9 (Apr 26, 2008)

extranjero said:


> With the exchange rate, and the fact that Govnt pensions are going to be used to determine the tax base, Surely many will pay more?


To my immense amazement I found I was paying less tax in Spain than when all my income was taxed in the UK.I have no idea how or why but the declaration was done by a fully qualified experienced professional who charges a reasonable fee.

But if I find at any time that I have to pay more, whether in tax, bank charges, falling exchange rates, it won't be a big deal since like the majority of people who plan their lives in Spain I made ample allowance in my calculations for that contingency.

I didn't come here to spend my time worrying about paying a few euros more - or as in my case less - to Hacienda.


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## larryzx (Jul 2, 2014)

_I have no idea how or why but the declaration was done by a fully qualified experienced professional who charges a reasonable fee._ 

Yes, but almost certainly, it was you who signed the declaration, and thus it is you, and not the expert you paid, who is responsible if there is an error.


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## larryzx (Jul 2, 2014)

extranjero said:


> With the exchange rate, and the fact that Government (employee) pensions are going to be used to determine the tax base, Surely many will pay more?


Not sure what you mean about the exchange rate, implying it s good. In 2002 when the euro was introduced as the currency in Spain, the pound was 1.65 to the euro, so 1.25 seems pretty poor to me.


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## extranjero (Nov 16, 2012)

larryzx said:


> Not sure what you mean about the exchange rate, implying it s good. In 2002 when the euro was introduced as the currency in Spain, the pound was 1.65 to the euro, so 1.25 seems pretty poor to me.


Not when you compare it to a year or so ago!
Of course, if you're selling property and going back to the UK, that rate seems pretty attractive now.


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## Lynn R (Feb 21, 2014)

extranjero said:


> With the exchange rate, and the fact that Govnt pensions are going to be used to determine the tax base, Surely many will pay more?


Well, some people are just bound and determined to see their glass as half empty!

If my purchasing power goes up (or even stays as it is now, compared to what we've seen since 2008) I'll not be too unhappy if it means paying a bit more tax. I'll only be paying less than a quarter of the extra income I get from an improved exchange rate, after all. I went to the supermarket this morning and bought a bottle of wine, bread, milk, 2 large chicken breasts, a red pepper, mushrooms, sweetcorn and creme fraiche for €9.29. Try buying that in the UK for less than £7.

Oh, I forgot the salmon pate that was also included in the bill - now, since I've been away, a 160g jar for the same price a 125g one was before.


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## mrypg9 (Apr 26, 2008)

larryzx said:


> _I have no idea how or why but the declaration was done by a fully qualified experienced professional who charges a reasonable fee._
> 
> Yes, but almost certainly, it was you who signed the declaration, and thus it is you, and not the expert you paid, who is responsible if there is an error.


I won't be losing sleep.


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## larryzx (Jul 2, 2014)

Lynn: _ €9.29. Try buying that in the UK for less than £7._

Please let us know where you get your exchange rate of (over) 1.33 euros to the pound.


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## Lynn R (Feb 21, 2014)

larryzx said:


> Lynn: _ €9.29. Try buying that in the UK for less than £7._
> 
> Please let us know where you get your exchange rate of (over) 1.33 euros to the pound.


Humble apologies, I was obviously getting carried away by euphoria at the improving exchange rate.

Of course the real cost of my shopping in sterling was £7.36 - now do an online shop comparison at Tesco or wherever and tell me what it would cost in the UK. If I get time later on I'll do it myself.


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## ddrysdale99 (Apr 3, 2014)

extranjero said:


> With the exchange rate, and the fact that Govnt pensions are going to be used to determine the tax base, Surely many will pay more?


Are these changes an election "promise" or something more concrete? Are there any actual details about rates and tax bands?


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## Lynn R (Feb 21, 2014)

ddrysdale99 said:


> Are these changes an election "promise" or something more concrete? Are there any actual details about rates and tax bands?


They are changes which are definitely going to happen (albeit motivated by electoral reasons, no doubt). Some details of the new rates and tax bands, in English, here:-


! Spanish News Today - Spanish Government Cuts Income Tax


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## Lynn R (Feb 21, 2014)

Lynn R said:


> Humble apologies, I was obviously getting carried away by euphoria at the improving exchange rate.
> 
> Of course the real cost of my shopping in sterling was £7.36 - now do an online shop comparison at Tesco or wherever and tell me what it would cost in the UK. If I get time later on I'll do it myself.


Just out of curiosity I did do the online shopping comparison - the cost of the same items at Tesco (not the most expensive brands or organic chicken, and for only 400g of chicken breasts instead of the 715g I bought at Mercadona) was £11.55 WITHOUT the wine - add on an extra £4.69 for the cheapest bottle of Chardonnay they had (similar to what I bought from Mercadona).


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