# Taxes when retiring to Tenerife



## nellgwin

I have tax question. We are both retired. We are hoping to retire to Tenerife, our pensions are paid from the isle of man, mine being retirement and government pension, paid into IOM bank.
If we become resident on Tenerife what tax allowance is allowed for a married couple before liability for tax? What is the tax rate? Would we still be able to have our tax affairs felt with in the IOM, especially as I will occasionally work there and declare and pay tax on my earnings


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## Bevdeforges

I've moved your post into a thread of its own, hoping to get a few more responses.

Basically, you don't normally get to choose where you are considered tax resident. And how your pension is taxed will depend on any tax treaties between your home country and where you are resident - as well as the source of the pension. Private pensions tend to be handled differently than government pensions.

With luck, we should be able to flag down someone with some knowledge of the tax situation for Tenerife.
Cheers,
Bev


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## xabiaxica

Bevdeforges said:


> I've moved your post into a thread of its own, hoping to get a few more responses.
> 
> Basically, you don't normally get to choose where you are considered tax resident. And how your pension is taxed will depend on any tax treaties between your home country and where you are resident - as well as the source of the pension. Private pensions tend to be handled differently than government pensions.
> 
> With luck, we should be able to flag down someone with some knowledge of the tax situation for Tenerife.
> Cheers,
> Bev


I'm not an expert, but very simply - if you're living in Spain for 183 days in a calendar year (that's the tax year in Spain) then you are tax resident here - you have no choice in the matter, as you said (there are various other 'triggers' which don't apply to someone physically living here) 

I don't know if the IOM is part of the UK as far as tax is concerned (istr that it's some kind of tax haven?) but if so, there's a reciprocal agreement between the UK & Spain that you don't pay the same tax twice

if tax _rates_ are different, then you will either pay the extra or get a rebate 

also, as a tax resident you would have to declare all worldwide assets

if there's no reciprocal agreement then Spain will tax you on your worldwide income 

as for tax rates - they seem to change at least annually


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## nellgwin

*taxes*

Thanks, IOM is tax haven and has rscipical agreement with Spain.
Do I pay the higher tax rate for example Spain or the lower tax threshold in IOM, as I pay tax on my pension and earnings in IOM.
I would still work occasionally in the isle of man even after moving to Tenerife.


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## CapnBilly

nellgwin said:


> Thanks, IOM is tax haven and has rscipical agreement with Spain. Do I pay the higher tax rate for example Spain or the lower tax threshold in IOM, as I pay tax on my pension and earnings in IOM. I would still work occasionally in the isle of man even after moving to Tenerife.


Are you sure that there is a Double Tax Agreement with Spain. It is reported that they are discussing, but I couldn't see an actual agreement. Unless there is one in force, then you would have to pay tax in all your worldwide earnings, as Xabiachica said, including your pension. The reason I was looking for it, is that the recent OECD based DTAs usually contains a clause that says whilst Government pensions are taxable only in the country paid, they are taking into account when working out the marginal tax rate in Spain , on any other income. Essentially this means if your pension is over €3000, then it will increase your tax in Spain, which, is a high tax environment.

I think you really need to seek professional advice.


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## nellgwin

OK, think I understand that, am away in Malta for three months but shall visit my tax office as soon as I get back. Thanks for your help


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