# Income tax deductions in Spain?



## AllHeart (Nov 22, 2013)

I'm looking at income tax deductions in Spain. I have found a really good summary by Advoco here:

Spanish income tax rates 2015

I have three questions....

I've read elsewhere that you can claim your rent for an income tax deduction. Does anyone know the rules for this, i.e. how it's calculated?

Second question.... I see on the Advoco site that they have a low-income allowance deduction. Here it is from that site:

_"*Low income allowance*
(includes pension income)
(only available if investment income is less than €6,500)
Earnings up to €11,250 €3,700
Earnings between €11,250 and 14,450 €3,700 pro rata
Earnings over €14,450 €0"_

I fall in the 11,250 to 14,450 range. What does 'pro rata' mean? (I might not qualify for this as I have an investment income.)

Third question.... There is a disability allowance of tax-free income up to €12,000 for 65 to 100% disabled. I would like to apply for this. Has anyone claimed this? If so, what is the process of doing so?

Thanks in advance for any help!


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## AllHeart (Nov 22, 2013)

I just noticed that on the bottom of the page I linked to, it says "rent €1,000." It doesn´t give the calculation or what that means. I´m thinking this means if you pay rent, you are allowed to claim €1,000 income as tax free. I´m wondering if this is dependent upon a certain amount of rent? 

Edit to add: This falls under "declaration thresholds," so I wonder if you need to pay a minimum of €1,000 rent before you can claim a rent allowance?


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## Lynn R (Feb 21, 2014)

In order to be able to claim the disability allowance, I would think you would first have to be officially "accredited" as a disabled person and have an assessment to establish the degree of disability.

This process is carried out by the Junta de Andalucia and there is an assessment centre in Málaga. The following link sets out what has to be done and what documents have to accompany the application form.

Reconocimiento de Discapacidad en Andalucía - SUPER Cuidadores

I don't know how long this process takes, but you might be hard pressed to get it done in time for this year's tax return to be submitted.


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## CapnBilly (Jun 7, 2011)

AllHeart said:


> I've read elsewhere that you can claim your rent for an income tax deduction. Does anyone know the rules for this, i.e. how it's calculated?


The ability to claim relief for rental payments was abolished on 1st January 2015, unless you signed the lease before this date, and had previously claimed the relief. If you were claiming previously then you can continue to claim unless you sign a new lease. Note automatic extension of an existing lease (signed before 1st January 2015) under statutory rights does not constitute a new lease.



AllHeart said:


> Second question.... I see on the Advoco site that they have a low-income allowance deduction.
> 
> I fall in the 11,250 to 14,450 range. What does 'pro rata' mean? (I might not qualify for this as I have an investment income
> 
> Thanks in advance for any help!


The calculation is €3,700 less the difference between your income and €11,250 times 1.15625. The allowance is then €2,000 plus the resulting figure. It only applies if your investment income is less than €6,500.

With regard to disability it's technically a self assessment process, so you can certify your disability BUT it is more then likely that you will be asked to provide evidence. Unfortunately the UK system doesn't easily map across. I agree with Lynn, it is much easier if you are assessed under the Spanish system.


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## Rabbitcat (Aug 31, 2014)

Bottom line- how much can you earn before you have to pay tax? Thanks


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## CapnBilly (Jun 7, 2011)

Rabbitcat said:


> Bottom line- how much can you earn before you have to pay tax? Thanks


Assuming no other allowances, €11,250 for an individual under 65


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## AllHeart (Nov 22, 2013)

Lynn R said:


> In order to be able to claim the disability allowance, I would think you would first have to be officially "accredited" as a disabled person and have an assessment to establish the degree of disability.
> 
> This process is carried out by the Junta de Andalucia and there is an assessment centre in Málaga. The following link sets out what has to be done and what documents have to accompany the application form.
> 
> ...


Thank you for that information! I'll look over that tomorrow. In case anyone is interested, here is the information about the disability allowance from the government:

MÃ­nimo por discapacidad - Agencia Tributaria


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## AllHeart (Nov 22, 2013)

CapnBilly said:


> The ability to claim relief for rental payments was abolished on 1st January 2015, unless you signed the lease before this date, and had previously claimed the relief. If you were claiming previously then you can continue to claim unless you sign a new lease. Note automatic extension of an existing lease (signed before 1st January 2015) under statutory rights does not constitute a new lease.


That explains why I can't find info on this. Thank you! 




CapnBilly said:


> The calculation is €3,700 less the difference between your income and €11,250 times 1.15625. The allowance is then €2,000 plus the resulting figure. It only applies if your investment income is less than €6,500.


I found this information:

_"Income is split into general income (renta general) and savings income (renta del ahorro). General income is taxed at progressive scale rates. There are four tax bands which range from 24% to 47%. Anything not categorised as ‘savings income’ is included here such as salary, pension and rental income. Savings income is taxed at a rate of 21% . This includes income from interest and dividends, income from a purchased annuity and capital gains."_

From here: Vives Pons & Asociados | A Brief Guide to Income Tax in Spain

I have two sources of income: A government disability pension (CPPD), so this would be renta general (general income), right? The other source of income is a monthly annuity, so this would be rental del ahorro (savings income), right?

So does that mean in this calculation of the low income benefit allowance, that they are using the figure for only my pension, since my annuity is already taxed, or are they adding the two incomes for that calculation? I'll put it another way, calling annuity A and pension P....

A + P = €14,000

A is taxed at 21%. A is less than €6,500, which qualifies me for the low income allowance.

P is less than €11,500, so I get the low income allowance of €3,700. Or are they adding A + P in this calculation of income?




CapnBilly said:


> With regard to disability it's technically a self assessment process, so you can certify your disability BUT it is more then likely that you will be asked to provide evidence. Unfortunately the UK system doesn't easily map across. I agree with Lynn, it is much easier if you are assessed under the Spanish system.


I think Lynn is right, that it's done by the government of Andalucia - not a self-assessment. I'll talk to my doctor about this, once I've read more on it.


Again, thank you for your kind help!


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## CapnBilly (Jun 7, 2011)

The low income allowance is based on employment earnings, which includes pensions. Savings income is excluded from the calculation, unless it's over €6,500 in which case you don't qualify.

Income tax is self assessment, you could claim the level of disability, but as I said you will be asked for evidence. I do know someone who claimed without a Spanish assessment and had to provide all sorts of information about their condition.


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## AllHeart (Nov 22, 2013)

Thank you for your reply!! 



CapnBilly said:


> The low income allowance is based on employment earnings, which includes pensions. Savings income is excluded from the calculation, unless it's over €6,500 in which case you don't qualify.


That's good news. Then I won't owe any taxes on my pension by my calculations:

€8,863 (pension amount)
- €5,550 (personal allowance)
- €3,700 (low income allowance)
= - €387

Right?



CapnBilly said:


> Income tax is self assessment, you could claim the level of disability, but as I said you will be asked for evidence. I do know someone who claimed without a Spanish assessment and had to provide all sorts of information about their condition.


I won't bother claiming disability then since my pension income won't be taxed and there's nothing I can do to lower the taxes on my annuity. So I'm stuck with paying €1,100 euros on my measly €5,234 annuity! This is treated as regular income in Canada, and I'm able to claim against it. I had no idea about that until today, so I'm kind of bummed out about it. This tax rule really surprises me, as it would discourage people from saving money! Do you have this rule in the UK too?


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## CapnBilly (Jun 7, 2011)

The low income allowance is added to a basic allowance of €2,000 that everyone who earns over €14,450 receives, so your total allowance is €5,700. This is deducted from your earned income, and then your personal allowance, so if there is any personal allowance left it is deductible from your savings income.

Annuity income can be taxed favourably in Spain, depending upon the age you started to draw the Income. I suggest you see your gestor to confirm that yours will qualify. You may be pleasantly surprised.


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## AllHeart (Nov 22, 2013)

CapnBilly said:


> The low income allowance is added to a basic allowance of €2,000 that everyone who earns over €14,450 receives, so your total allowance is €5,700. This is deducted from your earned income, and then your personal allowance, so if there is any personal allowance left it is deductible from your savings income.


Yes, I just looked at the Advoco site and see that pension is included as income, so I'm also eligible for that €2,000. Fabulous! 

So the calculation would be...

€8,863 (pension amount)
- €2,000 (income allowance)
- €3,700 (low income allowance)
= €3,163
- €5,550 (personal allowance)
= - €2,387

So you're saying that I can deduct this from my annuity like this:

€5,234 (annuity amount)
- €2,387 (remainder of personal allowance, as above)
= €2,847 taxed at 21% = €598 taxes due

Is that what you're saying?



CapnBilly said:


> Annuity income can be taxed favourably in Spain, depending upon the age you started to draw the Income. I suggest you see your gestor to confirm that yours will qualify. You may be pleasantly surprised.


I'm planning on not using a gestor, but doing just this with an appt with the Hacienda. Do you have any information on this? I started drawing in 2013, and it lasts as long as I live (I used to think it was 20 years, but it's forever).


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## AllHeart (Nov 22, 2013)

Oops. You didn't ask what year I started drawing on the annuity, but my age. I was 49.


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## CapnBilly (Jun 7, 2011)

AllHeart said:


> €5,234 (annuity amount)
> - €2,387 (remainder of personal allowance, as above)
> = €2,847 taxed at 21% = €598 taxes due
> 
> Is that what you're saying?


Correct.



AllHeart said:


> I'm planning on not using a gestor, but doing just this with an appt with the Hacienda. Do you have any information on this? I started drawing in 2013, and it lasts as long as I live (I used to think it was 20 years, but it's forever).


unfortunately, as with many things in Spain it's a very grey area. Technically a purchased annuity is treated favourably and you are taxed on the "interest received" and not the capital. They way it works is that the proportion you are taxed on varies depending upon your age when it is drawn.

Many people claim this relief, although there is confusion as to whether they actually qualify, because of the different ways annuities are bought, particularly in the UK. Generally these are bought from personal pension funds , which may have been created from an occupational pension. Theoretically these do not qualify, because they have been purchased with untaxed capital ( because these payments currently qualify for tax relief in the UK), and should be taxed as earnings rather than savings in one One thing is certain, it is important to get the first return correct, as this establishes the taxation for the future. The general advice from well known advisors is that if you have an annuity you should claim the relief. This is essentially how they market QROPS.


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## AllHeart (Nov 22, 2013)

CapnBilly said:


> Correct.


OK. Thank you. 



CapnBilly said:


> unfortunately, as with many things in Spain it's a very grey area. Technically a purchased annuity is treated favourably and you are taxed on the "interest received" and not the capital. They way it works is that the proportion you are taxed on varies depending upon your age when it is drawn.
> 
> Many people claim this relief, although there is confusion as to whether they actually qualify, because of the different ways annuities are bought, particularly in the UK. Generally these are bought from personal pension funds , which may have been created from an occupational pension. Theoretically these do not qualify, because they have been purchased with untaxed capital ( because these payments currently qualify for tax relief in the UK), and should be taxed as earnings rather than savings in one One thing is certain, it is important to get the first return correct, as this establishes the taxation for the future. The general advice from well known advisors is that if you have an annuity you should claim the relief. This is essentially how they market QROPS.


I just found this, which is what you're talking about (my annuity is a whole-life):

_"Purchased annuity income – In Spain income derived from a purchased annuity is categorised as savings income and is taxed at a fixed rate of 18%...In the case of a purchased annuity only a portion is treated as income as part is deemed to be a return of capital invested and as such is tax free. For whole of life annuities between 60% to 92% can be received tax-free and for temporary annuities 75% to 88% can be received tax free. The taxable element is determined by applying a fixed percentage to the amount received depending on either the age of the beneficiary (in the case of a whole of life annuity) or the duration of the income (in the case of a temporary annuity)."_

From here: Malaga Law Solicitors

I agree with you that the first return is the most important, as it sets up the rest of my tax returns for life. I'm thinking now on getting a gestor.


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## AllHeart (Nov 22, 2013)

In case anyone is interested (excuse the pun ), here are the rates of taxes on annuities in Spain - both temporary and whole life:

Hot Topics - Money Matters - Annuities

I turned 50 the year that I started withdrawing, but was 49 when I actually started. So hopefully I will get the age 50 percentage, which is 35%. 

35% of €5234 (annuity amount) = €1,831 taxable at 21% = €385.

Not so bad!!

I don't think any allowances (including personal allowance) at all are allowed on annuities or any other savings income, because I can't find any information saying this. But I will post here when I find out.

CapnBilly, thank again so very much for your help!


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## CapnBilly (Jun 7, 2011)

AllHeart said:


> I turned 50 the year that I started withdrawing, but was 49 when I actually started. So hopefully I will get the age 50 percentage, which is 35%.
> 
> 35% of €5234 (annuity amount) = €1,831 taxable at 21% = €385.


The problem with searching all over the web is that some of the information is out of date. Just to clarify the reduction is based on your age when you start drawing. So, if your 50th birthday is June but you draw the first payment in May then the band is 40-49. Having said that the percentages shown on the website you posted ares= wrong, and the percentage for age 49 is 35%, and for 50 its 28%.



AllHeart said:


> I don't think any allowances (including personal allowance) at all are allowed on annuities or any other savings income, because I can't find any information saying this. But I will post here when I find out.


 I'm not suite sure why you are searching for information I have already provided, as I answered this earlier. You receive a personal allowances which is offset against your earned income, after the earned income allowances, and if there is any left then it is offset against investment income.


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## AllHeart (Nov 22, 2013)

CapnBilly said:


> The problem with searching all over the web is that some of the information is out of date. Just to clarify the reduction is based on your age when you start drawing. So, if your 50th birthday is June but you draw the first payment in May then the band is 40-49. Having said that the percentages shown on the website you posted ares= wrong, and the percentage for age 49 is 35%, and for 50 its 28%.


Thank you for finding that info. So the calculations would be the same at 49 as I calculated for 50, i.e. 35% Where can I find the current rates, please?




CapnBilly said:


> I'm not suite sure why you are searching for information I have already provided, as I answered this earlier. You receive a personal allowances which is offset against your earned income, after the earned income allowances, and if there is any left then it is offset against investment income.


I don't mean to slight you by looking. But you're not an accountant (right?) and you're not giving me references. So I'm not positive that what you're saying is correct, so I'm checking everything you say. I always do this when people give advice, so please don't take it personally. Everything you've said so far checks out, except the deductions on savings income, and everywhere I looked said savings income is taxed at a fixed rate, meaning no allowances are deducted, so that's why I'm still wondering about this.


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## CapnBilly (Jun 7, 2011)

I don't use websites for my information, I use my knowledge of the Spanish tax legislation, so the information regarding the rates is from Art 25.

The information regarding personal allowances comes from the tax legislation and the workings of the Spanish taxation model, which you can download from the Hacienda, but it's only available in Spanish.


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## AllHeart (Nov 22, 2013)

CapnBilly said:


> I don't use websites for my information, I use my knowledge of the Spanish tax legislation, so the information regarding the rates is from Art 25.
> 
> The information regarding personal allowances comes from the tax legislation and the workings of the Spanish taxation model, which you can download from the Hacienda, but it's only available in Spanish.


Well that's an excellent reference! Fantastic news. 

Then my calculations are even lower....

€5,234 (annuity amount)
- €2,387 (remainder of personal allowance)
= €2,847
x 35% (taxable portion rate)
= €996 (taxable portion)
x 21% (tax rate)
= €209 taxes owed

Is that right? :fingerscrossed:


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## AllHeart (Nov 22, 2013)

CapnBilly, do you know if the disability tax allowance can be carried over to savings income? If so, I won't owe any tax.


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## CapnBilly (Jun 7, 2011)

AllHeart said:


> CapnBilly, do you know if the disability tax allowance can be carried over to savings income? If so, I won't owe any tax.


The earned income allowance I described earlier is only applicable to earned income. 
The personal allowance and any disability allowance, if there is any allowance left after application to earned income, is then allowable against savings income.

Just to clarify though that if your annuity meets the requirements of a "Rentas Vitalicias" (as I described earlier) then the reduction is on the basis that the amount you are receiving is made up of capital and income, and the reduction is intended to identify the income part, so this is the amount that is taxable, not the capital.


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## AllHeart (Nov 22, 2013)

CapnBilly said:


> The earned income allowance I described earlier is only applicable to earned income.


Understood, yes. This is the €2,000 allowance against my pension.



CapnBilly said:


> The personal allowance and any disability allowance, if there is any allowance left after application to earned income, is then allowable against savings income.


Fantastic! I will apply for the disability pension.



CapnBilly said:


> Just to clarify though that if your annuity meets the requirements of a "Rentas Vitalicias" (as I described earlier) then the reduction is on the basis that the amount you are receiving is made up of capital and income, and the reduction is intended to identify the income part, so this is the amount that is taxable, not the capital.


Yes, this is exactly what I have. My father purchased this annuity for me with a lump sum, and I am getting a monthly income from this.

Your help is most appreciated!


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## CapnBilly (Jun 7, 2011)

AllHeart said:


> Understood, yes. This is the €2,000 allowance against my pension.
> )


On earnings income of below €14,450, its €3,700 (as I set out earlier) plus the €2,000 that everyone receives, so €5,700 in total.


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## AllHeart (Nov 22, 2013)

CapnBilly said:


> On earnings income of below €14,450, its €3,700 (as I set out earlier) plus the €2,000 that everyone receives, so €5,700 in total.


The low income allowance of €3,700 is for an income below €11,250, and it's prorated between €11,250 to €14,450. Since this only includes my pension, which is less than €11,250, and since my annuity is less than €6,500, I get that low income allowance in full. This is how I understood you from previous posts, right? This is as per post #12 calculation of pension taxes (zero) that you said was correct.


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## CapnBilly (Jun 7, 2011)

That's correct, although I missed out the word upto, the point I was making is that the earned income allowance is a maximum of €5,700 which I had previously explained, and a minimum of €2,000 if your earned income is over €14,450.

In other words, you should already have enough allowances so that there is no tax to pay.


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## AllHeart (Nov 22, 2013)

CapnBilly said:


> That's correct, although I missed out the word upto, the point I was making is that the earned income allowance is a maximum of €5,700 which I had previously explained...


Yes, you explained this well before too, and I understand.



CapnBilly said:


> ...and a minimum of €2,000 if your earned income is over €14,450.


This €2,000 is now a fixed allowance, regardless of your income. It used to be pro-rated, depending on a range of incomes, but I read this has changed.



CapnBilly said:


> In other words, you should already have enough allowances so that there is no tax to pay.


Yes, to recap, these are our calculations....

Calculations for general income (pension):
€8,863 (amount of pension)
- €3,700 (low income allowance)
- €2,000 (general earned income allowance)
= €3,163
- €5,550 (personal allowance)
- €12,000 (disability allowance)
= - €14,387 (taxes owed)

Calculations for investment income (annuity):
€5,234 (amount of annuity)
- €14,387 (remainder of allowance from pension, as above)
= - €9,153


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## donz (May 5, 2010)

Hi, just to jump on this thread as seems closest to my query

My own personal circumstances have recently changed so am having to review my earnings etc

I need to understand as autonomo, what I am personally allowed to earn before paying personal tax. The business autonomo accounts are one thing, but then if I invoice 'myself' what can I earn before having to pay tax? 

Is there a tax free level before you start paying?

I saw this earlier in the thread but not sure if this applies to me?
'Assuming no other allowances, €11,250 for an individual under 65'

I also have a new gestoria who is sorting out previous years accounts as my old gestoria seemingly has screwed things up so a lot to sort out! My brain is fried! :juggle:


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## AllHeart (Nov 22, 2013)

donz said:


> Hi, just to jump on this thread as seems closest to my query
> 
> My own personal circumstances have recently changed so am having to review my earnings etc
> 
> ...


Hi Donz. I don't know the answer to that question, but here's a ton of information on being self-employed (autonomo). I was planning to work autonomo in Spain and found these articles so very useful.

Advoco : Free Advice Centre


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## donz (May 5, 2010)

thanks yes I've read through that website and it is very good, though I got lost on the personal tax part eek!


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## AllHeart (Nov 22, 2013)

donz said:


> thanks yes I've read through that website and it is very good, though I got lost on the personal tax part eek!


I think so amazing that this information is given to everyone for free! It makes for a better world.  

Well, I hope you get your questions sorted out. Let me know if there's something else I might be able to answer. Hopefully someone else can answer your previous question. Take care and have a great weekend!


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## AllHeart (Nov 22, 2013)

Donz, since you don't have an answer yet but there are people on the forum who are self-employed so they can probably answer your question, perhaps you want to start a new thread with your question?


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## AllHeart (Nov 22, 2013)

I went to the tax office this week to check the calculations for my income tax. It's unofficial, but everything looks like it's correct. CapnBilly, thank you for your help on this. The only thing that isn't correct is the proof of disability. Perhaps proof is different in different regions, but here in Andalucia it's not a self-assessment that allows me to claim disability allowance. I can't even use letters from my doctors to prove this. I have two choices - either using the govt of Andalucia that Lynn posted, or I can use my disability assessment in Canada. 

So I'll be doing my actual calculations with the tax office in May. If I don't owe taxes, I'll be having a most excellent trip to Canada in June and trips in Europe through the year! :fingerscrossed:


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## CapnBilly (Jun 7, 2011)

AllHeart said:


> I went to the tax office this week to check the calculations for my income tax. It's unofficial, but everything looks like it's correct. CapnBilly, thank you for your help on this. The only thing that isn't correct is the proof of disability. Perhaps proof is different in different regions, but here in Andalucia it's not a self-assessment that allows me to claim disability allowance. I can't even use letters from my doctors to prove this. I have two choices - either using the govt of Andalucia that Lynn posted, or I can use my disability assessment in Canada.
> 
> So I'll be doing my actual calculations with the tax office in May. If I don't owe taxes, I'll be having a most excellent trip to Canada in June and trips in Europe through the year! :fingerscrossed:


Thats good to know. 

With regard to my post about self-assessment I was referring to your tax return, not your disability, which is why I said you would have to provide evidence.


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## Williams2 (Sep 15, 2013)

*Can I claim Spanish tax relief on contributions to a Personal Pension Plan ?*

If it was to a Personal Pension Plan in Spain, I assume there would be no quibble but what about if it's going
into a Private UK Pension or a UK SIPP Pension, setup long before you even dream about moving to Spain.
Has anyone looked into this, as I fail to find any definitive answer as to whether British Expats, living and
working in Spain, can still contribute into their UK Private Pensions schemes and be able to claim tax relief
on their contributions in the annual Renta.

For instance - there's no mention here - that the Private Pension Plan must be in Spain, to claim tax relief on contributions into the Private Pension Plan. So maybe you can claim tax relief, so long as your Private Pension is within the EU ?

Tax treatment of Private Pensions in Spain


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## stevelin (Apr 25, 2009)

HI Just to join the discussion re disability allowance. My OH is in receipt of Disability living allowance payable by the UK( they know we live in Spain so its all above board) In the UK this is tax free does it need to be declared in Spain and if so is this enough evidence to get the disability allowance on the Renta? Thanks for any information.


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## AllHeart (Nov 22, 2013)

stevelin said:


> HI Just to join the discussion re disability allowance. My OH is in receipt of Disability living allowance payable by the UK( they know we live in Spain so its all above board) In the UK this is tax free does it need to be declared in Spain and if so is this enough evidence to get the disability allowance on the Renta? Thanks for any information.


Your wife is in the exact same position as me. I'm on Canada Pension Plan Disability. But I also have a disability allowance that is federal, so that I can claim over $7,000 tax free every year. I think that's what you're talking about, right? The office here told me that I can present either as proof of disability; I just have to bring in the letter from Canada. One person at the Hacienda told me I had to translate it into Spanish, but someone higher up said I don't need to translate it. I'll see when the time comes in May as to whether or not it needs translating.


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## stevelin (Apr 25, 2009)

Yes your correct in your thinking re pension and payment from UK goverment. What is the letter you have information re the award for payment or a medical assessment. As am thinking we should qualify for this as well.


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## AllHeart (Nov 22, 2013)

stevelin said:


> Yes your correct in your thinking re pension and payment from UK goverment. What is the letter you have information re the award for payment or a medical assessment. As am thinking we should qualify for this as well.


I received a letter saying that I am eligible for the disability tax allowance, as well as a letter to say that I am eligible for Canada Pension Plan Disability. Those are the letters I will bring in (I will bring in both letters, to be on the safe side). Did you receive any correspondence saying your wife is eligible?


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## stevelin (Apr 25, 2009)

Hi Yes we have letters confirming payment from UK government is for disability. Also one stating pension is due to health.


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## AllHeart (Nov 22, 2013)

stevelin said:


> Hi Yes we have letters confirming payment from UK government is for disability. Also one stating pension is due to health.


Perfect! That's what you should bring with you to your gestor or the hacienda. :thumb:


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## AllHeart (Nov 22, 2013)

I just got back from doing my taxes at the Hacienda. It turns out that they may not accept my Canadian disability papers. They guy who did my taxes spoke with his supervisor, and they agreed to put me for the disability tax allowance, but they said that I may get audited and the papers will not be accepted. They say I have to prove disability through the Spanish government's assessment, so they told me to go to the government to get formally registered as disabled. That appointment is through the link that Lynn gave. Based on claiming the disability allowance, I owe zero taxes. Without the disability allowance I would have owed over 600 euros. 

Hopefully I won't have a problem. :fingerscrossed:


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## xabiaxica (Jun 23, 2009)

AllHeart said:


> I just got back from doing my taxes at the Hacienda. It turns out that they may not accept my Canadian disability papers. They guy who did my taxes spoke with his supervisor, and they agreed to put me for the disability tax allowance, but they said that I may get audited and the papers will not be accepted. They say I have to prove disability through the Spanish government's assessment, so they told me to go to the government to get formally registered as disabled. That appointment is through the link that Lynn gave. Based on claiming the disability allowance, I owe zero taxes. Without the disability allowance I would have owed over 600 euros.
> 
> Hopefully I won't have a problem. :fingerscrossed:


Tbh I'm not surprised if they won't accept Canadian disability papers.


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## Lynn R (Feb 21, 2014)

AllHeart said:


> I just got back from doing my taxes at the Hacienda. It turns out that they may not accept my Canadian disability papers. They guy who did my taxes spoke with his supervisor, and they agreed to put me for the disability tax allowance, but they said that I may get audited and the papers will not be accepted. They say I have to prove disability through the Spanish government's assessment, so they told me to go to the government to get formally registered as disabled. That appointment is through the link that Lynn gave. Based on claiming the disability allowance, I owe zero taxes. Without the disability allowance I would have owed over 600 euros.
> 
> Hopefully I won't have a problem. :fingerscrossed:


I did think it was a long shot that disability assessments from outside Spain would be accepted, to be honest.

We also went for our appointment this morning, it was very busy but we were seen within 2 minutes of our allotted time so that was good. My husband was pleased because he had to pay very little this year, me less so because I have a bill well into 5 figures (which I expected so it didn't come as a shock), so there is always somebody worse off than you!


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## AllHeart (Nov 22, 2013)

xabiachica said:


> Tbh I'm not surprised if they won't accept Canadian disability papers.


Now that I think about it, it makes sense. The criteria for disability is different in different countries, and there is no way a country could check on all other countries' criteria.


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## AllHeart (Nov 22, 2013)

Lynn R said:


> I did think it was a long shot that disability assessments from outside Spain would be accepted, to be honest.
> 
> We also went for our appointment this morning, it was very busy but we were seen within 2 minutes of our allotted time so that was good. My husband was pleased because he had to pay very little this year, me less so because I have a bill well into 5 figures (which I expected so it didn't come as a shock), so there is always somebody worse off than you!


I was very pleased too as to the efficiency and ease of doing my taxes. We don't have that service in Canada, and I've paid about 70 euros a year to use tax software to do my taxes. So I'm thrilled to get them done for free.

How can you owe in the five figures when you're on a pension?!


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## Lynn R (Feb 21, 2014)

AllHeart said:


> I was very pleased too as to the efficiency and ease of doing my taxes. We don't have that service in Canada, and I've paid about 70 euros a year to use tax software to do my taxes. So I'm thrilled to get them done for free.
> 
> How can you owe in the five figures when you're on a pension?!


It's because I got a lump sum from a final salary pension (it's a sum equivalent to 3 years' annual pension). In the UK such lump sums are tax free, but in Spain they're not, hence I have to pay tax on it. It isn't a Crown Pension either (eg civil service, local authority, police etc) because they are only taxable in the UK under the double taxation agreement (although you do now have to declare them on your Spanish tax return as exempt income and it can, therefore, affect how much tax you have to pay in total).

I did know about that when I took the decision to move here, knowing that I would be receiving such a lump sum (and two other smaller ones this year), but if I hadn't wanted to pay the tax I would have had to stay living in the UK and I decided I'd rather live here for 10 years longer than wait until after I'd received the lump sum before moving. I also considered whether I could move back to the UK temporarily for 2015, the year I received the lump sum, but when I weighed up what I'd have to spend on renting somewhere to live, extra costs of utility bills, food, etc. plus the fact that we'd only just managed to register with the Spanish state health service after my husband became a pensioner, it just didn't seem worth it and I wanted to be here instead of there anyway!


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## AllHeart (Nov 22, 2013)

Lynn R said:


> It's because I got a lump sum from a final salary pension (it's a sum equivalent to 3 years' annual pension). In the UK such lump sums are tax free, but in Spain they're not, hence I have to pay tax on it. It isn't a Crown Pension either (eg civil service, local authority, police etc) because they are only taxable in the UK under the double taxation agreement (although you do now have to declare them on your Spanish tax return as exempt income and it can, therefore, affect how much tax you have to pay in total).
> 
> I did know about that when I took the decision to move here, knowing that I would be receiving such a lump sum (and two other smaller ones this year), but if I hadn't wanted to pay the tax I would have had to stay living in the UK and I decided I'd rather live here for 10 years longer than wait until after I'd received the lump sum before moving. I also considered whether I could move back to the UK temporarily for 2015, the year I received the lump sum, but when I weighed up what I'd have to spend on renting somewhere to live, extra costs of utility bills, food, etc. plus the fact that we'd only just managed to register with the Spanish state health service after my husband became a pensioner, it just didn't seem worth it and I wanted to be here instead of there anyway!


I understand now. 

I made a similar decision visa-vis Canada. I have a withholding tax of 10% applied to my pension and 15% applied to my annuity, which is taxes taken off because I am living out of country. As you see, I don't make a lot of money, so that's a huge amount for me. Many people told me [both at Revenue Canada (Canadian hacienda equivalent) and at the insurance company that pays my annuity] that I would not get that withholding tax back. I decided that even if I didn't get that money back, I would prefer to stay in Spain. But as it turns out, it will all be refunded in Canada, which I'm thrilled about. Now that I don't have to pay taxes in Spain either, I see the withholding tax as a forced savings account. 

I consider this another heart decision that I made. I'd rather live on less money and be in Spain. But as it turns out, I don't have to make that sacrifice. Yay!


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## Roy C (Sep 29, 2012)

Lynn R said:


> It's because I got a lump sum from a final salary pension (it's a sum equivalent to 3 years' annual pension). In the UK such lump sums are tax free, but in Spain they're not, hence I have to pay tax on it. It isn't a Crown Pension either (eg civil service, local authority, police etc) because they are only taxable in the UK under the double taxation agreement (although you do now have to declare them on your Spanish tax return as exempt income and it can, therefore, affect how much tax you have to pay in total).
> 
> I did know about that when I took the decision to move here, knowing that I would be receiving such a lump sum (and two other smaller ones this year), but if I hadn't wanted to pay the tax I would have had to stay living in the UK and I decided I'd rather live here for 10 years longer than wait until after I'd received the lump sum before moving. I also considered whether I could move back to the UK temporarily for 2015, the year I received the lump sum, but when I weighed up what I'd have to spend on renting somewhere to live, extra costs of utility bills, food, etc. plus the fact that we'd only just managed to register with the Spanish state health service after my husband became a pensioner, it just didn't seem worth it and I wanted to be here instead of there anyway!



This is were I need to keep my eye on the ball. When I retire in just under four weeks , I will receive a tax free lump sum from my pension. We are over in June/July when we will probably buy our place in Spain but obviously i won't be able to move until after Janury otherwise I will get clobbered for a well into five figure sum also. If I do leave it until after January before we move my first tax form will be in June 2018 right? Hopefully avoiding a big bill.


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## Lynn R (Feb 21, 2014)

Roy C said:


> This is were I need to keep my eye on the ball. When I retire in just under four weeks , I will receive a tax free lump sum from my pension. We are over in June/July when we will probably buy our place in Spain but obviously i won't be able to move until after Janury otherwise I will get clobbered for a well into five figure sum also. If I do leave it until after January before we move my first tax form will be in June 2018 right? Hopefully avoiding a big bill.


Yes, quite right, so your lump sum will be perfectly safe.


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## CharlieMCFC (Jan 27, 2016)

Williams2 said:


> *Can I claim Spanish tax relief on contributions to a Personal Pension Plan ?*
> 
> If it was to a Personal Pension Plan in Spain, I assume there would be no quibble but what about if it's going
> into a Private UK Pension or a UK SIPP Pension, setup long before you even dream about moving to Spain.
> ...


Did you ever find out the answer to this? I'm deep in tax return heaven ;-) and am trying to find out the answer to this same question.


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