# Tax on income



## ianm1968 (Nov 19, 2014)

My wife and I are looking to move to lanzarote 
I have heard recently a lot of expats are returning home because of Spanish taxes being so high 
Would my wife have to pay tax on her old age pension? And how much do they take??


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## 90199 (Mar 21, 2010)

ianm1968 said:


> My wife and I are looking to move to lanzarote
> I have heard recently a lot of expats are returning home because of Spanish taxes being so high
> Would my wife have to pay tax on her old age pension? And how much do they take??



If it is just state pension it will not be taxed, it is under the threshold. All income has to be declared and depending on the amount you earn decides how much tax one pays. I pay tax in the U.K. on a government pension and I have paid tax in Spain on some rather lucrative investments.


I am an ex pat but my home is here in the Canary islands, where I return every night. I used to live in Yorkshire, I have no intention whatsoever of returning there, it's too blooming expensive and too blooming cold.


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## larryzx (Jul 2, 2014)

Hepa said:


> If it is just state pension it will not be taxed, it is under the threshold. *All income has to be declared *and depending on the amount you earn (*what your income is*) decides how much tax one pays. I pay tax in the U.K. on a government pension and I have paid tax in Spain


I am in the same situation, tax in UK on a crown pension and some here on OAP and investments off shore. 

However. I suspect many are not aware that tax must be paid by residents on any other property they own worldwide.  My wife has a modest house in the Philippines: she pays tax on it here, for just owning it. If it were providing any income, that income would also be taxed here.


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## dazza1875 (Jul 10, 2015)

hello larryzx I have heard conflicting opinions regarding ones UK STATE PENSION as to wheather you pay spanish tax on 115 pound at 24% tax rate which would leave a uk pensioner 
living in Spain with just 86 pounds per week!! I know of many friends that are OAP living where I live, one person in particular who is on uk state pension and high rate of disabilty living allowance, she has no other assets, are scared that they may be in tax arrears of as much as 10 to 15 years on their UK state pension, if this is correct my friend will owe the spanish tax office 31,000 euros over 15 years plus penalties and interest. this can not be allowed to happen it is stealing it is national insurance contributions for time served as a uk working citizen not a spanish working citizen the UK STATE PENSION SHOULD BE EXEMPT PROTECTED FROM ANY SPANISH TAX, INHUMANE DRACONIAN TAX LAW if this is true!! what is your thoughts on this !!


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## Alcalaina (Aug 6, 2010)

dazza1875 said:


> hello larryzx I have heard conflicting opinions regarding ones UK STATE PENSION as to wheather you pay spanish tax on 115 pound at 24% tax rate which would leave a uk pensioner
> living in Spain with just 86 pounds per week!! I know of many friends that are OAP living where I live, one person in particular who is on uk state pension and high rate of disabilty living allowance, she has no other assets, are scared that they may be in tax arrears of as much as 10 to 15 years on their UK state pension, if this is correct my friend will owe the spanish tax office 31,000 euros over 15 years plus penalties and interest. this can not be allowed to happen it is stealing it is national insurance contributions for time served as a uk working citizen not a spanish working citizen the UK STATE PENSION SHOULD BE EXEMPT PROTECTED FROM ANY SPANISH TAX, INHUMANE DRACONIAN TAX LAW if this is true!! what is your thoughts on this !!


Don't panic. This is not true.

First of all, you have a personal allowance before you pay income tax in Spain, just as in the UK. You don't pay tax on the entire pension, only the amount that is above the allowance. You get extra allowances for being over a certain age, or if you have dependents, or a disability. You can also be assessed as a married couple if one of you has a bigger pension than the other, and share the allowance.

For example, I get a full state pension which I declare in Spain, but I don't pay any income tax on it because it's below the threshold. 

Your friends should have done their tax declarations every year since they became resident in Spain. This is the law. If they had done that, they would know exactly what tax they did or didn't have to pay. I guess some helpful person told them they didn't have to?

As to whether you pay tax in Spain or the UK, if you choose to live in Spain you are benefiting from all the services that the tax pays for. How would you feel if foreigners working in the UK paid tax in the country they came from, rather than to the UK government?


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## Lynn R (Feb 21, 2014)

One more point - from this year on, they would be paying tax (after deduction of the personal allowances) at 19% and not 24.75% as it has been for the last few years, because the Government has now cut income tax rates.


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## dazza1875 (Jul 10, 2015)

THATS GREAT NEWS !! ALCALAINA AND LYNN R as my friend was not sleepy very well for worrying over this tax issue. I can know tell her that she owes no spanish tax arrears regarding her income per year of only receiving a basic UK STATE PENSION and high rate disability allowance, thank you both for your replies!!


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## Lynn R (Feb 21, 2014)

dazza1875 said:


> THATS GREAT NEWS !! ALCALAINA AND LYNN R as my friend was not sleepy very well for worrying over this tax issue. I can know tell her that she owes no spanish tax arrears regarding her income per year of only receiving a basic UK STATE PENSION and high rate disability allowance, thank you both for your replies!!


Well hang on, it's not 100% safe to assume that your friend has no Spanish income tax liability. It depends how much her high rate disability allowance is, and whether that amount, added to her state pension, exceeds the total of the personal allowances. Have a look at this table of personal allowances for 2015 - she would be entitled to the personal allowance for someone over 65 (or a higher one for over 75s depending on her age), plus the earned income allowance plus the general allowance of €2,000. 

A guide to Spanish income tax in 2015.

To qualify for the Spanish disability tax allowance she would need to be officially assessed as disabled in Spain under their procedures.

By the way, Spanish people who receive their pensions from another country because they worked abroad for many years before returning to Spain when they retire (which is quite common) still have to pay tax on them in Spain if they exceed the personal allowance, so a British person is treated exactly the same (as they should be).


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## dazza1875 (Jul 10, 2015)

Dear LYNN R where does it read on the list does it mention disability income the need to pay tax for the year end december 2015. If you are on incapacity benefit from the uk then you pay spanish tax. I know for a fact that high rate disability living allowance that one receives from the uk is exempt from paying spanish tax. Regarding my friends UK STATE PENSION the total amount per year she receives is 6,950 euros , so the total amount over the personnal allowance threshold is 250 euros per year deduct 24% for tax = 62.50 per year in tax. THANK YOU FOR YOUR REPLY arrears. REMEMBER YOU ONLY ARE TAXED ON THE AMOUNT OVER THE THRESHOLD WHICH IS 6,700 EUROS ANYTHING AFTER THAT AMOUNT YOU PAY 24% TAX ON .THANK YOU FOR YOUR REPLY!!


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## Lynn R (Feb 21, 2014)

dazza1875 said:


> Dear LYNN R where does it read on the list does it mention disability income the need to pay tax for the year end december 2015. If you are on incapacity benefit from the uk then you pay spanish tax. I know for a fact that high rate disability living allowance that one receives from the uk is exempt from paying spanish tax. Regarding my friends UK STATE PENSION the total amount per year she receives is 6,950 euros , so the total amount over the personnal allowance threshold is 250 euros per year deduct 24% for tax = 62.50 per year in tax. THANK YOU FOR YOUR REPLY arrears. REMEMBER YOU ONLY ARE TAXED ON THE AMOUNT OVER THE THRESHOLD WHICH IS 6,700 EUROS ANYTHING AFTER THAT AMOUNT YOU PAY 24% TAX ON .THANK YOU FOR YOUR REPLY!!


I didn't know that the DLA was exempt from Spanish tax.

No, the tax allowance for disability wasn't mentioned in the link I posted. *********


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## dazza1875 (Jul 10, 2015)

this is information research into certain benefits from the uk that are taxable and tax free in the UK. My understanding is the Spanish tax office can only demand income tax from benifits that are taxed in the UK the term they use is [ benefits in-kind] meaning if they are taxed in the UK and one lives in Spain and still receives their uk taxed benefit, then the Spanish tax authorities can demand income tax , however, they can not deduct tax on certain benefits that are tax free in uk i.e. exempt from foreign tax. here is a list that I found on the UK government website with my added comments in brackets. There are examples also of yearly amounts in regards to carer allowance and UK state pension !

*Uk state pension per year.*
5,980 pounds = 8,317 euros [UK state pension total per [email protected] tourist exchange rate July 12th 2015, average for a year and other years past will be lower amount total than 8,317 euros possibly as low as 7,300 euros]- 6,500 [euros free tax threshold per year not taking into consideration of disability so threshold will be higher before you pay spanish income tax]

Total *1,817* [taxable in Spain per year @ 24% tax rate I think it is 19% now so less than 454] 
*= 454 [euros per year in tax arrears.]*

CARERS ALLOWANCE [62POUNDS X 52 WEEKS = 3,224 POUNDS per year]
[75 EUROS X 52 WEEKS= 3,800 EUROS per year tourist exchange rates, however, the exchange rates fluctuate constantly so the total amount annually in euros after conversion will be lower from year to year]

Personal allowance threshold per year before paying tax in Spain 5,050 euros Therefore as a carer you pay no tax on one’s uk carer allowance in Spain [5,050 euros individual personal allowance income threshold in Spain]

3,800 euros [ total carer allowance per year]

1,250 [ below threshold of 5,050euros] 

The most common benefits that you pay Income Tax on are: State benefits that are taxable [benefits in-kind] the reason why Spain is taxing UK state pensioners

the State Pension
Jobseeker’s Allowance
Carer’s Allowance?? [ don’t understand why Spain can deduct income tax, as the total amount one receives is well below the personal allowance threshold of 5,050 euros ] 
Incapacity Benefit (from the 29th week you get it) 
Bereavement Allowance 
pensions paid by the Industrial Death Benefit scheme 
Widow’s pension
Widowed Parent’s Allowance 

UK Tax-free state benefits that are EXEMPT from Spanish income tax [ this is my understanding]

The most common state benefits you don’t have to pay uk Income Tax on are:

Housing Benefit [in Spain does not apply not exportable outside UK]
Employment and Support Allowance (income related) 
Income Support - though you may have to pay tax on Income Support if you’re involved in a strike [in Spain does not apply not exportable outside UK]
Disability Living Allowance 
Guardian’s Allowance [ not in Spain does not apply not exportable outside UK] 
Attendance Allowance [ not in Spain does not apply not exportable outside UK] 
Winter Fuel Payments and Christmas Bonus 
lump-sum bereavement payments 
Maternity Allowance [ not in Spain does not apply not exportable outside UK]
Industrial Injuries Benefit
Severe Disablement Allowance 
War Widow’s Pension 

I hope this helps people to try to understand this very confusing tax issues, this is my understanding how I interpret these isuues, the list above came from the UK government website 
please let me know what you think it's good to get feeback from other expats!!

thank you kindly !!


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## ddrysdale99 (Apr 3, 2014)

Excuse my ignorance but does this all mean that you can continue to receive UK benefits after you stop being a UK resident?


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## Rabbitcat (Aug 31, 2014)

Pretty amazing/ ridiculous/ scandalous if JSA can be legally claimed by claimants living in Spain!!!!


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## jojo (Sep 20, 2007)

Rabbitcat said:


> Pretty amazing/ ridiculous/ scandalous if JSA can be legally claimed by claimants living in Spain!!!!


I could be wrong, but I'm fairly sure than it can only be claimed if you claim it in the UK for at least 12 weeks before going to Spain and only for 12 weeks after you arrive. You still have to tell the UK of all the jobs you've applied for and been interviewed for, making sure that you have done the minimum. ... and that has to be signed off by the oficinaempleo in Spain, if you can get them to agree to........... Something like that. Its possible temporarily, but not easy, I've never heard of anyone managing it and its only for £70 a week, regardless of dependents and if you're over 21

Jo xxx


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## ddrysdale99 (Apr 3, 2014)

I was more thinking about ESA, DLA, PIP, Carers Allowances etc.


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## Lynn R (Feb 21, 2014)

ddrysdale99 said:


> I was more thinking about ESA, DLA, PIP, Carers Allowances etc.


Some of them are exportable, yes. In fact the DWP has an Exportability Team to deal with them, according to their website.

As far as dazza1875's point about benefits which are exempt from tax in the UK also being exempt from taxation in Spain, I am just not sure about that (but I'm certainly no expert as I've never had the need to look into it).

As far as other types of income are concerned, in fact it's quite the reverse - only income which MUST be taxed in the UK, eg Crown Pensions is exempt from Spanish tax (but must now be declared and may affect the marginal tax rate). I started to receive a pension this year and also received a lump sum which would not have been taxable if I lived in the UK, but because I am a Spanish resident I must declare it and pay income tax on it. There are many other things which would not be taxable in the UK but they are here.


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## dazza1875 (Jul 10, 2015)

* Taxable and other foreign benefits: exemptions*
*There is no liability to income tax in respect of that part of a taxable foreign benefit that corresponds with that part of a UK benefit that is exempt income; for example dependency additions*
* Where an adult dependency addition is payable the following rules apply:
If the benefit is listed at EIM76100 the adult dependency addition is not taxable
EIM76100 LIST *
*Cold Weather Payments, see also Winter Fuel payment *
*Disability Living Allowance*
*Incapacity Benefit for first 28 weeks of entitlement, taxable thereafter*
*Industrial Injuries Benefit, a general term covering industrial injuries pension, reduced earnings allowance, retirement allowance, constant attendance allowance and exceptionally severe disablement allowance
Severe Disablement Allowance
War Widow's pension
Exceptionally Severe Disablement Allowance*
These benefits are the only benefits that are exportable and are exempt from Spanish income tax, there were many others on the list but they are not exportable in Spain. Basically majority of disability benefits are exempt from foreign tax outside the UK. *NO COUNTRY WOULD DARE TAX A SEVERLEY DISABLED FOREIGN UK CITIZEN THAT ARE NOT TAXED AT SOURCE IN THERE BIRTH COUNTRY AND WHERE THAT BENEFIT WAS ISSUED.*


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## Rabbitcat (Aug 31, 2014)

I simply don't get it. 

Surely if you need / qualify to be on benefits ( NOT pensions/ disability payments) you should not be living over in Spain. 

You should be either trying to get a job at home to get off benefits or if the benefits are such that you can afford to knock about Spain- you shouldn't be on benefits. Rant over!!!!


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## ddrysdale99 (Apr 3, 2014)

So Disability Living Allowance is not taxable. What's the problem?


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## baldilocks (Mar 7, 2010)

There was an amnesty for those who had failed to send in tax returns (and pay whatever tax was due) over the last 6 years. that amnesty expired 30th June. If you missed it then you may be taxed and even fined unless you can provide good reason for failing to beat the deadline.


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