# Australian Super Tax Implications



## paulhe (Jan 2, 2018)

To all Australians living in Spain, can you help me understand how, if at all, a super fund might be taxed in Spain as a resident. If, for example, a person not yet retired had an opportunity to reside in Spain for one year on a NLV (with a view to long term residency) . The superfund is not yet active - that is, it is left in the superfund and would not be utilised as an income stream, nor would it be accessed until retirement.
Paul


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## xabiaxica (Jun 23, 2009)

paulhe said:


> To all Australians living in Spain, can you help me understand how, if at all, a super fund might be taxed in Spain as a resident. If, for example, a person not yet retired had an opportunity to reside in Spain for one year on a NLV (with a view to long term residency) . The superfund is not yet active - that is, it is left in the superfund and would not be utilised as an income stream, nor would it be accessed until retirement.
> Paul


Are you certain about that?

My understanding is that worldwide income is taxed. If it isn't active, you have no income from it, as you say.


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## paulhe (Jan 2, 2018)

xabiaxica said:


> Are you certain about that?
> 
> My understanding is that worldwide income is taxed. If it isn't active, you have no income from it, as you say.


Thanks xabiaxica, but no, I am not certain at all hence my query. in Australia one can only access one's super (pension pot) under strict conditions - being at 'preservation age' and retired. My question is whether, regardless of the strict rules to access, Spain might require me to decalre the Super amount and tax it accordingly. 
Paul


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## kaipa (Aug 3, 2013)

paulhe said:


> Thanks xabiaxica, but no, I am not certain at all hence my query. in Australia one can only access one's super (pension pot) under strict conditions - being at 'preservation age' and retired. My question is whether, regardless of the strict rules to access, Spain might require me to decalre the Super amount and tax it accordingly.
> Paul


You would definitely need to declare it (if over the required size). Tax would only be levied if it was annually paying premiums.


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## Barriej (Jul 23, 2012)

paulhe said:


> To all Australians living in Spain, can you help me understand how, if at all, a super fund might be taxed in Spain as a resident. If, for example, a person not yet retired had an opportunity to reside in Spain for one year on a NLV (with a view to long term residency) . The superfund is not yet active - that is, it is left in the superfund and would not be utilised as an income stream, nor would it be accessed until retirement.
> Paul



If it works the same as normal age related pension pot or a bond that is not matured.

You only have to declare it on your 720 once. (usually the first time) and only re declare if the value varies by a certain amount (not sure but think its €20,00) in a year.
The fund has to be over €50,000 to need declaring.
Only pay tax when you start drawing the funds as income.

Ive got all my info here as we have to do our 720 early next year. 

Weirdly once you are taking the funds, any interest or gains it makes are also not taxable as long as they stay in the fund and are not paid out direct (or this is what the Spanish accountant we are dealing with has stated). Although Im not taking his word for it and, I am in the process of confirming this from other sources. Don't want any surprises...


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## snikpoh (Nov 19, 2007)

Barriej said:


> Weirdly once you are taking the funds, any interest or gains it makes are also not taxable as long as they stay in the fund and are not paid out direct (or this is what the Spanish accountant we are dealing with has stated). Although Im not taking his word for it and, I am in the process of confirming this from other sources. Don't want any surprises...


I think this is ONLY if it's held in a "Spanish wrapper" - best to ask a professional.


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## Barriej (Jul 23, 2012)

snikpoh said:


> I think this is ONLY if it's held in a "Spanish wrapper" - best to ask a professional.


Thats why Im not relying on just one say so. 
Even though the accountant we are using is a specialist tax advisor who is Spanish.


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## The Skipper (Nov 26, 2014)

snikpoh said:


> I think this is ONLY if it's held in a "Spanish wrapper" - best to ask a professional.


I think you are right. The money has to be invested in a tax compliant bond also known as a "Spanish wrapper." This article explains how it works: Spectacular Tax Savings for Expats using Spanish Compliant Investments! - Blacktower Financial Management EU


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## paulhe (Jan 2, 2018)

Thank you all for your helpful replies. I may be able to take 12 months career break and I plan to seek a one year NLV to test the water and see if retiring to Spain is what I want to do. We have a place to stay and during the year I would have a small income of about euro 9315 at todays exchange rate. The rest of the required amount would be in savings in my Spanish bank account (.so about 24568 euros) . As I understand it therefore, that year I have to complete the Modelo 720 declaring my pension super fund (but no tax payable as it is not accessible and is not being drawn down) and declaring my savings amount (but again no tax payable on that amount, only on any interest earned) and also my small income of euro 9315 - on which there may be some tax payable, subject to tax threshold allowances. Is that correct? 

Paul


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## paulhe (Jan 2, 2018)

paulhe said:


> Thank you all for your helpful replies. I may be able to take 12 months career break and I plan to seek a one year NLV to test the water and see if retiring to Spain is what I want to do. We have a place to stay and during the year I would have a small income of about euro 9315 at todays exchange rate. The rest of the required amount would be in savings in my Spanish bank account (.so about 24568 euros) . As I understand it therefore, that year I have to complete the Modelo 720 declaring my pension super fund (but no tax payable as it is not accessible and is not being drawn down) and declaring my savings amount (but again no tax payable on that amount, only on any interest earned) and also my small income of euro 9315 - on which there may be some tax payable, subject to tax threshold allowances. Is that correct?
> 
> Paul


Not that it is relevant for my purpose of one year NLV prior to retirement but in the future when I do retire permanently and can access my super (pension) it may also be worth looking further into the super fund in Australia and whether it is itself a Spanish compliant fund. All Super (pension ) funds are regulated according to Australian law and in other jurisdictions therefore satisfy that other jurisdiction's tax requirements and may not be taxed in the other jurisdiction. See for example U.S. Tax Treatment of Australian Superannuation Funds | Castro & Co.


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## kaipa (Aug 3, 2013)

One huge problem is tax differences when moving from one country to another. If you have spent a long time planning your savings in one country you might find that the country you move to has a different system.leaving you exposed to tax. I dont think it will be possible to take advantage of the Australian system if you choose to move. The question of the level of tax you pay might be approximated by a tax expert but my experience is that really has to be a very good firm with knowledge of both systems.


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