stevesainty

My only income that is taxable in Spain is my portion of UK rental income and a small amount of interest on savings (less than 200 GBP). The total of my Spanish income is less than my Spanish personal allowance. I do however have a UK government pension that will have to be declared as exempt income on this year´s tax return.
My wife has a similar amount of UK rental income and savings income but she also has a UK state pension that is taxable in Spain. She also has a UK government pension.

I believe that I will not have to pay any Spanish tax.
I believe that my wife will receive her full Spanish personal allowance and also her full Spanish earned income allowance as her taxable income will be below the threshold for the scaled reduction.
I believe that the only difference the UK Government pension will make will be to determine what rate of Income tax will be levied on the taxable income.

Can someone please tell me if by beliefs are OK or flawed as I am trying to prepare a budget for the coming year with all the uncertainty surrounding the exchange rate and the EU referendum.

Fred James

You may end up paying Spanish tax. Until the tax program is released and you actually use it to calculate the effect of including the UK Government pension in the calculations, you will not know the effect.

It just depends on your actual income. I did some simulations last year to work out the effect and was surprised that in some cases where no tax had previously been due, that the new rules ended up with tax being due. For this year's declaration the allowances and tax rates have changed so it is not possible to run a simulation yet. You can work it out manually, but it is a very complicated problem.

You must also take into account that the exchange rate this year is much higher so your declared income will be about 10% higher than last year.

tina1566

Hi, sorry to jump on board can I ask if you have property rentals in the UK do you pay tax twice UK and Spanish? Do you pay tax on saving that are in UK bank accounts?
Thanks, hoping to move out in the summer but struggling to get correct information 😊

scot47

Surely there is Double Taxation Agreement in place ?

snikpoh

You pay tax on UK rental income in UK but then offset it on your Spanish tax return - so you only pay once.

You pay tax on any INTEREST earned from your UK savings - not the capital itself.

stevesainty

Even with the Dual taxation agreement there may be some tax to pay in Spain. Spanish rates of tax are higher than in UK.

There are some incomes that are only taxable in UK like government pensions. There are some incomes that are taxable in both UK and Spain like UK rental income. There are some incomes taxable only in Spain like UK State pension, non government UK occupational pensions, UK interest on savings and dividend income.

From 2016 UK government pensions have to be declared in Spain as "exempt income" and will somehow be taken into account in the calculation of your Spanish tax burden.

The tax paid on your UK rental income will be offset against any tax due in Spain.

You are supposed to get all your interest on savings paid without tax deducted in UK but there are some institutions that will not do that and so you will end up paying some tax twice. Income from UK tax exempt ISA´s will have to be declared as if they are paid gross and you will pay Spanish tax on them. Any income from Premium bond wins and also lottery wins above a certain amount need to be declared and taxed in Spain.

Remember, if you spend 193 days or more during Jan - Dec, either in bits or one stretch you are deemed to be fiscally resident and need to complete a tax return.

snikpoh

... but you can claim this back and then only pay tax on the income (interest) in Spain

stevesainty

Spanish tax return all done and dusted online.

Not too painful a result even with our Government pensions being included in the calculations as exempt income.

The best option for us this time was a joint declaration as I have very little Spanish income that is taxable, that will change in 2022 when I receive my UK state pension.

Bo S

Do you need to register and login to use the online return? It would be good to do dummy runs so that various outcomes can be seen.

Thanks,
Bo

Fred James

You can download the PADRE tax program here

Personal Income Tax - Tax Agency

You can use it freely but if you actually complete your tax declaration using it, you can submit it online but you will need a digital certificate or other online ID to submit it.

stevesainty

As Fred says, you just need to download the padre program, a new one is issued each April, and then use it. You can put in both your own and your spouse´s details and then by toggling between separate returns and a joint return you can decide which is the better option. If you have a digital signature you can submit the return online.

Digital signatures are very easy to obtain and can be organized within half a day from start to finish. Once you have one you can access your personal documents, online, with both national and local government web sites, Gobierno, Ayunyamiento, Suma etc. as well as Trafico and Hacienda; well worth having.