Dondurma

Hi folks.

Reasonably straightforward question- my only source of income when I reside in Spain will be a UK Crown pension.

I know I MUST register in Spain for tax even though my income is tax exempt as it must be taxed in UK

What I would like to know is after registering do I still need to send in a tax return every year even if my circumstances have not changed?

Thanks

snikpoh

Personally I would - if you do it yourself or even go to hacienda and have them do it, there are no costs.

Dondurma

Thank you snikpoh its probably advisable as you say. Was just wondering if it was mandatory if no change in the circumstances

Rosemary

My understanding is that even nil returns need to be done every year to prove that there have been no changes in your circumstances.

Rosemary

Dondurma

Well apparently not for those for example who initially register but earn less than €8000- they are not required to send an annual return unless their circumstances change

I was just thinking if being tax exempt ( Crown Pension) after first registration, would it be a similar situation

marcbernard

There have been some changes recently in the treatment of CS pensions by Hacienda. It is not yet definitive whether this year or next is the crucial change effective, but in any event you should be aware that whilst in earlier years a CS pension was ignored by Spain, the revised DTA between the two countries has resulted in potentially substantial tax payment being due on "other" world income. If, however, your total income is in fact only your CS pension (and not specifically the UK state pension) there should be no liability to tax in Spain. On the other hand it is advised to look closely at the changes made to avoid being caught by the changes.
On the other hand if by Crown you mean the State pension. this would be taxable in Spain and NOT in UK, but you should manage to avoid the taxman here since the miserable level of the UK state pension woulld be below the level of tax in Spain, given no other world income. Of course, it is unlikely that you could survive here on only the State pension!

Dondurma

Marcbernard- thanks for that.

My pension is Civil Service Crown Pension- definitely only taxable in UK.( I am way below state pension age!!!)

I am aware new rules in Spain state when I become tax resident this pension must be declared although it will be considered tax exempt.

My query is if my circumstances stay the same, after my initial declaration do I have to send in a tax return every year with this same info re my exempt pension or only if my circumstances change

marcbernard

The prime argument lies with the thought of Inheritance Taxes, and this depends on the inheritors' situation. One needs to be a five year tax resident to claim the best reliefs, and to send a tax return annually albeit resulting in nil due, would be the best way forward. One can undertake this with the help of Hacienda office at no cost.
Always assuming you do not live in Murcia, of course!

Dondurma

Thanks for that. Sound advice and with you having put it that way- well worth getting off my lazy butt and putting in an annual return. Much appreciated

EsuriJohn

Don't be sure you will not pay some "tax" as from 2016 the Government pension must be declared in Spain. This means that if you have any other income which is taxable in Spain ie. State pension, property rent, Private pension which is not enough of itself to be taxed on its own you will end up paying tax. Fred assures me that this is not double taxation but merely an increase in you marginal rate. And yes you should make a tax return every year to help at EoL with succession tax and capital gains tax.

Dondurma

Esurijohn as I have stated it will be my ONLY source of income. I appreciate all help and info and will definitely do as advised and submit an annual return regardless of it being a " nil return"

Fred James

I would be interested in knowing how people have actually submitted a zero return.

I recently produced a declaration for some friends, which resulted in a zero return.

I usually take my return to the bank who are happy to process the payment, but in this case, their bank refused to do it as no payment was involved.

They then went to the tax office to submit it, but even that proved difficult and involved a couple of visits before they sorted it out.

I have suggested that next time they take the option at the end of the declaration to make a donation to the Catholic Church. This way the bank will have something to transact which should solve the problem.

Yes, I know that an online declaration is possible, but that gets complicated because of the need for digital certificates or a PIN24.

marcbernard

Fred
Your comment sounds a bit religionist!

Fred James

That's the way the system works. If you generate a rebate, the program asks if you would like to donate it to the church.

If you don't take this option, the very last box that pops up in the program is another opportunity to make an unspecified contribution.

A €1 donation could save a trip to the tax office. That's not religious - it's common sense!

marcbernard

The catholic church is probably the richest organisation in the world, and is noted for taking little or no notice of the poverty of its general followers. Why would anyone want to contribute to that sort of organisation?
I know its off topic but hell, so what?