Originally Posted by Porth

Is the tax year in Spain please Jan - December? So if one became resident in say July 2014 would the revenue stream be split between countries or would the fiscal residency test cut in and then election to pay taxes comes into being?

Originally Posted by marcbernard

The first thing to remember is that a RESIDENT of Spain in receipt of two (or more) pensions one of which is as a result of having worked in the Civil Service, Police or similar organisation, has until recently (see below) benefited from two seperate countries' tax allowances. The CS etc pension would be taxable in UK (and tax would be due if the UK personal allowance(s) are all used up). The State and other (private) pensions would not be taxable in UK provided of course that the required registration as a Spanish citizen had been made. These items, along with other world income, would be taxable in Spain unless the threshold had not been exceeded.
An exception to the above would be if income arose from property within UK, and this would be subject to UK tax, and also in Spain; but the machinations of a Double Taxation agreement would come into play so that you would only pay tax on this income at the higher of the two regimes.
Another quirk has now apeared in that whilst the existence of a CS etc pension was ignored totally in Spain up to (probably) 2013, a revised agreement, which has I understand yet to be implemented, allows for the UK element to be taken into account in calculating the rate of Spanish tax on world wide income. However there can still be no tax deducted by Spain on the UKCS etc pension. Thus, on my understanding, if your total world income minus the CS etc pension does not of itself give rise to Spanish Tax liability, none would be due.

Originally Posted by missile

Presumably at present she is tax resident in USA? She will be selling her shop before she leaves and will thus be subject to pay whatever tax is due in USA.

Originally Posted by perthhomeschool

Yes, of course, she expects that, but was wondering whether she would have to declare the sale to the Spanish gov and be taxed again.

I think the question here is really whether what she has made in income or holds in assets in another country PRIOR to taking up residency is even relevant.

Originally Posted by CapnBilly

It calculates your marginal tax rate, less the various allowances, that you would pay if the Government pension was included. It then applies this rate to any income that is taxable. So in a sense you are correct if your income in Spain is below your allowances, but if you have a state pension, it doesn't take much to take you over.

According to my calculations, an individual over 65 will start paying tax on any income in Spain over €7200 (£6000 - basic state pension) if you have a government pension over £2450. If you are under 65 and have the same level of income in Spain, it's a Government pension of about £1700

Originally Posted by Fred James

As for your question about rates and allowances you get a personal allowance of 5151. If you are over 65 you get an additional 918. This goes up to 2040 at 75.

You also get a general allowance of 4080 – 2652 (sliding scale on incomes from 9180 – 13260)

My comments would be:-

The UK State Pension is currently £107 per week that is £8564 pa. If you gross that up at €1.20 that's €10276 pa.

A 65 year old with just a state pension would have an allowance of:-

€5151+€918+€4080 giving a tax allowance of €10149 just a smidgen under the UK State pension. However if like us your wife is on less than the full pension level a joint submission shows no tax to pay.

If you are correct then even with the changes to the DTT affecting our Government Pensions will show no extra tax to pay.

Originally Posted by EsuriJohn

Fred posted this on another thread:-




I think you need a new calculator or keyboard, as a number of your figures are incorrect.

Firstly the basic state pension is currently £110.15 pw and is going up again in April to £113.10, so thats either £5,727 or £5,881. I rounded it up to £6,000.

I'm afraid that Spanish tax doesn't work in the way you describe. It will take your total worldwide income ( including government pension) and deduct your earned income allowance. It then works out the tax on that amount, and deducts the personal allowance at the basic rate, and the amount is then calculated as a percentage ( this is what I call your marginal tax rate) say 8%. So this the rate at which you would have paid if you had been paying tax on all your income.

It then applies this rate to the income that is taxable in Spain.

I can assure you that the figures I have quoted are more or less correct, as I put them through the Padre model to make sure they were right.

Whether you believe them or not is upto you. I posted them for information, so people were aware if what is likely to happen.

Originally Posted by CapnBilly

I can assure you that the figures I have quoted are more or less correct, as I put them through the Padre model to make sure they were right.