gemscot1

I am 52 and looking to moving to Spain this year with my wife to make sure I am not impacted by the brexit nonesense however am a little worried that my actions could impact when i claim my pension - specificially the 25% lunmp sum you can remove - I apprecaite that i should get some pension advice and i will however always best to hear thoughts/comments so I can at least understand and consider things in advance

thanks in advance

VFR

I think you would be best to consult an expert in Pension & Tax issues.

gemscot1

thanks that is the plan - was just hoping that others might share their thoughts - my gut feel is that the lumo sum will be taxable if i am a resident in Spain but as you say an expert will give me the options

gemscot1

if anyone could recommend a pension expert/advisor then that would be extremely helpoful - thanks

Fred James

You don't need a pension expert to confirm it is taxable.

Notdunroamin

Exactly, in effect a pension lump is simply income and will be subject to taxation the same as any other.

The only way to avoid it is by not being tax resident when you take it.

gemscot1

yes makes total sense - i guess what i need to now understand is if i was to use my whole pot to buy an anuuiity and theredore i take no lump sum how is the monthly payments taxed - will look into this now - sonme sites are saying its taxed favourably in spain which may make it a better option - thanks so far for thoughts

Fred James

Annuities are about the best tax deal you will get. You only pay tax on a small percentage of the income. The exact % depends on your age when you start to take payments.
These are the figures
39 or less – 40%
40 to 49 – 35%
50 to 59 – 28%
60 to 65 – 24%
66 to 69 – 20%
Over 69 – 8%.
The income is classed as savings income and taxed on a sliding scale that is lower than normal income tax.

gemscot1

wow this is pretty nice to if you claim at say 55 then you pay tax on only 28% of the income and the rest is tax free - certainly makes up for the poor annuity rates - thanks for supplying

Lmj2018

if you take your lump sum and you are Spanish resident you will be taxed on it. The “tax free” bit is only if you are. Uk tax payer. I took mine the year before I became a tax resident in Spain, sorry but that doesn’t help you.

gemscot1

all comments help - it allows me to build an opinion so when i approach an advisor I can at least be tooled up with some thoughts/opinion

Moses2013

https://www.spanishpropertyinsight.c...ax-form-spain/
The controversial “Modelo 720” will sound familiar to those who have any connection with Spain. This annual tax return is one of the anti-avoidance tax measures incorporated by the Spanish government, and it is required to disclose any assets owned internationally by Spanish residents to the tax office.Individuals who meet any of the above tax residence conditions are considered to be residents in Spain and therefore must submit the 720 tax form. There is an allowance of 50,000 euros which is calculated before submitting the form, but as rule of thumb, the aggregated value of assets must be considered, which include:

– Real estate and property generally, as well as any profits arising from these.
– Bank accounts, cash and deposits.
– Financial assets, investments, pensions, insurance and other financial instruments.

While it is the taxpayer who directly owns the assets who must submit the tax return, parties who hold any rights over the international assets, such as beneficiaries or those with power of attorney must look into this as well.

The deadline to file the form is the 31st of March of each year, though there is no need to file it annually if the value of the overall assets has not rebased 20,000 euros. The form must be submitted online and a Spanish ID or Resident number identification is required.

gemscot1

thanks this is a good point - would need to disclose pension value every year - so much to consider lol

Fred James

You do not have to declare the value of a pension "pot" but you do have to disclose the value of an annuity that you are taking payments from.

Annuities need the name and address and company number of the institution providing the annuity and the value at 31 December based on a capitalisation value of the income produced based on the official interest rate (as of 2017) of 3%.

Essentially what this calculation does is work out how much money you would need to invest to get an income equivalent to the money paid from your annuity. This results in a surprisingly large figure but this is discounted depending on your age and the value figure for a 65 year old is 24% of the above figure. This increases by 1% for each year less than 65 and decreases by 1% for each year more than 65, so a 75 year old would declare a value of only 14% of the maximum figure.

For example, if you want to make €1 interest from a 3% investment you would need to invest €33. So if the income from your annuity is €10000 you would have to invest €330000. If you are 65 then you only take 24% of this figure which is €79000 so that is today's value of your annuity so you would need to declare it.

gemscot1

ah right so whilst its inversted I dont declare? - but when it crystalises and an anuuity is purchased that is when i need to declare? - bit worried they will ask where this value came from - i guess you dont pay any tax on this anyway so its just merely advisng them of assets