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Spanish income tax.

Spanish income tax.

Old Mar 2nd 2019, 5:52 am
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Default Spanish income tax.

We are pensioners and looking at moving to Spain and having our pension transferred each month.But after looking at the income tax we are wondering if this would be a good move financially.
How do expats cope with such high rates?
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Old Mar 2nd 2019, 6:04 am
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Default Re: Spanish income tax.

You don’t have an option. If you come to live in Spain you pay Spanish tax.

The tax rates are higher and the allowances are lower. Certain pensions such as annuities are very much lower for tax

How do you cope with it? Simple, you just pay the tax and save money on your other living expenses.
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Old Mar 2nd 2019, 8:10 pm
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Default Re: Spanish income tax.

Fred is quite right, you cannot have everything in life. We do not know any details of your pension income so that makes your question slightly difficult. Cost of living can be less in Spain. If you shop around you can get a bottle of London Dry Gin for 5€, packet of fags 5€, bottle of wine under 2€.
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Old Mar 2nd 2019, 9:37 pm
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Default Re: Spanish income tax.

Thanks both.
Just came as a bit of a shock when researching life in spain.
Probably wait and see the outcome of Brexit first.
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Old Mar 2nd 2019, 11:35 pm
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Default Re: Spanish income tax.

Originally Posted by Golffish23
Thanks both.
Just came as a bit of a shock when researching life in spain.
Probably wait and see the outcome of Brexit first.
The last part is wise. I am surprised that likelyhood of paying tax in spain would come as a surprise? It does also depend upon type of pensions you have i.e. state, private or crown? State and private declare and pay Spanish income tax, crown pensions declare but pay UK income tax but Spain take that into account to assess further income. You would also need to declare any asserts held valued over Euro 50,000. Look up Spanish Modelo 720.
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Old Mar 3rd 2019, 12:32 am
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Default Re: Spanish income tax.

Originally Posted by bobd22
The last part is wise. I am surprised that likelyhood of paying tax in spain would come as a surprise? It does also depend upon type of pensions you have i.e. state, private or crown? State and private declare and pay Spanish income tax, crown pensions declare but pay UK income tax but Spain take that into account to assess further income. You would also need to declare any asserts held valued over Euro 50,000. Look up Spanish Modelo 720.
Not surprised at paying tax but was surprised about the big difference between UK tax and Spanish tax.
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Old Mar 3rd 2019, 12:49 am
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Default Re: Spanish income tax.

Originally Posted by Golffish23
Not surprised at paying tax but was surprised about the big difference between UK tax and Spanish tax.
Ok got you now. As I say it does depend on type of pension.
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Old Mar 3rd 2019, 3:07 am
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Default Re: Spanish income tax.

Spain is a high tax country. Portugal has a fantastic tax regime for ex pats. Hopefully Spain will see the folly of its ways.

Until then i spend half the year in low tax UK. Losing 30 years of PEPs and ISAs tax free income and gains would be plain silly. For those on lower incomes with fewer assets the decision is more nuanced.
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Old Mar 3rd 2019, 3:16 am
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Default Re: Spanish income tax.

The tax rates and allowances depend very much on your income.

A 65 year old pensioner with an income below €11250 gets allowances of €12400 so pays no tax. In the UK the allowance is about €14000

The UK state pension is currently about €9500.

I have a full UK state pension and an annuity and pay far less tax than I would pay in the UK.
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Old Mar 3rd 2019, 5:19 am
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Default Re: Spanish income tax.

Originally Posted by Fred James
The tax rates and allowances depend very much on your income.

A 65 year old pensioner with an income below €11250 gets allowances of €12400 so pays no tax. In the UK the allowance is about €14000

The UK state pension is currently about €9500.

I have a full UK state pension and an annuity and pay far less tax than I would pay in the UK.
Hi Fred
Thanks for the comments

Really confused now?
From what I have found on line according to the Spanish tax band 19% tax is taken from 0 to 12450 euro and a pensioner age 65 would get an allowance of 6700 euro therefore 19% tax would be deducted from the balance of 2800 of a uk pension up to 12450, then anything from then on up to 20200 would be 24%.
Or do I have it wrong?
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Old Mar 3rd 2019, 7:52 am
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Default Re: Spanish income tax.

Yes you have. As well as the basic age 65 allowance, everyone gets another €2000 plus up to another €3700 depending on your income. If it is €11250 or below you get the full allowance. If your income is over €14450 you do not get it. In between it is prorata.

With a purchased annuity, you only pay tax on about 25% of the income.

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Old Mar 3rd 2019, 8:13 am
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Default Re: Spanish income tax.

Originally Posted by Golffish23
Hi Fred
Thanks for the comments

Really confused now?
From what I have found on line according to the Spanish tax band 19% tax is taken from 0 to 12450 euro and a pensioner age 65 would get an allowance of 6700 euro therefore 19% tax would be deducted from the balance of 2800 of a uk pension up to 12450, then anything from then on up to 20200 would be 24%.
Or do I have it wrong?
Everyone has a general tax allowance of 2,000€
Then you have a personal allowance Under 65 = 5.550€, 65-under 75 = 6.700€ and over 75 = 8.100€
Then you have an earned income allowance on a sliding scale, on earnings of up to 11.500 = 3.700€, earnings of 14.000 = 809€, earnings over 14.450 =nil

If you only have a UK pension you are unlikely to pay any tax in Spain, nor in UK

See the link to a worked tax example for a 2018 tax return

https://drive.google.com/file/d/1Jpx...Bvw9sZ4jC/view

Last edited by stevesainty; Mar 3rd 2019 at 8:16 am. Reason: Inserting a link
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Old Mar 3rd 2019, 9:30 am
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Default Re: Spanish income tax.

Originally Posted by stevesainty
Everyone has a general tax allowance of 2,000€
Then you have a personal allowance Under 65 = 5.550€, 65-under 75 = 6.700€ and over 75 = 8.100€
Then you have an earned income allowance on a sliding scale, on earnings of up to 11.500 = 3.700€, earnings of 14.000 = 809€, earnings over 14.450 =nil

If you only have a UK pension you are unlikely to pay any tax in Spain, nor in UK

See the link to a worked tax example for a 2018 tax return

https://drive.google.com/file/d/1Jpx...Bvw9sZ4jC/view

Fred,
Thank you so much for the information, I need to start again I think. Your information will be very helpful.
I have a state pension and a small private pension so I will try to work it out with help of your info.
Once again thanks.

Last edited by Rosemary; Mar 3rd 2019 at 9:39 am. Reason: corrected quote
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Old Mar 3rd 2019, 6:39 pm
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Default Re: Spanish income tax.

Originally Posted by stevesainty
Everyone has a general tax allowance of 2,000€
Then you have a personal allowance Under 65 = 5.550€, 65-under 75 = 6.700€ and over 75 = 8.100€
Then you have an earned income allowance on a sliding scale, on earnings of up to 11.500 = 3.700€, earnings of 14.000 = 809€, earnings over 14.450 =nil

If you only have a UK pension you are unlikely to pay any tax in Spain, nor in UK

See the link to a worked tax example for a 2018 tax return

https://drive.google.com/file/d/1Jpx...Bvw9sZ4jC/view
Excellent post, I did my calculations slightly differently as a forecast and I will change them to yours (I added all the allowances up first before calculating). I haven’t checked to see if there are any material differences
Out of interesting, is a Draw down pension pot included on your return for wealt tax purposes?
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Old Mar 4th 2019, 5:20 am
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Default Re: Spanish income tax.

Originally Posted by stevesainty
Everyone has a general tax allowance of 2,000€
Then you have a personal allowance Under 65 = 5.550€, 65-under 75 = 6.700€ and over 75 = 8.100€
Then you have an earned income allowance on a sliding scale, on earnings of up to 11.500 = 3.700€, earnings of 14.000 = 809€, earnings over 14.450 =nil

If you only have a UK pension you are unlikely to pay any tax in Spain, nor in UK

See the link to a worked tax example for a 2018 tax return

https://drive.google.com/file/d/1Jpx...Bvw9sZ4jC/view
Is it just me or have you had finger problems with the tax band for 24% ( 22220 rather than 20200) in cells I43 and I44?

And yes my forecast calculations (never having done one - hence a forecast) are materially different from yours
Why are the allowances (eg the 5,550) not reducing taxable income - or is it - that's just the way the calculation works in Spain

Last edited by uk03878; Mar 4th 2019 at 5:33 am.
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