Fred James

Tricky one this.

Some financial experts think that the UK Government pensions should be included in the Spanish tax declaration, others don't.

The tax treaty is not abundantly clear on this point as it says that UK Government pensions should "only be taxed in the UK". That doesn't say that they should not be declared in Spain. There is a special box on the tax return where these should be entered - they certainly are not entered in the main income box. Under the usual rules you would expect the tax paid in the UK to be offset against the Spanish tax which is still the case.

The problem is that if you include the UK pension it might affect the tax rate that you pay in Spain by lifting you into a higher tax bracket on the rest of your declared income. This does seem to be the case if you do include the details on your return but only if you have a reasonably high income.

It's a very complicated subject and the tax calculations are also pretty weird.

Best to carry on with the way you have been doing it. The real problem is with people who have UK Crown pensions as well as a UK state pension and possibly other income (private pensions and investments) and then, because the Crown pension (and their state pension, unless they have taken steps to get it paid gross) is taxed in the UK, think that they don't have to declare the UK state pension and any other income.

HBG

I could be heading for a double whammy on this one because I'm due to draw down a Spanish 'pension' after making autonomo payments for a few years. My Gestor has been brilliant over the years, but he's totally flummoxed over this one.

So am I.

Fred James

I don't see it being a problem - you just add it to any other income (apart from the Crown Pension) and declare it as earned income.

It's just another income source - nothing special about it from a tax point of view.

HBG

Thanks, Fred, but it's a bit more complicated than that. My Gestor is a shrewd old boy, but he's retiring before the budget next year.

He did give me some advice and I'll mention it briefly in case it helps someone, but I won't be taking the advice myself.

He suggests putting everything in my wife's name, returning to the UK, on paper, and coming back, officially as a tourist. I wouldn't want to live that way.

tommy.irene

Yes i get the old age pension and £340 rent for my house..

Fred James

So you definitely need to make a declaration.

The rental from your UK property is taxable in Spain but you can deduct the UK tax paid.

tommy.irene

My rent income is only about £4000 a year..

But thanks for the information..I will see an acountant here and see what he does for me..thanks again everyone..

HBG

If you can live with such a minute transgression of the law, just about the level of not paying a parking ticket, don't tell anyone.

milesg

I am new to this site so please excuse any faults on my part.

I lived for about 9 months in Gran Canaria and did the NIE and Social Security but they will be out of date now.

I am looking to go back to the Canaries on a permanent basis, as a long term renter, and would like to do everything legally. So all I will comply with all necessary registrations.

I know that Canary Island tax law is very different to that of mainland Spain.

So any ideas as to what I could expect from the following as a retired 58 year old.

1. I would have little or no Spanish income.
2. Rental income , less expenses but not taxed, from Germany.
3. Variable but small income from a numbered account in Liechtenstein.
4. Potential capital gain on above assets.
5. Potential capital gains from UK assets.
6. At 65 a proportion of UK and Swiss state pension.

The rental income would not be sufficient to live from and supplement would be required from the numbered account capital. Potential to split numbered account then declare a part. Bear in mind htat income/divorce tax has already been paid on all this stuff in the locations where it was earned.

Any ideas as to information sources or advice.

Domino

quick question - how long ago did you get your NIE etc ??

when I was given my NIE I was told it was "for life", so if you go back to Spain you will be able to use the same number.

other than to say that Spain now requires all residents to have adequate financial and medical cover to meet their needs so they will not be a drain on the country's finances, I will leave the rest to others who know more about these things

kr

Rosemary

As Concierge for the Spanish section of BE I would like to say hello and welcome.

BE is a very large expat website, so if you have problems finding your way around we have concierges who will try to direct you. The moderators for the Spanish forums are Mitzyboy and Fred James, moderators are there to ensure that the site runs smoothly within the rules of BE. Problems and complaints should always be addressed to a moderador who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are friendly and helpful with a wealth of knowledge of the issues of living in Spain. At the top of the page you will find a quirkily named thread called Free Beer which is full of important and useful information. Hope you enjoy your time participating in the forums.

Please let me know if you need any further help.

Rosemary

Fred James

Income tax law in the Canaries is not significantly different from other regions of Spain. All the basic tax rates and allowances apply but their are minor differences just like in the other autonomous regions.

As you will be fiscally resident because you are spending more than 183 days in Spain you will be liable for tax on your worldwide income and capital gains which includes all the items you have mentioned.

There are normally double taxation agreements between Spain and most countries so you would need to look at these carefully to see if there are any exceptions to the rules that the income is taxed in Spain.

Even if you end up paying no tax in Spain due to the personal allowances or exemptions you will almost certainly have to complete an annual tax declaration in Spain.

milesg

To Domino...I got my NIE and Social Security numbers in Q1 2006.

Forgot to mention in my post vital fact, have UK nationality as well as Swiss.


To Rosemary... many thanks for your kind words. I will try to maintain your high standards.


To Fred...I understand what you say but as I understand there are some special things with the Canaries.
I have heard income tax is capped at a maximum of 20 % instead of mainland progressive rates maximising at 43?... but I am no expert so please correct me.
Canary IGIC is generally 5% (luxury stuff is higher).

Since my post I discovered this article...bit sensational ..but maybe there is some truth in it

http://www.telegraph.co.uk/finance/p...e-Beckham.html

In any case advice is welcome

Fred James

No it's not - it's the same as the mainland and it now goes higher than 43% on high incomes.

The "Beckham Rule" does not apply to you as it only applies to income generated in Spain.

Fredbargate

http://uk.finance.yahoo.com/news/tax...163631617.html

No mention of Gib