Notdunroamin

Taxleak is for employees and is useless for retirees or pensioners.

Assuming you have an NIE you can use the official Agencia Tributaria simulator.

https://www2.agenciatributaria.gob.e...OLAB&EJER=2019

If you have only a state pension and/or drawdown from a private pension or pensions you need only put the total in Box 0003 and the simulator will do the rest.

Keithtoon's 22,500€ for instance would result in a tax bill of 3083.25€

If you have annuities or income from other sources things get a little more complicated, for a very rough ballpark (but high side) figure for annuities you can add 50% of income to Box 0003 then put 50% of the other 50% in Box 0032, gross income from other sources you can add to Box 0003.

No pithy comments or criticisms please, as I say this is for a very rough ballpark way to give you some idea of how much tax you might need to pay, and in part to illustrate that the simple tax band model employed in UK does not work in Spain.

However you use it though it's still a better tool than Taxleak!

Lynn R

If you subtract the figure of 1,426 for social security contributions (not applicable to a pensioner) from the figure of 4,406 for total deductions from an annual income of 22,500, though, the result from Taxleak is not massively different from the figure for tax given by the AEAT simulator.- in other words, a very rough ballpark figure.

Fred James

I was advised that qualifying annuities went into box 0032 (rentas vitalicias) and you only entered the reduced amout of 28% or less depending on your age when the annuity started to be paid.

Notdunroamin

That's correct however the key word is 'qualifying' and the problem is that the typical UK annuity is not necessarily directly analogous to a Renta Vitalica which means it's treatment for tax needs to be different.

This is an area I've looked into in some depth and I've come to the conclusion that many tax advisors in Spain do not appreciate the difference and when working with British clients may incorrectly treat UK annuities as Renta Vitalica's leading to an underpayment of tax, and possibly a significant one.

This is my understanding of the situation but if anyone knows anything to the contrary then I'm more than happy to be contradicted or corrected!

Renta Vitalicia income is regarded as a return on savings or moveable capital and generously taxed according to the table below:

• 40%, when the recipient is less than 40 years old.
• 35%, when the recipient is between 40 and 49 years old.
• 28%, when the recipient is between 50 and 59 years old.
• 24%, when the recipient is between 60 and 65 years old.
• 20%, when the recipient is between 66 and 69 years old.
• 8%, when the recipient is over 70 years of age.

If a UK annuity were bought with savings or a personal pension fund to which a employer had not contributed then I believe it could arguably be declared as a Renta Vitalica and be taxed accordingly.

Most however will have been bought with funds comprised of contributions from both employer and employee in widely varying proportions and many by consolidating a number of separate funds into one each likely with different employer/employee contributions, but that technically it's only the employee portion which can be regarded as savings income and thereby qualify for Renta Vitalicia style tax relief, the other portion being declared in Box 0003.

Clearly the problem there is that it can be extremely difficult, if not impossible, to accurately apportion the two parts.

If you cannot accurately apportion the contributions then when declaring annuity income to be 100% bombproof you should include the entire amount in income in Box 0003. Nobody can ever argue with that although it can mean paying more tax than you otherwise might.

Another way though, suggested to me by a professional Spanish tax accountant, is to assume that the funds used to purchase my two small UK annuities, both of which were bought with consolidated funds, were apportioned 50/50 so put 50% of the gross income into Box 003 then apply the relevant Renta Vitalica formula to the other 50% and put that in Box 0032.

That's the route I've taken in this last tax year and it resulted in a modest but welcome saving of around 270€ but obviously the greater proportion of your income represented by annuities the greater the difference can be.

Keithtoon

Thank you English Red...

Keithtoon

Thank you Lynn R...

Lynn R

What you'll also need to get used to is having to put aside enough to cover your annual tax bill, because it isn't deducted at source as it would be in the UK (once you've sorted out your double taxation situation and you are paid your UK pension income gross, that is).

Keithtoon

That is a good tip. Will no doubt use a Gestor to help out my first Tax declaration/application.

Lynn R

You have the option to pay it in two instalments if you want to (one at end of June and the other in November) but I find it easier to pay in one go and at least it's done with!