Expat79

Hi

As the header states, I'm going to be living in Spain and working in Gibraltar. I need to know what Spanish tax I will be liable for considering that I'm going to be renting in Spain and buying a car in Spain.

My wages are going to be taxed and paid in Gib but will the Spanish government expect me to pay any additional income tax to them?

Many thanks

Fred James

If you are living in Spain you will be liable for Spanish tax on all of your income. However you are normally allowed to deduct any tax already paid on that income in the country where you actually earned it.

Whether you end up paying extra depends on the individual allowances and tax rates in each country.

johnwalk5

Not a reply but additional question. Does the same apply to pensions paid and taxed in UK?

mikelincs

Yes, but the UK state pension is below the tax threshold.. BUT you must, if tax resident, ie in Spain more than 183 days a year, living in Spain, make a tax return every year no matter what your earnings are or where they are from. Some pensions you can get paid free of UK tax, and then they are taxed in Spain, others, such as some public service pensions .eg. Police and civil service, will always be taxed in the UK, but then you can offset that tax against any you may have to pay in Spain.

johnwalk5

Hi Mikelincs. No disrespect meant but how qualified are you to make these statements? I ask because I have just had a formal consultation with a Spanish lawyer who assures me that as a resident of the EU I can choose where I am taxed.

And incidentally my state pension is over the tax threshhold!

Fredbargate

The Gibraltar answer

Pensions

A pension from any statutory pension scheme or provident or other fund approved by the Commissioner and received by an individual who is -

aged 60 or over; or
compulsorily retired at age 55 by operation of section 8 (2) of the Pensions Act, shall not form part of the assessable income of the individual and shall be taxed at 0%

johnwalk5

Sorry Fred, can you put this in layman's language and how is this relevant to any tax liability I may or may not have in Spain. I know that my state pension, if that's what you mean is not taxed at source but another two are.

The real question is who is right, a spanish tax lawyer or posters on this forum?

Fred James

The lawyer is totally wrong. You have no choice as to where you are tax resident - it is a matter of fact based on various parameters mainly the 183 day rule.

Why would you ask a lawyer about tax rules? A tax specialist might be more appropriate.

In this case the forum members would seem to be better advised than your lawyer.

To answer your other question, pensions arising in the UK are taxed in the UK unless you ask to have them paid gross under the double taxation treaty.

Irrespective of that they will be taxed in Spain. If you did not opt to have them paid gross in the UK then you deduct the UK tax from the Spanish tax. If you have them paid gross you just pay Spanish tax on them.

Domino

That sounds a very interesting statement - please give us his contact details, it could prove a very lucrative conversation for many here.

But if you don't believe what is being said by others here, based on their own experience of trying to pay as little as possible then look at the information at http://www.advoco.es/advice.html and select the relevent item(s)

UK and Spain have a Double Tax Agreement http://www.hmrc.gov.uk/international/dta-intro.htm and http://www.hmrc.gov.uk/international/residence.htm
As Fred James has said many times before, any income in the UK is subject to UK tax (unless you can make other legal arrangements). This includes your old age pension, but as this falls below the tax break for 65 and over of £10,550 then tax is not charged. However if you add the income of a private pension then this will be added to the OAP and you will be taxed on all above the £10,550.

If you are able to opt out of the DTA and pay in Spain I think you will find you will pay more

so what was your knowledgeable friend saying about Switzerland or Lichtenstein ? ? Please tell.

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mikelincs

It appears I know mare about Spanish taxation rules than your lawyer at least. living in Spain more than 183 days a year, you are tax resident in Spain therefore you pay your tax in Spain, ours, as a couple, worked out at 60 cents, but this was done via a gestor, not a lawyer. If what you said was true, then surely everyone living in the EU would choose to pay their tax in the country with the lowest tax rate, so then how would most of the countries get any tax revenue. Can you imagine the problems caused if say 15 million Germans decided that the tax rate was cheaper in Spain, so decided to be taxed in Spain, result.. end to Spain's economic woes, but the start of bankruptcy for Germany. People do not pay tax on a state pension, they may well pay, like me, on my NHS pension, but that isn't a state one, my state pension is paid free of any deductions and I cant see from reading the state pension amounts how anyone can receive enough from that to pay tax

Domino

and how much did the gestor cost ??

mikelincs

€50 for both of us..