Tax On Pensions
 

iHAVE JUST ARRIVED CAN I HAVE MY PENSION THAT IS PAID INTO A ENGLISH BANK T/F AND IS THERE T :confused: AX IMPLICATIONS i ONLY EARNED ENOUGH 2 PAY BASIC TAX?

Re: Tax On Pensions
 

It really depends on your status, if you intend living in Spain more than 183 days P.A. you are effectively Tax resident and therefore all your worldwide assets/income come under the Spanish tax system. There are exceptions, IE if your pension comes from a UK government agency such as DSS or Civil service or military pension it is taxable only in the UK.

There is an agreement between Spain and UK tax authorities that you will be taxed only in one country (Your country of residence), I thought the whole subject was quite complex to understand in the UK, and when Igot to spain it turned into a nightmare, in the end I paid an Asesoria to sort it all out and Tax wise I am marginally better off in the spanish system.
all the info you need is here, But I suppose it really depends on personal circumstance.

http://www.windrammiller.com/tax_spain.html

For transfers to Spain there are lots of options, but again it depends on your circumstances. For example , UK Gov pensions can be paid direct, Spanish banks wont charge if it is a pension payment, Halifax will do direct transfers UK Halifax to Spanish Halifax FOC, Lots of options you will need to shop around for the best for u.

Re: Tax On Pensions
 

:) Check with your pension company, a lot of them can pay your pension in Euros, if you have a Spanish bank account, and generaly at a favourable exchange rate, but you must inform the tax people in the U.K. first. At first you could possibly pay tax in both countries, but there is a way to claim it back from the U.K. ;)

Re: Tax On Pensions
 

Civil service and military pensions are classed as "Crown" pensions and are, as you say, taxed in the UK.

Normal DSS state retirement pensions are not included in this category and are taxed in Spain.

Re: Tax On Pensions
 

Sorry Fred, Your quite right I didnt make myself clear, I meant a pension from the DHSS after working for them and retiring , not the general state pension which we have paid into and get on reaching age 60 or 65!! :D

Re: Tax On Pensions
 

Which brings up a good question, for those of us a few years away from retiring in the sun are pension credits transferred automaticly when you move?

My wife worked in Germany 7 years and I expect we'll be a few years in Spain and then after that who knows (hopefully not back to Germany) do pension credits follow you around. I know labour mobility is one of the bedrock baisis of the EU but what about pensions?

vox populia I would suggest picking up a recent (make that new) copy of "You the law and Spain" ISBN: 8489954410 he has a chapter dealing with that very thing. Being as I'm a few years away yet I skipped that one :D

Re: Tax On Pensions
 

Thanks Tim I will get that book its all very complicated espically regarding company pension schemes as I have that there is no law to insist on your scheme being paid in euros to a spanish bank depite all those years of paying in !

Re: Tax On Pensions
 

True, but just phone them up, thats what I did , my pension company is quite small, yet they still have pensioners who live in EC countries, and already have a system in place to pay in Euros. :D

Re: Tax On Pensions
 

Interestingly enough Canada is in the process of doing the same with pensions. Currently the GST (VAT) refunds are now paid in Euros and although I have many years to wait, pensions are as well (but not yet direct deposit)

Re: Tax On Pensions
 

Cheers, I phoned them they said that if I wait until I have spanish residence then they maybe able to pay the pension gross and the spanish taxation system tax me there because it will be slightly cheaper? Does anyone know if this can be done?
Vox Populia :(

Re: Tax On Pensions
 

You need to get a form from the Revenue, fill in the details of any income you want paid gross and the form then goes to the Spanish taxman. He notes the details, stamps it and it goes back to the UK Revenue.

When they get it back you will get your income paid gross.

The Spanish tax is not due until June of the following year so you will effectively get a tax "holiday" of up to a year.

Depending on your income and personal circumstances, Spanish tax is about the same or slightly higher than the UK.

Re: Tax On Pensions
 

Thanks Fred, It sounds like apart from the initial tax break i will be no better off financially!