Tax question
 

Evening all.

Can someone please confirm if my understanding below is correct? Thanks.

Moving to Spain in May ish. Will not be working, age 52. Any private pension income that I drawdown from the UK will be taxed in Spain. I believe the rate will be 19% on income above the personal allowance of €5,550 up to €12,450. Or am I talking nonsense?

Re: Tax question
 

You will also get a general tax allowance of 2,000€ and 3,700€ earnings related allowance (this reduces, on a sliding scale, the more you earn and disappears at earnings over 14,450).

A simple view is reduce your total income by 2,000€, multiply the balance by 19% to get the tax due, then reduce this amount by 19% of 5,550 (1,054.50) and 19% of 3,700 (703).

This is, of course assuming that your income comes within the bands allowed for this level of taxation.

Re: Tax question
 

Thanks Steve. Complicated stuff!!

Re: Tax question
 

The other issue is timing of arrival and entry into Spanish tax system - you need 183 days in Spain to be liable for tax so if you arrive (intending to live as a resident) after tax cut off point (Spains Tax year is Jan-Dec) you would not be liable to make a declaracion until 2020 on your 2019 income.

Re: Tax question
 

Gracias.

Re: Tax question
 

Can someone please help with this scenario?

Move to Spain end of July ie less than 183 days remaining in tax year.

Rent a flat and advise private pension provider of my new address.

Say in August or September I drawdown some pension income eg 20k.

Will I escape UK tax as I'm living in Spain? Will I escape Spanish tax as less than 183 days?

Or is this a wishful thinking tax avoidance idea?

Thanks.

Re: Tax question
 

Very wishful. You have to be tax resident somewhere at any point in time. In your example, you will be UK tax resident.

Sometimes there are benefits in being in one system as against the other (this is only an option when you are relocating) so take professional advice.

Re: Tax question
 

Thanks. Thought it might be!!

Re: Tax question
 

Technically speaking, you cease to be tax resident in the UK when you leave permanently, but HMRC will continue to consider you tax resident until you can prove you are tax resident somewhere else. Once you can prove this, there is the possibility of a tax rebate.

Yes, if you take the lump sum while not tax resident in Spain, it will be free of Spanish tax.