britishbull

Well, I have been looking at the latest tax regulations in Spain and this is what seems to be the case as I was hoping for similar to OP.

EU states can set their own tax rates but the overall tax regimes are becoming very similar with regards to foreigners living in one country and having an income in another, loopholes and anomalies are being closed (such as allowing two set of personal allowances to lower tax).

No argument with OP for state employee pensions, this is a concession between the two governments though I doubt if there are many Spaniards retired to the UK who take advantage of it,

As far as Spain taking ever larger chunks of expat income goes, you can expect it to get much worse as the government does not have a clue how markets work,

Fred James

In which case I don't quite see the point you are trying to make.

State "employee" pensions are taxed in the UK and state retirement pensions are taxed in Spain.

It's not an EU thing - there are different rules for most countries worldwide.

http://www.hmrc.gov.uk/taxtreaties/dtdigest.pdf

Chiclanagir

And as I understand it UK rental income has to be taxed in the UK though why I don´t know.

Domino

the impression I am getting is that he was initially trying to say was
State Employee Pensions are tax free

but I don't think that is right..................

Fred James

Because it is income that arises in the UK.

As a general rule all income arising in the UK is taxed in the UK irrespective of the tax residency of the earner.

There are exceptions under the double taxation treaty such as UK pensions (excluding government pensions). These can be free of UK tax so long as they are taxed somewhere else.

britishbull

The point I was trying to make is that the concession is only for people who have pensions that have worked for the government, if you have a normal company pension it will be taxed as part of your worldwide income in Spain with a tax credit for any tax paid in the UK. Not talking about the OAP pension BTW. You don't pay tax twice but you are taxed on the whole sum in Spain rather than the pension less personal UK allowance in the UK.

Unfortunately, UK rental income is also taxed as part of your worldwide income in SPain with a tax credit for any tax paid in the UK. So if your rental income was the same as your personal allowance in the UK you would pay no tax there but would pay tax in Spain (although you only pay tax on half the rental income plus lots of things you can set against it). I had this argument in another thread as I thought it was just taxed in the UK.

EsuriJohn

On rental income arising in UK you can export it tax free from UK and have it taxed direct in Spain if you have satisfied HMRC that you are correctly registered for tax elsewhere by submitting FD 9 or equivalent. This saves the hassle of non-coincedental tax years and 2 tax returns.

britishbull

"On rental income arising in UK you can export it tax free from UK and have it taxed direct in Spain if you have satisfied HMRC that you are correctly registered for tax elsewhere by submitting FD 9 or equivalent. This saves the hassle of non-coincedental tax years and 2 tax returns."

The point of having it taxed in the Uk rather than Spain would be that you can set your personal allowance against it and if you only have one property then you would escape most of the tax except that Spain will now tax it as part of your worldwide income...

Fred James

That's not strictly true. Unlike the deal where you can "export" your state and occupational pensions tax free which are then ignored by HMRC, the situation with rentals is different.

HMRC Form FD9 does not cover rental income. "The form is for use by an individual resident of Spain receiving pensions, purchased annuities,
interest or royalties arising in the UK".

You can apply to not have tax deducted at source by the tenant/agent on the basis that your allowances will probably mean that you won't have to pay tax but in theory it is still taxable in the UK via self assessment.


http://www.hmrc.gov.uk/international/nr-landlords.htm#4

EsuriJohn

That's true if you were renting at £1000 a week I accept that HMRC would not let you take that without tax but if you are on the tax "hook" somewhere then a £500 a month rent for a "hovel" up t'north does not worry them.

bobd22

No North South divide then

Fred James

I'm not disputing that.

My point was that your description of the process was incorrect.

EsuriJohn

Correct again Fred!