losviv

With the new, groundbreaking pension reforms where the pension pot is now in the hands of the owner, how will it affect the reporting(or not) of this major asset when it comes to declaration on modelo 720? I believe that at present there is no requirement to declare the pension pot until it is annuitised! So the pot could slip through the net as it appears very likely that it will be cashed in over time!
As for how these transactions will be taxed if the owner is a Spanish tax resident GOK!!

losviv

Spqain, my apologies! when in Spain.

Neptuno

Surely any money received from the pension pot will be taxable in Spain, even though 25 percent is tax free in Uk, it won't be in Spain. I presume that's why some people go down the route of QROPS

Fred James

Yes, pension lump sums are taxable in Spain but not at the full tax rate. There is a calculation where you only pay tax on that part of the sum which was accrued interest rather than that part that was your own personal contribution.

In the UK it seems that they are taxable in full (I assume that the old 25% tax free allowance still applies but I haven't checked that) which could mean that, if significantly large, it could be advantageous to cash them in when tax resident in Spain as they are treated as savings income and taxed at potentially lower rates than the UK.

I haven't looked at it in detail but the new rules would seem to blow the QROPS options away.

I retired so long ago that these options no longer are relevant to me so I have not taken that much interest in the changes.

Patrick2976

UK pensions are declarable on the modelo 720 once you can take benefits from them. That's direct from Agencia Tributaria. So once you are of pension age and can access the benefits the pension is declarable whether you are taking benefits or not.

Neptuno

Blevins Franks stated that only pensions from annuities are declarable on the 720

Patrick2976

Sorry I omitted the word 'personal'. They are right in terms of occupational pensions but personal pensions are a different ball game - especially if (in a SIPP for example) there is a life insurance element;
Quote:
No obstante, en la medida en que las condiciones del plan de pensiones extranjero establecieran la posibilidad de ejercer el derecho de rescate a favor del partícipe en los términos propios de un seguro de vida, deberá ser objeto de información conforme al artículo 42 ter.3.a).
En todo caso, una vez acaecida alguna de las contingencias cubiertas por el plan, el beneficiario deberá informar de los derechos existentes en el mismo, bien con indicación de su valor de rescate, conforme al artículo 42 ter.3.a), bien conforme al artículo 42 ter.3.b) si se constituye una renta a su favor.

Patrick2976

And this from my own accountant in Spain;

We think it is clear that the asset is declarable when the owner, policyholder, acquires the right to receive money from it. This may be a right to take a capital sum and/or a right to buy an annuity. If reaching age 65 triggers that right, then the asset is declared in the 720 from age 65. The important point being the date when the right arises, as distinct from the age of the policyholder. A pension that ‘matured’ at age 60 for example would trigger the need for declaration at age 60.

I think the reason they introduce the idea of a life insurance element is to distinguish private, personal pension plans, from what I call works pensions, including the state retirement pension. One does not generally have the right to take capital from these nor swap them for annuities, and they are generally therefore not declarable.