Joddle

I am UK national and have just reached 65 so am now officially retired living in Valencia. I have the opportunity to earn a little beer money from time to time - just a few hours per week. If I did so what would be the tax implications of this?

snikpoh

If that's 'without contract', then you would have to be autonomo and pay the 260€ SS each month!

However, ISTR that there is a minimum number of hours before you need to be autonomo - I don't know if this is true or not.

Any income earned needs to be declared along with your pension (of course) - whether this changes your existing tax situations is down to your personal situation.

Joddle

thanks - that's pretty much what I thought. I have UK work and state pensions so of course don't want to affect those adversely. At the moment here in Spain and the UK I also declare UK income from a house rental although that does not bring me into the Spanish tax bracket (as ex civil servant my pensions being UK tax paid) but I do pay tax in the UK for the rentals.

I was offered the chance to earn a little extra teaching English, maybe 3 or 4 hours a week for about 30 weeks a year (i.e. term times) but it looks like its all going to be too complex to bother with. I would have liked a little extra beer money but not if its going to cause major headaches!

marcbernard

Joddle
Do not forget that due to changes in the Double Taxation Agreement beween UK and Spain over recent years, your Civil Service pension may impact on your Spanish Tax liability, even though no tax will be due to Hacienda on the CSP itself.

Joddle

I submit a return via my gestor each year which has my pension and other uk income details - so far I have not have to pay any Spanish tax. I don't know how much I could earn in Spain before that situation changed. It not that I mind paying some tax if its due - its just all the paperwork needed to remain "legal".

marcbernard

Joddle
To use a Gestor is good advice, provided he/she is sure of the impact of CS pension, which in previous years had not needed to be included at all on the Return. This year is different, and it will worth ensuring that your Gestor is alive to the changes.

EsuriJohn

If your UK State Pension is just a standard pension because you were contracted out for your time in the civil service you will be right on the tax borderline with that alone. If you now add your Crown Pension as required by the new DTT FROM LAST YEAR which operates from 01/01/2016 you will almost certainly pay Spanish tax. Your UK rental income will also be taken into account and an allowance made for tax already paid. If you then earn from teaching you will certainly be paying some tax. As an example I just have a standard full State Pension plus a Crown Pension with no other income and in the past have paid no Spanish Tax. With just the improvement in the exchange rate and the 3% pension increase over the last year I would pay tax this year. However now that they will account for my Crown Pension my marginal tax rate will result in a tax bill for around €1000 in 2016

Joddle

Hi and thanks for the responses. Can anyone give me a reference to the new procedure - i.e. a link to where this information is coming from as I am getting some conflicting advice and so it would be good to know there to see the regulations officially..

EsuriJohn

Do a search on DTT Fred has posted all the details more than once.

BEVS

To be fair I can't find a relevant post about this either.
Perhaps there is another term other than DTT?

not2old

Double Tax Treaty (DTT)

Could it be in the following thread in what Fred posted?

http://britishexpats.com/forum/spain...x-laws-863929/

http://britishexpats.com/forum/spain...estion-868358/

.

CapnBilly

Just to be clear, the revised DTT came into effect on 12th June 2014, and applied to income taxable in Spain from 1st January 2015. This means any increase in tax as result of the change will be payable this year.

Fred James

The new DTC is detailed here

https://www.gov.uk/government/upload.../spain-dtc.pdf

The key point is section 22, 1,b which states:-

Where in accordance with any provision of the Convention income
derived or capital owned by a resident of Spain is exempt from tax in
Spain, Spain may nevertheless, in calculating the amount of tax on the
remaining income (or capital) of such resident, take into account the
exempted income or capital.

Joddle

So how does all that fit alongside this advice given to me some time ago?

"Under no circumstances refer to or reveal your government (Civil Service) pension, since you do not have to declare this pension - Article 19 of the Double Taxation Relief (Taxes on Income) (Spain) Order 1976".

Fred James

They have now changed the rules so that advice is no longer valid. You now have to declare it. It is still not directly taxed, but the amount has to be taken into account in determining the tax rate that will apply to the rest of your income. The net result is that you will pay more tax this year.

There is a special box on the tax return where it has to be entered. It has always been there, but in the past it was never clear whether you had to declare the exempt income and the tax office tended to allow you to ignore it.

That has now been clarified in the new tax agreement which makes it quite clear that it must now be declared.