HMRC Dual taxation process

Kelvin1960 wrote on Thu Jul 7, 2022 12:11am:

We declare/pay income tax on our (British) private sector pensions in Spain, but our income received from (the profit on) UK property is declared/taxed in UK.

We do not yet receive state pensions. We have no "government" pensions.

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In the event that I earned any additional income from work in Spain, I would expect to declare/pay income tax on it in Spain.

Knc60 wrote on Thu Jul 7, 2022 10:30am:

Hi Kelvin

Thanks for your response.. 

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My accountant has declared my UK rental income to the Spanish tax authorities. As such, I am now paying tax for said income in UK and Spain.. 

Do you have to do the same 🤔

Thanks

Kelvin1960 wrote on Thu Jul 7, 2022 12:28pm:

No

Our UK rental (profit) income is notified to the Spanish authorities, so it can/could influence our marginal income tax rates in Spain.

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But the income tax is paid in UK.

  

Craignathan wrote on Wed Jul 13, 2022 5:03pm:

Hi I'm finding this interesting as I'm moving to spain in next few years.. its nice to here from someone who knows whats happening.

Q1.do you get your standard tax free allowance still in the UK whilst your living in spain from your rental property? 

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Q2. do you also get the Spanish tax free allowance on earnings made in spain ? If so how much is it? 

Kelvin1960 wrote on Wed Jul 13, 2022 10:45pm:

1. Yes

2. Yes. Like the UK, there is a sliding scale of marginal tax rates (with some age-related tax breaks). The tax take is generally higher than in the UK, and the personal allowances are lower (I think only Eu 5,500 pa per person, but I'm not certain of that number, and there are some "black art" o...

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...ptions around being taxed individually or as a couple ). My wife and I pay tax on our UK company pension incomes at Spanish rates (just as if we had earned them in Spain). 

It is my understanding (fortunately we are not in this position) that those reliant solely or mostly on UK State Pensions, and with established Spanish Residency, are not dramatically prejudiced by the Spanish tax system.

If, on the other hand, if you will be coming to Spain (from the UK) on a post-Brexit visa scheme, your qualifying level of earnings will likely attract a larger tax-take in Spain than in the UK.   

Craignathan wrote on Wed Jul 13, 2022 11:23pm:

Okay I think I'm following what you said there thanks.

Is it right on rental income in uk then the tax is paid in uk at uk rates then whatever is remains after tax is your to keep in spain with no further tax penalties?

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However I'm guessing this shall be classed as earnings in spain so would still effect earning tax brackets in spain. Thanks for advice in advance 

Kelvin1960 wrote on Thu Jul 14, 2022 10:47pm:

Yes, that is my understanding & my experience.

My wife and I each have a flat in the UK ... nothing special ... so the "profit" on each (income minus allowable expenses) is below the UK tax threshold, so we pay no income tax in the UK.

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But we have to tell the Spanish taxman about that profit, and there is the potential for it to move us (individually) up a tax bracket ... although, in practice, this hasn't happened.