Double Taxation Treaty - Page 2

Dear marcliff,

I have read your comments, and noted your advice.   Does HMRC tax pensions that routinely go into the bank every month, and every year, based on increases in the P60's?  Do you you have to fight this battle every year? Does the Spanish Accountant base his calculations on Bank Statements?

We became resident last January, when we bought a flat, they told us that the purchase of property automatically made us resident.  So some payments are net of tax while others are taxed.  It's difficult to guess the exact amount of tax, along with the currency increases.

Also, does it make a lot of difference if the accountant is experienced in DT.  I'm not sure ours is, even if he says he is.  Maybe the answer is to be non resident, if we could afford it in London.

Many thanks once again, for  all your valuable information and advice.

luisarose

Once you've completed the Form Spain individual (FD9) the HMRC informs your private pension provider that your tax code is now NT or not taxed. You only do it the once and don't have to do it again. Only if you return to become resident in UK will it change.

Your Spanish accountant will base his calculations on the P60 you provide from a private pension payer and on the letter your receive from the government telling you how much your state pension will be each week. 

Did you mean you became residents in January of this year? In which case your first tax return will be around April next year for your entire worldwide income in 2023. (You become a resident as soon as you take out official residency but you do not become a tax resident until you have been in Spain for more than 6 months in one calendar year (the tax year in Spain is the same as the calendar year) and as you purchased in January you would have become a tax resident straight away but the Spanish tax authority will not know anything until you complete your first tax return. This will also affect the co-payment on prescriptions which are based on income in this region.

The amount of tax paid will clearly be shown on your P60. Tax is not taken directly from the state pension at the moment so you won't get a P60 for that.

Hope that clears some of your points up. As to the person who does your tax returns I wouldn't know. They should know about it as certain boxes on the tax return refer to taxable income, which will include private pensions and state pensions, and non taxable income which will generally include crown pensions although the gross amount your receive will be entered. Don't forget that you should also have lodged a P85 with UK banks or building societies to state your interest should be paid tax free. The £1,000 interest free in UK does not apply in Spain so that also has to be included under taxable income.

Most people end up paying more tax in Spain than they would in UK but my council tax bill here more than offsets that amount. (250 euro a year here and my old house in UK has just gone up to £2368 a year). 

Just one thing to add. You must send the FD9 and the certificate of fiscal residency to HMRC. I've posted before but here again is the site to request the fiscal residency certificate

https://sede.agenciatributaria.gob.es/Sede/en_gb/no-residentes/certificados-residencia-fiscal.html

You complete that online with your NIE, name etc etc plus mobile phone number (important) and use the Request code part. They will then send you letter with a long code included and that should arrive within the week. Once you have this letter, go back to the page above and this time enter the long code they have included. They will then send an SMS code to your phone with a PIN which you enter.

You now have the key to download the certificate of fiscal residency which you include with the FD9. I think it is only valid on one device so you have to use the same PC or phone each time you want to do something with the Spanish tax office. 

In case that's gone, this is the link to the FD9 Form Individual Spain https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1121255/Double_Taxation_Spain_Indiviual.pdf

I did mine myself which I found quite easy. Our solicitors were going to charge 300 euro for doing it using information I had to provide.

Just wanted to confirm the above info from Marcliff. He gave me the details of how to get fiscal residency earlier this year which I successfully completed for me and hubby and promptly sent to HMRC in May. Sadly they still haven’t processed it or the request for refund of tax deducted from private pension, I’m sure they will at some point in the future, but worry in case the deductions keep being taken until it’s sorted out. 

Maybe the government should es open some of the Tax offices they chose to close. 

It can take ages for them to deal with it. One poster said 2 years and I outdid that by telling him it was 3 and half years before they sorted it out. Took them months to even reply to a letter I sent them. I sent them the certificate of fiscal residence as they requested and then, 4 months later, got a letter to say my application was incomplete as I needed a certificate of fiscal residence. Eventually they acknowledged receipt of the correct documents and I got a refund on one particular pension for 4 years which came to over 8,000 pounds. I then got 7 letters from them, one saying they were sorry and I shouldn't be paying tax, another with the cheque in it (hooray), 4 letters with how I'd overpaid for each year over the last 4 years and one saying they were going to tell my pension provider to pay my pension with an NT code (which took another 2 months) 

They get there eventually but it's a pain waiting for them. Yes, covid got in the way but they actually closed all help lines down for several months as well. 

Once they'd acknowledged their error and sent me more forms, it was about 10 months before I got the refund, 3 and a half years of writing back and forth was the nuisance. 

Hi I sent my certificate of fiscal residency to HMRC at the end of May and have been told by them it should be prosesed by 19th of December and then 6 to 8 weeks or longer if I live abroad to do the refund. 

May I thank everyone who answered regarding the Double Tax Treaty.  The replies have been very informative, and helpful.   I am just about to apply for the Tax Certificate now. Undoubtedly HMRC will keep us waiting a  long time, meanwhile we'll be paying double the tax.  Seems a little unfair!

Kind Regards to all

luisarose

Good luck.

We received ours very quickly and equally on returning to live in UK, they were very efficient in sending us the necessary documentation to get out if the spanish tax man's clutches.