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Has anyone taken a lump sums from private pension before age 60 to live on in spain, if so what is the tax free amount as getting two different amounts. One says €5550 as its an income the other says €22000 as its a pension and your sole income. Anyone with similar circumstances advice would be welcome.
This is Spain not UK, there is no 'tax free' on a lump sum if taken whilst resident here.
All income is classed as earned income and taxed accordingly so whether it comes from a pension or other sources makes no difference.
Posted: Tue Mar 12, 2024 9:52am
Super helpful member
Hi Robbie
Firstly, I'm not an expert!!
If you take your lump sum before you become tax resident in Spain, then that money will subsequently be seen simply as savings and so will not be taxed in Spain. If it's over €50k, then it will need to be declared as part of your worldwide assets, but this does not involve paying tax.
If you take your sum after becoming tax resident then it will be taxed as simply income for that tax year, which could cost you dearly.
I had a similar situation recently in which I inherited a significant sum of money from my Dad in the UK. I was anxious that it might be taxed as income, but my financial advisor told me that, so long as I didn't bring the money into Spain then there would be no tax to pay. If I was to bring some of it into Spain then it would be taxed as income for the financial year, so if I take less than the threshold for income tax then there will still be no tax to pay. The threshold in my case comes to approx €12k but income tax in Spain is a complicated beast and so could be different for you depending on circumstances.
I will also PM you with a little more personal information.
Cheers
Steve
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