Quick (ever hopeful) tax question

Every resident in Spain is subject to pay taxes on his global financial assets. But why wake up sleeping dogs?

Hello

 If she becomes resident here, you have to make an annual tax declaration & declare all your worldwide  assets, so UK pensions have to be included.

Cheers

Elinspain

Hello

 Are you giving advice not to declare it, you know  that is not legal!?

Elinspain

You will need to check, but I'm fairly certain this will be classed as a British Crown pension, in which case it will not be taxable. However, there is a box to record it on the income tax form, because although tax is not payable on it, it is taken into account when setting the tax bands that your wife's taxable income falls into.

If you need more explanation, let me know!

Assuming it's her only income then €3,600 is way below any tax thresholds and therefore will not attract taxation either in UK or in Spain.

That doesn't mean she shouldn't do an annual tax return though because firstly it's necessary to get her registered in the Spanish tax system, which is a necessary but often forgotten final step in the residency process, and secondly because it's what will get her free medicines if or when in the Spanish health system.

Regarding 'global financial assets' reporting is only necessary (Modelo 720) if you have in excess of €50,000 but even then it's only reporting and not subject to tax unless you reach wealth tax thresholds which I think start at €700,000.

Pensions only need to be included in that if they have drawdown or cash in facilitities so that excludes state pensions, and I would guess local government pensions too, both of which would simply be declared as income on the Modelo 100 tax return.

Following your advice to this poster you may be interested in this statement:

Every year, the United Kingdom and Spain automatically exchange details. In total, 97 countries are now exchanging information automatically.

https://www.gov.uk/government/publications/spain-tax-treaties

This link clarifies what is regarded as a Crown Pension (Government) and non-Crown (non-government) pension:

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm343040

Hi Darro. You seem to be quite knowledgeable regarding taxes in Spain. I will be moving over to live later this year. I will be in receipt of Irish state pension, a small UK state pension and a small German state pension. At present I pay tax on my German pension to the German revenue authorities. Do you know if Spain has the same agreement with Germany regarding who I pay tax to?

Thanks

Ian

Extract below from the following link with regards taxation of German State Pensions in Spain:

https://sede.agenciatributaria.gob.es/Sede/en_gb/ayuda/manuales-videos-folletos/folletos/folletos-residentes-rentas-extranjeras/alemania.html

• Pension received on account of dependent work provided to the State, federal states, political subdivision or local authority, or legal entity under public law (Article 18.2 IDC). Their treatment is:

  1. In general, these pensions would only be taxed in Germany.

     In Spain they would be exempted, although the exemption would be applied progressively.This means that, if the taxpayer is obliged to file an income tax return to obtain other income, the amount of the exempt pension is taken into account in Spain to calculate the tax applicable to the remaining income.

  2. However, if the pension beneficiary resident in Spain is of Spanish nationality, such pensions would only be taxed in Spain.