Spanish tax

Herefordjack wrote on Mon Jun 19, 2023 7:30pm:

I think Marcliff has summed it up pretty well.

UK ex pats often fail to realise that, although UK crown pensions aren't directly taxed in Spain because they are already taxed in the UK, the Spanish tax man still adds them into your overall taxable income to assess which tax band or bands your taxable income falls into. It often has the effect...

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... of at least partially 'bumping up' your taxable income into a higher tax band.

I am assuming, like Marcliff, that when you talk about government pension, you mean crown pensions, and not the UK state pension.

marcliff wrote on Mon Jun 19, 2023 7:17pm:

You have a government pension so not taxed in Spain and no state pension otherwise that would be taxable.

Your husband has a government pension also taxed in UK but will be added to the other pensions to work out his tax level in Spain.

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His two other pensions, taxable in Spain, comes to 13700 less the tax allowance of 6700 so 7000 euro a year taxable at the 19% level (lowest) or 1330 euro a year. Less other discounts such as married man's allowance, low increment allowance etc reducing it by something like 350 euro for the first and 200 for the second (round figures) reducing the tax liability to around 780 euro.

Of course, they were round figures but fairly near and 670 euro is not far off as probably other allowances I haven't taken into account.

As an aside, I get a government pension which is not taxed here but is taken into account for my tax base. My state pension last year was about 7600 and my private pension was about 8000 (pounds) so in total (apart from the government pension) around 17500 (just about 4 thousand more than your husband's) and my tax last year in Spain was almost €3000. (and the year before).

Herefordjack wrote on Mon Jun 19, 2023 7:30pm:

I think Marcliff has summed it up pretty well.

UK ex pats often fail to realise that, although UK crown pensions aren't directly taxed in Spain because they are already taxed in the UK, the Spanish tax man still adds them into your overall taxable income to assess which tax band or bands your taxable income falls into. It often has the effect...

Read more...

... of at least partially 'bumping up' your taxable income into a higher tax band.

I am assuming, like Marcliff, that when you talk about government pension, you mean crown pensions, and not the UK state pension.

marcliff wrote on Mon Jun 19, 2023 8:09pm:

Yes. Robbie73 used government so I continued not to confuse the issue. 

marcliff wrote on Tue Jun 20, 2023 1:35pm:

In which case the entire amount, state pension and other pensions, will be taxable in Spain. I assume your govt pension is also the state pension so that is taxable in Spain but, up until this latest rise, will have been under the Spanish allowances. You may find that, with the 10.1% increase thi...

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...s year then you will also pay taxes next year.

Your husband will taxed on all of it as none of his income has tax paid in UK. 

But there are personal allowances, deductible expenses, low income deductions etc. So you won't end up paying the whole 19 or 24  percent on everything. The average Spanish pensioner normally finds they pay 7.7% of the amount after all the deductions.