Law in Spain

Law in Spain is a dedicated Blog to advise British Expats living in Spain about their legal issues through the expertise of Abad Abogados lawyers. The main purpose of this blog is helping Expats to find useful and updated legal tips to deal with Spanish Bureaucracy.

Retired in Spain? If so, you should read...
Monday, January 26, 2015 @ 7:11 PM

The Spanish Tax office has given six months to retirees living in Spain who are resident at Tax Purposes with pensions from abroad to regularize without penalty.

As a result of the strengthening and effectiveness of international mechanisms of information exchange between tax organizations, the Spanish authorities have discovered that there are many residents in Spain at tax purposes (they stay more than 183 days per year in Spain) receiving pensions from abroad of the country and they are not correctly declaring their annual personal income taxes.

Due to the characteristics of these people: elderly pensioners, who have greater difficulty in knowing the Spanish legislation, living many years abroad and, in general, not having great fortunes; the Government has approved for these groups an extraordinary period of grace of six months from January 2015, to rectify the situation.

This measure affects foreign pensioners that live in Spain and are residents at tax purposes and who claim their pension from abroad, or Spanish pensioners who have returned to Spain after many years working in another country and receive a pension from that country.They will have 6 months from 1 January 2015 to regularize their situation, during this time no sanctions will be applied.

The new disposition includes two special measures for cases of regularization in income tax than income from pensions paid from abroad:

An extraordinary period of legalization: no surcharges, interest or sanctions to pensioners will be applied who voluntarily regularize their fiscal status by filing from 1st January to 30th June 2015 statements IRPF of exercises not prescribed (from 2010-2014)

A cancellation of interest, surcharges and penalties required by this concept. The cancellation must be requested by the applicant from 1^st January to 30th June.

During this time, these pensioners should visit a tax adviser who will help them with this year’s declaration, as well as those from previous years that have not been declared, and ensure that they are completely up-to-date with their fiscal affairs from this point.

Futher information about Residency in Spain at: www.abadabogados.com

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18 Comments

camposol said:
Tuesday, January 27, 2015 @ 6:59 PM

I think many expats actually DO know they are required to pay their taxes in Spain, they just don't want to do it, taking the risk that they will probably won't be found out. The fact that they are elderly is patronising.
There is plenty of info about it from several sources, and they should have researched it anyway before coming to Spain, instead of doing what some do, living as if they are still in the UK.

Annie said:
Saturday, January 31, 2015 @ 5:49 AM

I am a pensioner, resident in Spain, and pay tax here but it is far more expensive for me than it would be in the UK. I have a UK government pension and a small private pension and pay 2000 euros more tax here than I would have done in the UK mostly due to the lower tax-free allowance. Unlike a lot (if not most) of the workers in Spain, a pensioner cannot hide any of their income via the black economy. Much as I appreciate that the tax laws must be obeyed, I do wish the Spanish authorities would start invettigating those expats who, for example, declare an income of under 5000 euros in addition to going for the low-hanging fruit of pensioners.

peter said:
Saturday, January 31, 2015 @ 8:59 AM

Hopefully most will be OK but I expect that people will carry on as normal.
Most I speak with pay all their income tax back in the UK and they simply say, I can choose where to pay my tax due to the double taxation agreement.
Me, I pay here because I read the rules, asked and was told that I am here more than in UK so Spain gets my tax.
Pain as it is very different for an ex PAYE boy.
Maybe I am wrong?

Andy Watson said:
Saturday, January 31, 2015 @ 9:25 AM

Completely agree with Camposol and Annie. I would say most retired British people understand perfectly what is being asked of them (a tax grab) they don't want to be tax resident. The 183 days is rather difficult to verify. Trips back home to the UK 'could' be tracked. Many people have friends and family in other Schengen countries, crossing the border with France and Portugal is untrackable.
Or you could be a good boy or girl and declare everything and wait for the next bail in or new tax that this government invents.

Jimbo said:
Saturday, January 31, 2015 @ 9:25 AM

Peter, you are right, you cannot choose where you pay your income tax, you pay it where you reside, on your worldwide income wherever it arises, the purpose of a double taxation agreement is to stop you paying tax on the same income twice.

Inland Revenue will exempt UK arising income tax, except where it is deducted on certain government pension schemes, as long as you submit a form Spain Individual which is stamped by the Hacienda here in Spain.

In other words Inland Revenue will stop taxing you in the UK as long as the Hacienda confirms you are paying tax in Spain.

My gripe is the vast number of " I don't really live here, I use my daughters address in the UK ", after 183 days and it doesn't have to be continuous in the Spanish tax year 1 January to 31 December, you are legally tax resident in Spain whether you like it or not.

Alison Barrass said:
Saturday, January 31, 2015 @ 9:37 AM

Police have already begun interviewing " nonresidents " in our village. Many play both health and tax systems. Even the winter fuel allowance, rental income from property in UK etc. is paid via an address in the UK. I agree it is time to sort this out.

RonArt said:
Saturday, January 31, 2015 @ 10:42 AM

I would really appreciate a link to the actual law. There was no mention of such a tax in all the paperwork required for my one-year (US tourist) visado. In my case, I cannot even file a tax form in the US -- pensions are not considered income EARNED, just income, as are my other incomes.

RonArt said:
Saturday, January 31, 2015 @ 10:48 AM

I've just published a science-fiction eBook on Amazon Kindle ("The King Who Never Was" -- Ron Garza). If that generates income, that would be taxable, but where? While I am physically here in Spain, everything related to that book is as if I were in the U.S.. Would I be taxed twice (there and here)?

Norm said:
Saturday, January 31, 2015 @ 1:07 PM

It probably won't be cheaper soon paying tax in the UK anyway. With the abolition of the personal allowance for non UK residents extremely likely, that 'benefit' will disappear. Better to regularise while you can.

Camposil said:
Saturday, January 31, 2015 @ 1:25 PM

Ronart, surely you pay tax in Spain if you are resident here. No matter where the income is generated?
Why not consult an accountant to be sure.
Only thing is some of the experts are not knowledgeable about tax treaties either!

Radam10 said:
Saturday, January 31, 2015 @ 3:02 PM

RonArt,
There is a US/Spain Tax Treaty that can be downloaded from the U.S. State Department web site. Essentially, if you are a resident outside the U.S., taxes paid to that country (in this case Spain) are deductible from your U.S. Federal income taxes. Unfortunately, my experience has been Spanish income taxes are much higher compared to U.S. income taxes, at least for me as a retired person. Broadly, OECD countries (major economies) have apparently moved to the concept of taxing worldwide income based on residency but with restriction on double taxation. But you need to get competent tax advice on your specific situation!

Lizzie said:
Saturday, January 31, 2015 @ 4:56 PM

and we thought Franco was dead.

Martha said:
Saturday, January 31, 2015 @ 5:58 PM

I was told by a Spanish accountant that I only need to fill in a tax declaration form as a foreign residentMarta if I own more than one property here or in UK

Jimbo said:
Saturday, January 31, 2015 @ 6:09 PM

Guys, what's is up with some of you and what's it got to do with Franco, if you spend more than 183 days in Spain in the tax year, you are liable to pay income tax in Spain on your worldwide income, wherever it arises !... end of story.

RonArt said:
Sunday, February 1, 2015 @ 11:52 AM

Thanks, Camposil, Jimbo, and Radam10. I found the treaties online but they are way over my head. I'll contact the US Embassy here in Madrid and some Ministry. Understandably, every country thinks the tax should be paid to them. In my case, I have a Residencia Temporal -- No Lucrativa, which means that I am only allowed to stay here through August and cannot hold a wage-paying job here. I'm just here to spend money. If that turns out to be a problem, I guess I can go spend it elsewhere.

RonArt said:
Sunday, February 1, 2015 @ 7:00 PM

UPDATE: I was using the wrong term ("earned"); that should be "taxable". I doesn't matter how I earned it. Also, forget the term "retired"; it is irrelevant. My search for FD9 at www.hmrc.gov.uk (as suggested by a website) returned nothing, but have a look. My guess would be just that -- a guess -- for any country.

Jimbo said:
Monday, February 2, 2015 @ 8:08 AM

RonArt,

At least I applaud you for trying, the FD9 has been replaced by a form called Spain Individual, if you go into Google and type Spain Individual Form, it will come up.

However this particular form is the individual agreement between the United Kingdom and Spain ONLY and it allows UK Inland Revenue to exempt any UK arising income from UK taxation, I don't think it will fit in your case as a USA citizen.

I think a phone call to the US embassy in Barcelona 91 587 2200, might be a good idea, they should be able to direct you to where to find the correct form needed.

Buena suerte.

Federico M. Vera (Army retiree) said:
Saturday, May 30, 2015 @ 6:58 PM

In a country where politicians , (each and every party left and right), have been helping themselves to great amounts of money, and now expect to replenish it from us foreigners, we should all get together and form a group to stop such imposition,by recurring to legal means: forming a lobby and hiring legal help.

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