Residencia

Hi More,

Many thanks, that is just what I was after.

Kind regards

Val

Thank goodness for Morerosado! Although this time it did take her all of 26 minutes to find and post the full link, you can always depend on her to do so. When does she sleep?!

Sorry, More, next time I shall try harder to give more detailed directions to information!

Hi all

Having had a look at the document can someone clarify the following please, in view of the EU taxation agreement:

1.  If you have residencia status and have a pension from the UK being paid into a spanish bank, who taxes you?

2.  As a resident plus if you have a UK address and are making voluntary NI contributions whilst able to for pension purposes what happens then. 

regards

Timba

Hi TIMBA

To answer your first question, unless you have already taken steps to get yourself out of the UK tax net  then you should receive the pension into your bank with tax deducted at source. Do get out of the system you have to fill in a form,( P85 if I remember correctly but not sure) then they send you another form which you have to get stamped by the Hacienda here and return to them.  Then they procrastinate as long as they can because the longer they can keep you the more tax they can take off you.

You can only do this for pensions which are not UK Civil Service pensions of any kind (Police, Teachers, Armed Forces, Local authority workers etc) - these always have to be taxed in UIK.

While they are delaying, your pension should be taxed at source even if it is paid into a Spanish bank, based on your UK tax code.  Whether or not this is the case you are still legally obliged to make a tax declaration if you are resident in Spain.  A gestor will do this for you and it is not expensive (ours costs €70 for 2 people annually).   He will work out how much tax you would be liable to if you were paying it all in Spain and the Hacienda will require the balance.  Thus if under the Spanish system you would have paid €2000 tax and you can prove that you have paid €1800 in UK, you owe them €200.  If it goes the other way, of course, you can't get back what you have paid in UK.  Only a gestor would be able to tell you whether you will be more or less liable here, but we take the view that this is where we use the services so Spain should get all the money.

Did not fully understand your second question, but NI and tax are two totally different things and you do not need a UK address to make voluntary contributions.  If on the other hand you are hoping to take advantage of the 'free' final five years, NI contributions, then you need to be resident in UK to get them and the above does not apply as it is only Spanish residents who are liable to tax on income arising outside Spain.

As with everything fiscal and legal in Spain, there are always differences of opinion even among the professionals but this is the advice we have followed. Hope it is helpful.

Jane

Hi Jane

Many thanks for your info and to follow on, where I was coming from is that I do have a services pension which goes to a spanish bank.  Subject to the sale of our house we are looking to move over permanently this year so I just wanted to get my ducks in a row so to speak as we all love  the tax man don't we.

But my other point is in relation to contributing to the UK state pension (which will eventually, when the time is right go to spain as well) with the voluntary contributions and I was under the impression that you had to have a UK  address in order to qualify for this.

Lastly, I will ask the question what is a Gestor?

Thanks

Timba

Hi there, Timba.

TAKEN FROM HERE

What is a gestor?

A gestor is a general purpose consultant who can make your life in Spain much easier. Working in an office known as a gestoría, he or she acts as an intermediary in your relations with the various official bodies. He knows the workings of many council and local government corridors and is usually able to obtain an official permit or document far quicker than you could on your own – even if you were fluent in Spanish.

Every Spanish town has one or more gestors. They are a necessary part of life because Spanish government and council officials are notoriously slow and nit-picking. Bureaucratic procedures are archaically complex and have to be slavishly followed to the letter. However, rather than single-handedly wrestling with these bureaucrats you can sit back and let a gestor do the dragon-slaying for you. A gestor is generally efficiently attentive to his clients and his fees are normally very reasonable.

Non-residents

If you are not resident in Spain, then a gestor will make sure that the bills get paid and that your home is still there and waiting for you when you return.  

The average Spaniard would not consider trying to obtain certain permits and licences without using a gestor. So why try to survive without using a gestor?

Typically, gestors will be able to handle the following matters for you:

·                    Taxes:                         Administration of income and wealth tax for residents and non-residents alike. Payment of local taxes such as rates (IBI), rubbish, and car tax for Spanish vehicles.

·                    Conveyancing:            A gestor can handle all of the legal work and tax payments required for a property purchase or sale.

·                    Wills:                           Your gestor can give you advice on preparing a will for your Spanish property, as well as liaising with the local notary for the signing of the will.

·                    NIE residency:            He can arrange for your national foreigner identification number (NIE) to be issued. You will need this number after buying a local property. A gestor can also help you obtain a residency permit.

·                    Vehicles:                     They can arrange for change of ownership and addresses to be registered, as well as helping with paperwork involved in obtaining a Spanish driving license and importing vehicles.

·                    Insurance:                  Many gestors are insurance agents and can arrange insurance for your house, car, and life.

·                    Permits:                      Your gestor can also arrange for your fishing and hunting licenses to be issued – as well as a gun license.

·                    Business:                    If you decide to set up a business, then a gestor will offer essential advice on preparing employment contracts and paying social security contributions.

In addition to the above you will find your local gestor a source of information and practical advice for resolving the various administrative problems that appear in everyday life.

Hi Timba

I have been making voluntary contributions since I came to Spain 6 years ago and the only address they have for me is the Spanish one, so they definitely know I am here and have been happy to accept them.  Worth checking with the Centre for Non Residents if you are in any doubt (anonymously if you don't want them to know who it is about!.  0044(0)115 974 2118.  If you are anywhere near retirement I assume you have already asked for a forecast to make sure you really do need to be continuing your payments?  Quite a lot of info at www.hmrc.gv.uk

I probably should have said Asesor Fiscal (tax consultant) rather than Gestor, but I always get confused.  Gestor is a person who sorts out all your official paperwork (residencias, driving licences, conveyancing etc) but the one we use seems to do everything including the financial so presumably one can be qualified to do one or both.

If your occupational pension is a services one, you can still elect to have your state pension paid gross in UK by filling in the P85 and the resultant FD9 (the one that has to be stamped here).  This will only be to your personal advantage if you would be paying more tax in UK than here, but at least it puts some money into Spain's coffers.

The tax form is horrendous - much more complicated than a UK Self Assessment - probably because the tax allowances are much more complicated.  Plus of course it is in Spanish. We take all our information to the guy in May (tax declarations are due in June based on income January to December of previous year) - P60s, certificates of interest earned and tax deducted, both here and UK, etc etc, and he has a programme which works it all out in less 20 minutes while we wait, although it probably took longer the first year.  He even sets up the bank payment for you, so nothing more to do.  You can elect to pay part in June and part in November.  We reckon it is the best value €70 of the whole year!

Oops

Just seen that More beat me to it while I was busy composing!  Much fuller and clearer analysis as usual!

Jane

heard about the 183 days rule when we were reading up about coming out for an extended break/holiday. We read all sorts of things, from leaving Spain and catching the ferry overnight to Morrocco or going down to Gbralter for the night, both takes us out of the country,Then supposedly we aren't considered resident??????????????????????.

IS THIS RIGHT, DOES ANYBODY KNOW??????????????.

We have no intention of being resident for at least 3 years or until we see the right property and we'll only be over the 183 days by about 20 days WILL THIS MATTER? .When we catch our plane home will they haul us into a little room for non payment of taxes? My husband will not be working whilst he's away so in theory he's not earning anything yo tax.

Read Robertos bit, 2 March, about 'Remain in Spain for more than 183 days in a CALENDAR YEAR' Does this mean we can stay consecutively if the time is spread say 120 days in 2008 and 90 days in 2009 basically from October 2008 -end of April 2009 and not be classed as resident.

Hi timba,

It is not as bad as you might think. We are both in the position of having UK Government pensions so these are taxed at source and paid into our bank in UK. Kath already has her UK State pension, I get mine in late 2009, and this is paid direct into her bank account in Spain after tax in UK . For now we are non-resident in Spain.

There is no tax on her State pension since it is below her UK personal allowance (PA) but this means that the remains of her PA is not much and the tax on her teachers pension is quite a lot.

What will happen when I draw my state pension in 2009 is that we will declare our intent to reside in Spain to HMRC and have both our state pensions paid direct into our bank accounts in Spain. We will declare these for tax in Spain but they will be below the Spanish PA level so that no tax will be payable since the Government pensions paid and taxed in UK are absolutly and totally disregarded by the Hacienda.

The upshot is that we will each have two personal allowances one each in UK and one each in Spain so we will draw our UK state pensions tax free in Spain. The tax on our government pensions in UK will be reduced since our full UK PA will be set against them disregarding our UK state pensions.

The second benefit is that since HMRC buys such a lot of euro the rate of exchange you get for you transfered pensions is as good as you can get and there is no hassle with currency exchange companies.

Regards,  John.

Laineybgood, I also said on the 3rd of March: "If you think you may spend more than the 183 days in total, you'll no doubt want to look into whether there's any advantage or not in becoming a resident. Of course, it's up to you really, since nobody is likely to know unless you volunteer the information! "

Since Europe abolished all borders (and reason), there's very little to worry about. Nobody is going to now how long you spend in Spain unless you want them to know. Follow John & Kath's example - work out what is best for you regards residency and take it form there. It's up to you. Popping off to Gibraltar or Tangiers won't be necessary - although if you're looking for an excuse......

Hi timba,

Just come across the Spanish income tax allowances for 2008. In Spain pensions are taxed as earned income.

The standard allowance (Minimo Personal y Familiar) consists of the total of : -   The basic allowance, plus futher allowances ......age allowance for 65+ and 75+ and earned income deduction.

Basic allowance                                                                                                                                            €5151

65+ allowance                                                                                                                                               €0918 (+ a further €1122 for 75+)

Earned income deduction                                                                                                                           €4080 for those on low incomes/pensions up to €9180 (but not rental income)

This gives a total of                                                                                                                                       €10149

A full UK State Pension is about £100 pw or £5000 pa and coverted at todays rate                      €6700  so there should be no tax to pay in Spain on the State Pension

Meanwhile back in UK the Government Pension will have a Personal Allowance at 65+ of        £9039 thereafter taxed at 20% up to £41435 and then 40%

In both jurisdictions there is no National Insurance to pay for pensioners and health care is free at the point of use if your "stamps" have been paid for the last two years.

So all in all not a bad deal!

Regards,

John.

Hi John

Where do you get your information as it's really helpful? Tax is one of our big worries when we retire and only have pensions to live on.  What about those of us under 65 - eg women? Do you know if these allowances count across the board for pensioners or are there different ones? If you let me know where you get your information I will try and figure it out for myself as I don't want to put you to any trouble.

Hi Sonia El,

If find the info all over the place so there is not just one paper or website to find sorry. In Spain retirement age for men and women is 65 so if you are over 60 and under 65 you are caught out.

Also the new tax rates in UK are particularly cruel to women between 60 and 65 who have retired with small pensions. This month Kath will pay £20 more tax than last month just because the 10% tax band has been abolished. It would have evened out if she had been on £18,000 or over pension a year but because she has less than £9,000 from both her pensions she is caught in a trap and Gordon gets another £20. Big headlines in todays Times about the nonsense of it all. When she reaches 65 she will get the age related personal allowance but until then she loses £240 a year!

Regards,

John.