uk or spanish tax

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28 Apr 2011 00:00 by jackt Star rating. 40 posts Send private message

Hi, Please forgive me if these matters have previously been dealt with on this forum.My wife and I have decided to move here permanently. I receive a state pension and three private pensions.At present these are paid into our uk bank and from there an exchange company pays Euros to our spanish bank. I pay uk tax. I shall notify uk pensions and inland revenue that we shall be permanent residents in spain and seek exemption from uk taxThen I would like all my pensions to be paid into my uk bank gross and continue for these sums to be paid into spain via our currency exchange people. I know that we can have our pensions paid directly into our spanish bank but the exchange rate will be lower than we receive now.I shall be most grateful to know whether the above proposals are possible.Thank you.




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28 Apr 2011 22:23 by marcbernard Star rating in Marina Alta; Alicant.... 239 posts Send private message


Yes this topic has been touched on before but not to worry!

It is not necessarily true that the FX companies offer the best rate for pensions. Certainly the state pension(s) can be paid direct into your bank in Spain and providing you use the right bank, who charge no fees, you will, in my experience, have your pensions paid from DSS in Euros, with almost certainly get the best, ie wholesale, rate of exchange used. Additionally, you may well find that the pension arrives in your Spanish bank the Friday or the day after it would have hit your UK bank. I doubt if the FX company can match that! The DSS International number to talk to is 0044 (0)191 2187777 and their Fax is on 0044 (0)191218 3201, but chase them for attention and always demand a prompt acknowledgement of faxes.

As to the bank to use, of course it depends where you are based in Spain. If in Valencia I would advise Bancaja, now part of Bankia but trading under its own name. With the newly organised savings banks now in operation it is possible that one or more of Bancaja's partners are operative in your part of Spain also, who should operate the same practice re no charges.

No doubt other responders will argue that I am wrong. Not an unkown occurance!

No harm in checking the banks and switching to the good one!

As to the private pensions, some may also use the DSS system. As a retired civil servant (no, the "gold plating" is a falacy!) I cannot say.

You are correct re tax. 

Welcome to permanence. A good option!


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30 Apr 2011 18:33 by jackt Star rating. 40 posts Send private message

Hi marcbernard, Thank you very much for the info. May I impose upon you further please. I was employed in the private sector

in the uk. I have a state pension and three annuities. Do I take it that I can ask gov pensions to pay euros into my spanish bank. I have emailed my annuity companies asking the same. Thank you again Jack.

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30 Apr 2011 20:59 by JohnKath Star rating. 157 posts Send private message

Like the previous poster I have a Government pension and a State pension in addition I also have a small Private pension . Each is treated differently by the providor and by HMRC.

The Government pension cannot be exported to Spain tax free. The payee Capita on behalf of the Treasury will pay direct to Spain for which they charge £1 and the exchange rate is determined by their agent the Bank of New York.  I have found that the exchange rate they give is variable and I can do better with my selection of FX companies with no charges. I now do the transfer and exchange myself on a month by month basis.

The Private pension company will not do the exchange or transfer direct to my Spanish account  so this is paid into my UK account added to my GC and goes win that pension to Spain. Since I am registered for tax in Spain (Modelo 030) and have completed a form FD9 for HMRC they have issued an NT (No Tax) code so I do not pay UK tax on that pension.

The State pension is paid tax free in UK (and not set against my GC tax code in UK) then exchanged and transferred by the Treasury to my account in Spain. It is without doubt the best exchange rate you can get and it arrives on the button every 4 (early if the due day is a bank holiday) weeks. The only downside is that unlike UK you cannot have the pension paid weekly it must be paid 2 weeks in advance and 2 in arrears and the time taken by DSS to set the operation up means  I lend the Government  2 weeks State pension in perpituity. Although I am assured that after my demise it will be paid to my estate.

I therefore have the benefit of 2 personal allowances, one in Spain and the other in UK all in accordance with the double taxation treaty between Spain and UK. The result is that my two pensions transferred to Spain are below the personal allowance and are not taxed.

It is now European Law the transfers of pensions between member states cannot be charged by the sending bank or the receiving bank. In Spain I use Bank Andalucia and they have never charged even before the new law.

You were spot on marcbernard!


This message was last edited by JohnKath on 30/04/2011.

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30 Apr 2011 21:28 by jackt Star rating. 40 posts Send private message

Hi JohnKath,

Thank you very much for the info. I think I am getting confused or having a senior moment. Would you mind claryfying please.

I have a state pension and private pensions which are from employement in the private sector. None are government pensions.. My understanding is that I can have my state pension paid in euros into my spanish bank account. In addition to my pensions from  my annuity companies. Are you saying that pension companies wont pay into a spanish account or is it up to the particular company concerned. Thank Jack



spanish bank

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30 Apr 2011 23:08 by marcbernard Star rating in Marina Alta; Alicant.... 239 posts Send private message

I must say that I do not understand the comment that the DSS pay 2 weeks in  arrear. My records do not confirm that. Also I note that the Bank of New York is not  always the intermediary bank.

Another interesting point is that although my total spanish taxable income is below the threshhold of liability, but must pay tax on my UK CS pension, were the latter to be included in the Spanish tax system and not the UK, I would not pay tax on it at all, since our joint income benefits from certain allowances which give overall freedom. So the double tax allowance does not always work out to the good!

I have replied to Jackt privately.


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30 Apr 2011 23:37 by JohnKath Star rating. 157 posts Send private message

The DSS made it very clear that when I changed from weekly payment into my UK account and started the compulsary 4 weekly into my Spanish account. The payments would be 2weeks in arrears and 2 weeeks in advance  together with the time taken to set up the process I was without a state pension payment for about 4 weeks. When my very first payment was made after my 65th birthday it was delayed by about 4 days since my pension started the first Monday after my birthday. My wife was very lucky she reached 60 on a Sunday and received her first weeks pension on the Monday morning. For the short period that I had my pcsp paid direct I was given no choices it was Bank of New York (no doubt the lowest bid on a contract) but careful monitoring demonstrated that I could do better using one my 3 FX companies.

The personal allowance in Spain can be quite generous so no doubt you are correct. I am surprised that if you get the full £7k+ UK allowance against you cs pension and a €9k+ allowance in Spain against your state pension you would be better off bringing both pensions to set against  the Spanish allowance. ( If that was allowed of course).

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01 May 2011 10:47 by marcbernard Star rating in Marina Alta; Alicant.... 239 posts Send private message


I suppose that the rules etc may have changed over the years as far as 2+2 weeks are concerned.

It has always been the case that State Pensions become payable from the first monday after the retirement age, so well done Kath for hitting the right day!

I won't go into the why or how of the tax liability, because it cannot happen anyway (unless the DTA is scrapped, like everything else which seems to be on the cards with the ConDemmed mob).

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01 May 2011 11:45 by amep75 Star rating. 79 posts Send private message


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01 May 2011 12:01 by marcbernard Star rating in Marina Alta; Alicant.... 239 posts Send private message

Unless AMEP75 can quote chapter and verse, I am afraid that his/her assertion is misplaced. A pension payable to an ex civil servant and certain others, remains liable to UK tax where-ever one lives in the world. It is fortunate that the Double Taxation Agreement with Spain results in such income being ignored totally by Hacienda.

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01 May 2011 12:01 by JohnKath Star rating. 157 posts Send private message

Choice of retirement destination is so important with the DTT. We took no notice of this when we made our choices.

1. Spain GC not exportable before tax, personal allowance about same in both jurisdictions and tax rates about the same.

2. Cyprus GC exportable before tax, personal allowances about the same and if you only have pension income there is a 5% tax rate on total income.

Did we do the right thing?

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01 May 2011 12:02 by amep75 Star rating. 79 posts Send private message


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01 May 2011 12:07 by JohnKath Star rating. 157 posts Send private message

AMEP75 you may have your opinion however HMRC have theirs and since they pay the money for Goverment Pensions if the DTT states that the pension will be taxed in one or other jurisdiction thats where it will be taxed. Regardless of what you or I may think!

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01 May 2011 12:09 by marcbernard Star rating in Marina Alta; Alicant.... 239 posts Send private message

Sorry, Amep75, I had lost sight of the fact that your earlier post was for JohnKath who has no CS pension. On the other hand you should not be quite so sharp. My comment was most definitely not rubbish!

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01 May 2011 12:10 by amep75 Star rating. 79 posts Send private message


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01 May 2011 12:13 by amep75 Star rating. 79 posts Send private message



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01 May 2011 12:45 by JohnKath Star rating. 157 posts Send private message

Just to correct the earlier post by marcbernard I stated that I have a Government Pension (PCSPS), my State Pension and from part time employment a small Private Pension which I have put into income drawdown. I consider I have researched this whole scene to death and there is no way I can get my GP to Spain without tax. The State Pension was easy. The Private Pension depends entirely on the rules of the providor however it was simple to get the NT tax code to set against it once the Modelo 030 and FD 9 were registered with the appropriate authorities (this took almost 2 years down here in Ayamonte our local Hacienda put this in the too difficult category and did not want to sign the FD 9 )

PS earlier I posted GC where it should have been GP

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01 May 2011 12:54 by JohnKath Star rating. 157 posts Send private message

For the benefit of the OP if his PP are paid via annuities he will be pleased to know that these receive very favorable tax treatment in pain.

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01 May 2011 13:05 by JohnKath Star rating. 157 posts Send private message

For amep 75 not all pensions that appear to be Government Pensions are treated as such. For instance National Health Service Pensions fall into 2 categories the vast majority are not GP and can be exported tax free. However a small proportion are treated as Local Government Pensions and are not exportable tax free.

If he would care to tell us how those that are genuine GP's can be shifted out of UK without being taxed at source by HMRC who of course are not only the paymaster but also frame the rules and make the deductions. There must be tens of thousands of former Police, Teachers, Military, Civil Servants and Local Authority employees who might be interested in this alternative to what many of us understand to be the rules.

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01 May 2011 13:08 by Poppyseed Star rating. 893 posts Send private message

Civil Service pensions are definately taxed in the UK if they exceed the personal allowance, if they don't then they are not taxed. You can then have your State Retirement Pension paid in Spain free of UK tax and benefit from another personal tax allowance in Spain before paying tax on it in Spain. So people whose combined pensions would be taxable if paid in one country can find themselves having no tax liability in either. This does of course depend on how much the pensions are and whether income exceeds the personal and/or other allowances.



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