Where should tax be paid UK or Spain ?

So -  here we are in 2020, with the 2019 tax return revealing Government Service Pension (Article 18) has been taxed as a witholding tax, from June 12 2014 - resulting in Fiscal Evasion charge, fine interest and 2000 euros taken from the bank account. In reply to the appeal AEAT say 'P60 is a notification of UK tax due - not tax paid'  (nonsense) but there is an absolutely hostile response to any appeal. Have been told to claim the tax paid back from HMRC, if I think I paid it.

Personally I wonder if the on line forms were updated to receive the information provided by accountants at the on date of this new treaty - for Article 18 pensions this should have been fiscal year 2015- completed in 2016.  If the box aint there the info provided to the accountant cannot be entered. My problem apparently was revealed by interaction between AEAT and HMRC - especially checking on UK Gov pensioners living in Spain.  Strangely I cannot find any other pensioner with this problem. (why?)

Not sure I actually get what you are saying. I have a government pension (ex nurse working for a local authority) and my husband also has one. We have just done our tax returns and nothing has changed. We both declare the pensions and our  solicitors completes a special box on the return so we don't get charged tax although they are taken into account for the tax band.

Our other pensions are paid tax free in UK but we have to pay tax on them here which go in a different box. The instructions from the solicitors haven't changed this year and have been the same from (I think) 2014 when we actually had to start declaring the government pensions. Prior to that we didn't even have to declare them.

Are you sure your accountant is entering the income from the government pension in the correct box? Someone on here (can't remember who - sorry but I'm getting old) did say which boxes the income had to go in to ensure you weren't taxed twice or had to pay back taxes on them.

Again, as far as I am aware, there is no way of claiming back tax paid on certain types of government pensions nor can you have them paid free of tax in the first place.

The advice from our solicitors, this year, is that government pensions are not taxable in Spain unless you transfer them to a private scheme in which case they may become taxable. 

The P 60 shows U.K. taxable income and tax paid on that.  It does not show where the income came from.   When I was asked by AEAT how much my crown pension was, i got a letter from the service which administers it for the Met police.  AEAT were satisfied with that 

 A couple of years ago I asked HMRC if the P60 in future could show the source (Crown pension) of the income which had been taxed at source.    They said if that was possible it would take years to organise.

My gestor made a mistake the first year despite me repeatedly telling her she was wrong.  After a couple of years she said she could not get a refund from AEAT, so she repaid the over payment of almost 3,000 euros to my bank account from her personal account 

There is box on the form for crown pensions.  The number of the box changed after the first year. Not sure what number it might be this year but

Beiderbeck is replying to posts having a view on this.

In reply :  the autonomous communities operate  - in their own way regardng taxreturns. In Almeria province of Almeria they are inflexible, almost brutal in their refusal to even acknowledge problems with this Treaty, which for Article 18 is problematic. There is no defintion in the protocol as to Withholding tax, deductable from 2014, nor tax on income, taxbble from 2015.     My tax returns were all in order, but I had no replies ot the many questions I raised at the time about the position government service pensions were in ,nor if the 'boxes' and caculations in the on line form were ready for the first declaration. Mine was declared  from 1 Jan 2015 - THEY say - I have evaded tax and that I should have listed it as a witholding tax, decarable from June12 2014. THEY have taken 2180 from my account only regarding that 6 month period, in what is described as a 'four year catch up '

THEY say this will continue year by year until the catch up ends. So, HMRC appear to have had an interaction which has been interpretted incorrectly. 

Bearing in mind - the English language version of this Treaty differs from the la Moncola boletin - check it out ! The HMRC preamble, does not have a reciprocal explanatioon in Spanish either !

I am speaking to HMRC, complaints /Treaty Team Managers next week about this, but at present I see no good outcome of this problem, for me and any others involved.  Bear in mind - the AUTONOMUS comMMUNITIES CollECT THE TAX, and keep up to 50% before sending the rest  on to Mdrid - so imagine what enthusiasm there would be for reposnding to an appeal, which has to be in Spansih, with all the supporting documents translated, to both the autonomous community and Madrid - pensioners thus affected   will be long gone before this is resolved.  

PS = my P60 does denote the government authority - so that should not be a problem - but Spain says a P60 is a list of tax due - not tax paid - (nonsense of course) 

Beiderbeck  QUOTE    my P60 does denote the government authority - so that should not be a problem - but Spain says a P60 is a list of tax due - not tax paid - (nonsense of course)

Well it would appear you  either misunderstand  the P60 or you have beaten  the system

I have been shown a teacher´s and police officer’s P60s  by a friendly gestor. She asked me how she  could I tell they were referring to crown pensions. The Police officer’s one I knew because of the tax office shown on the P60 but the teacher´s one had nothing to show the `person was a teacher.-  Neither had anything to say a crown pension was involved.  it was following that I spoke to HMRC to see if they could start showing that info.

Just a thought.  When my crown pension was first `taken in consideration´ my tax in Spain increased by about 2,000€ .  I have paid that extra amount each year since, on top pf the tax I used to pay..   Maybe the amount you have paid (2180)  is the same as that and not a penalty.

This is my P60. No mention on it that it is a crown pension.

This message was last edited by johnzx on 27/02/2020.

This message was last edited by johnzx on 27/02/2020.

What a brilliant response by Beiderbeck, with factual detail. Looking to the wider picture ( again).......

What are the EU authorities doing about this, given it was they that presumably orchestrated the treaty change without any apparent responsibility to ensure correct enforcement and compliance is subsequently monitored in terms of consumer protection going forward,  not to mention the requirement for effective translations to be made available?

Is there an effective timely EU complaints mechanism in place to ensure proper monitoring so that citizens are not compromised in scenarios such as this, that spreads responsibility, as described, across local and national authorities, leaving consumers at risk of not knowing who is tasked with the responsibility to correctly enforce the system of repayments?

Or perhaps there is already a mechanism in place to independently adjudicate between the member states and gain correct recompense  where applicable, so that significant amounts as described in previous postings are correctly enforced.

If so what is that independent mechanism to adjudicate, and how effective is it?

It's not good enough to bring in treaty changes of this nature without proper checks and trusted adjudication mechanisms in place, to ensure that the consumer is not ultimately significantly compromised by what appears lengthy procedures, which some might consider as unnecessarily complex attempts to deny citizens of their rightful return of monies.

IN reply to the 2 posts today: 27.2.20.

I know of no complaints mechanism - except perhaps - pursuing an issue right up to the EU Court - would take years. 

About the P60 - sorry to make assumptions:

a. HMRC has a list of applicable Government Service Pensions on its web site, applicable to this Treaty. The one shown on your post should be listed - that is how AEAT should be able to work it out  .............however !

b. The on line submissions denoting P60 information are one thing -  I assumed AEAT would accept what the accountant had inputted - the other is that AEAT does not actually see the P60 - (except on appeal) and nowhere on the online form does there appear to be a place to state the pension provider ! Please tell me there is ? and - the box number? 

And I forgot to mention that my (local Government) pension provider, changed its name and logo combining several Fire/local gov/ teachers etc into one entity - how helpful was that ? 

Note: If anything useful comes out of my meeting with the Whitehall gurus next week - I will offer some more info. I am actually asking them what they said to AEAT, which stimulated AEAT to penalise me. I guess they will plead data protection and politely decline to answer.

And- this is only one aspect of a widespread treaty, so guess there are problems in other areas. 

Not sure what the EU has got to do with any countries laws and rules on taxation.

It is unfortunate that most tax authorities try it on with whoever they think they can con and fiddle, that includes HMRC, the Spanish tax authorities and the rest of the world. Taxation is purposely made complicated and confusing by almost all tax authorities and the parasites that work there.

Basically wherever you are tax resident you pay your personnel tax liabilities there whether you like it or not. Whilst abroad you will pay direct tax to the tax regime of that county on their tax laws related to transactions that occur in their county. You cannot say I am a Brit and only pay taxes in the UK. When abroad you will pay VAT (IVA) on what you buy, you will pay fuel duty, alcohol tax, fag tax, and all the rest. If you are Spanish tax resident you will pay your personal taxes in Spain, you cannot plead I have a British passport and are exempt from paying anyone, my name is Del Boy.

beiderbeck              What is and what is not a Crown Pension is not exactly that straightforward, however, here is the   “HMRC internal manual International Manual  List “ listing Crown Pensions

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

PS  I see I posted the same info on 16th August 2012, although it is now marked as updated 2020

This message was last edited by johnzx on 27/02/2020.

Beirderbeck

I understand your concern as things currently stand re citizens exposed to lengthy litigious processes.

When treaty arrangements are agreed it appears an oversight to not have in place effective swift regulatory and well communicated reporting mechanisms  from the outset of the treaty, so that innocent consumers are not exposed to such costly and lengthy litigious processes whenever these arrangements that appear beyond their control are not adhered to.

Currently innocents are being scapegoated.

There should be strict inbuilt compliance mechanisms such as SWIFT heavy fines against any authority that continues to turn blind eyes to such abuse of compliance, as identified within the reporting structures intended to protect. At the moment the EU Commission are failing to effectively protect those citizens scapegoated through no fault of their own.

Non compliance of this nature only creates unnecessary division and sadly impacts citizen cohesion between the two countries.

Is this worth reporting back to the Whitehall gurus as they continue to establish new treaties?

In reply to ads of 27/2/20 -  Your 1st para points in the correct direction -  from the outset the Article 18 (Government Service Pensions)  should have had attached, a protocol to completely remove any chance of ignorance or abuse on the part of those implementing these tax returns in Spain, through 17 autonomous comunities, 52 provinces and who knows how many local AEAT offices, which collect tax and keep a % before remitting remainder to Madrid. (not administered quite like HMRC)  

At the time the protocol suggested to HMRC ( without any response) was

a.  a list from the HMRC manual, of Gov pension providers, (or a link to the web site)

b. the agreed formula for declaring the gross amount  and calculating the net amount for progressive taxation by AEAT (ie. take the gross Gov pension annual amount, enable a 'box' to identify this amount as 'UKtaxpaid' , for the gross to have the otherwise appropriate tax deduction removed, within the on line system, and the net amount remaining, added to any other world wide income due for taxation in Spain at the aprrproriate - probably higher - %rate) ( to enable transparency and a record for the individual in hard copy)

Nowhere can I see any attempt to regularise this - consequently it looks as though the Article 18 gross amount IS being added to other income, by one or more AEAT offices.

Irritating point might be those  critics who may believe there is a resentment about paying tax. NO - resident  in the UK these PAYE pension provider payroll operations would have added notification of the UK state pension, and deducted tax at 20% above the threshold (usually by lowering the tax code) Oh - yes - dont forget contracted out deductions are taken from the UK state pension for those in receipt of Government Service Pensions ( mine is reduced by £45 per week.)

Stability in tax is important for pensioners, and lately AEAT has thrown up an unwanted and avoidable glitch, we may say originates from misunderstandings within the DTT itself.  One doubts whether HMRC can introduce or update any protocol, or, publish any formula under Article 18 for dealing with these pensions, but one can make representation and I will do so - alone it seems - as I cannot find any representative  group making noises of this kind.

Another informative posting by Beiberdeck.

Does this beg the question that the EU having established a treaty change without sadly effecting necessary protocol in place to ensure ignorance nor abuse can be effectively disincentivised, now have an obligation to do so, in the form of swift fines on those authorities who for whatever reason are not implementing the system as was originally intended? 

 It is a strange subject why people from throughout the world  are subject to unenforceable tax so called laws.