Income tax on UK State pensions in Spain

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12 Dec 2013 2:31 PM by camposol Star rating in Camposol. 1408 posts Send private message

Is tax payable on UK state pensions in Spain?

I have always thought so, and been told so  and thus  declared it, but today on p 50 of the E W News, a tax expert says it is not!

Will I then get back my overpaid tax?





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12 Dec 2013 3:31 PM by KathysLad Star rating. 329 posts Send private message

Nope, clearly not a tax expert. You have as much chance of getting back as I have of wining the Euromilions (which I don't do).

 





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12 Dec 2013 4:08 PM by Roberto Star rating in Torremolinos. 4545 posts Send private message

Roberto´s avatar

You must have a different edition of the EWN than me, because P50 is the TV guide here! Anyway, if, as I suspect, the article you refer to is a paid for advertorial, then the said "tax expert" is probably no more knowledgeable than your average EOS troll! Ignore. wink



_______________________

 

"Get your facts first, then you can distort them as you please"

Mark Twain

 

 

 




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12 Dec 2013 4:09 PM by camposol Star rating in Camposol. 1408 posts Send private message

That's why I'm asking all you lot!

The bit about getting a refund was tongue in cheek!

What about the article that stated tax is not paid on state pensions in Spain?





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12 Dec 2013 4:16 PM by johnzx Star rating in Spain. 5255 posts Send private message

I have always thought so, and been told so  and thus  declared it, but today on p 50 of the E W News, a tax expert says it is not!

Maybe an expert but on on tax in Spain.  He was wrong.

Worldwide income is taxable in Spain (with a couple of exceptions) so for sure UK Stae Pension, if with othet income it exceeds the tax free allownace. But all income must be declared even if it comes to less than the tax free allowance.

My Page 50 is as Roberto's  TV schedules

PS I found it in a different edition.  But for sure they are wrong, So don't ask them for advice

 

PPS  I just emailed them. I will post their reply


This message was last edited by johnzx on 12/12/2013.


This message was last edited by johnzx on 12/12/2013.


This message was last edited by johnzx on 12/12/2013.



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12 Dec 2013 4:56 PM by Roberto Star rating in Torremolinos. 4545 posts Send private message

Roberto´s avatar
I wonder why these people aren't regulated somehow. There can't be anything to be gained by them by giving blatantly incorrect information, so it can only be down to sheer ignorance / incompetence. Is it any wonder so many expats are so confused?!
It would be nice to think a responsible newspaper wouldn't accept misleading advertising - but then, they're probably no better informed themselves.

_______________________

 

"Get your facts first, then you can distort them as you please"

Mark Twain

 

 

 




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12 Dec 2013 5:02 PM by johnzx Star rating in Spain. 5255 posts Send private message

 I agree Robert, but then the EWN is anything but "a responsible newspaper"

They will print anything.

 

I have spoken the editor in the past re incorrect info,  and her reply was that other readers could write in and correct the errors.  That of course many people may have passed on the false info in the interim was of no concern to her.


This message was last edited by johnzx on 12/12/2013.



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12 Dec 2013 5:24 PM by casperruby Star rating. 165 posts Send private message

Hi
I have read this column with interest today and I must say I'm totally confused, surely the spanish tax authority print a tax advise booklet to cover what taxes foreigners have to pay and at what levels and in all languages its in there interest to do so or am I being far to simple minded?



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13 Dec 2013 2:49 PM by camposol Star rating in Camposol. 1408 posts Send private message

Johnzx -I had also e mailed this firm ,  and I received an email back confirming I was right and they were wrong, but it was blamed on the newspaper 's misprinting!





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13 Dec 2013 3:15 PM by johnzx Star rating in Spain. 5255 posts Send private message

Camposol
I had also e mailed this firm ,  and I received an email back confirming I was right and they were wrong, but it was blamed on the newspaper 's misprinting!
 
To be fair to them,  I am not sure they were wrong.     EWN misprinted their advert.
 
This is an email from the Gestoria
 
I thank you for your e-mail dated 12th December regarding the article on p. 50 of the Euro Weekly  News as we could check that the text the newspaper has published does not match with the original we send to them.
Our original text said: " ... the public pensions received by a resident in Spain are only taxable in U.k. and are not subject to the Spanish annual Tax return". We ignore the reason why  the word "public" was changed to the word "state". The Newspaper was authorised to correct spelling mistakes but never the words.
We have already spoken with the newspaper in order to receive an explanation and have asked them to rectify their mistake in the following edition, which we hope will be done.
 
Once again thank  you for your e-mail.
 
Should you have any queries do not hesitate to contact us.
 
Yours sincerely,
 
Claudia Lo Re
Torreta Asesores

 


This message was last edited by johnzx on 13/12/2013.


This message was last edited by johnzx on 13/12/2013.



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13 Dec 2013 3:54 PM by baz1946 Star rating. 2258 posts Send private message

... the public pensions received by a resident in Spain are only taxable in U.k. and are not subject to the Spanish annual Tax return

 

Public..State...Does that matter? The state gives it to the public...…So does this mean when you fill in your Spanish Tax Return you leave out your income amount of State / Public pension, (Spain knows what you get anyway)  so having no visable income at all then...Or... Does it mean you declare it but pay no tax on it?.....I need to know, one day I might get something.

 

 





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13 Dec 2013 4:25 PM by johnzx Star rating in Spain. 5255 posts Send private message

Baz as I, and others,  have said in the threads here,  so many times,  Government employee pensions (crown pensions, military, police etc.) are taxable only in the UK.  All other pensions, i.e OAP, private etc. are taxable only in Spain.

This is the corection which EWN will print next week:-

Correction

 

Please note in last week's The Euro Weekly News, we stated ‘state pensions received by a resident in Spain are only taxable in the UK and are not subject to the Spanish annual tax return.’

This should have read ‘public sector pensions, (those occupational pensions paid to civil servants and government workers) are not subject to the Spanish annual tax return. We apologise for any misunderstanding and to Segarra Asesores who had supplied the correct information. For more information and advice contact Segarra Asesores on 865 774 291 or email torretaasesores@gmail.com

 

 


This message was last edited by johnzx on 13/12/2013.



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13 Dec 2013 5:32 PM by Roberto Star rating in Torremolinos. 4545 posts Send private message

Roberto´s avatar
Wow. This was such a fundamental and important error. I know it's said you should never believe what you read in the papers, but based on this, it's not just a saying. NEVER BELIEVE WHAT YOU READ IN THE EURO WEEKLY NEWS. What an utter disgrace for a paper that promotes itself as a pillar of the expat community.

P.S. The snippet about a stabbing in Torremolinos IS true - it happened right outside my window :-(


_______________________

 

"Get your facts first, then you can distort them as you please"

Mark Twain

 

 

 




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13 Dec 2013 5:34 PM by KathysLad Star rating. 329 posts Send private message

Just to be clear, its not all public pensions, there are some which are taxable in Spain. In addition as I have posted previously, a "public pension" which is only taxable in the UK, will be used to calculate your marginal rate of taxation in Spain, when the new Double Taxation Agreement comes into force.

 

 

 





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13 Dec 2013 5:43 PM by baz1946 Star rating. 2258 posts Send private message

Ah...So now we are getting somewhere, seems the whole article has had a play around on words then. 





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14 Dec 2013 9:19 PM by JohnKath Star rating. 157 posts Send private message

I have both Government and State pensions. I have no other income. The very firm advice I received from BF on becoming Tax Resident in Spain was NOT to declare my GP and declare my SP. I have done this for the last four years. Since I had been "contracted out" most of my working life I have a full basic SP circa £110 pw which even multiplied up to euros is below the Spanish Pensioners tax threshold so my tax is zero. Therefor my marginal rate is zero.

I think that the new DTT will make no difference to my tax payable. I have one concern that is I will not declare the GP as income but in a special box just for that purpose. This does not allow me to also enter the considerable amount of UK tax I pay on that pension. I just wonder if this is a ruse to double tax me in Spain on income already taxed in UK WHICH UNDER NO CIRCUMSTANCES WILL HMRC ALLOW ME TO TAKE TAX FREE!

This message was last edited by JohnKath on 14/12/2013.
This message was last edited by JohnKath on 14/12/2013.
This message was last edited by JohnKath on 14/12/2013.



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15 Dec 2013 9:01 AM by Kathyslad Star rating. 329 posts Send private message

As I understand the new DTA, they can take your government pension into account when calculating your marginal rate of tax in Spain. My understanding of the way the Spanish tax system works is that you take your total income, deduct your earned income allowance, work out the tax on the net amount, and then apply the personal allowance at the basic rate. The amount of tax payable is then turned into a percentage, which is your marginal rate.

If you do the calculation on this basis, then as far as I can see ( unless my understanding is incorrect, and my calculation is wrong) if the only income you have which is taxable in Spain is the basic state pension ( currently £110.15 per week), and you have a Government Pension of over £2,740 you will start to pay tax on Spain. This assumes my understanding is correct, you are over 65, and the exchange rate is €1.20.

As an example if your Government Pension is £3,740, then you will pay approx €115 in tax in Spain when the new DTA is in operation. Note, in the past two years there has been a deduction of €400 for low earners. It's not clear whether this will continue.

As I understand the argument, it is not double taxation on the same amount, but collecting the extra tax you would pay, if it was all taxable in Spain.



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15 Dec 2013 11:19 AM by JohnKath Star rating. 157 posts Send private message

My understanding is that it is NOT simply a case of adding the two pensions together as earned income but that there is a box elsewhere in the PADRE program (619 I think) where the GP is declared. The program then does a complicated calculation that I don't begin to understand and then spits out the answer. What bothers me is that if it is not declared as income then there would not appear to be a mechanism to enter the tax ALREADY PAID on that income which is the whole point of the Double Taxation Treaty.

It would only be the case of collecting the "extra tax" you would have paid if they know what tax you have already paid but how do you tell them that?



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15 Dec 2013 11:58 AM by JohnKath Star rating. 157 posts Send private message

In answer to Johnzx who asked where the new legislation on the new DTT could be found.

I do not think this is new legislation but a review of several existing DTT's between UK and other countries. This does not need primary legislation but is almost an agreement between the two tax departments.

This review is completed and it is ready to roll between HMRC/Hacienda. In order to implement the revision the two departments need something like an Order in Council from each legislature to begin. The last I heard was that both ends had not yet done this.

Anybody any update on this?

The new version can be viewed on the HMRC website.



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15 Dec 2013 12:11 PM by JohnKath Star rating. 157 posts Send private message

This is a link to the latest news from HMRC:-

http://www.hmrc.gov.uk/taxtreaties/news/norway-spain-uk-dt.htm

It seems to say it is signed but not yet in force and it has been so for many months now. If they don't do something in the next few days I do not think they will be able to apply it to the Spanish 2013 tax year.





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