CLL Pension Tax

Your guide to tax on pensions in Spain

If you’re a Spanish tax resident and collect a pension, it’s important to know what your tax obligations are and how much the authorities retain at the source.

In this article, we look at the different aspects of tax on pensions in Spain. 

Did you know? We offer comprehensive tax representation services for residents and non-residents to help you save time and money, and avoid costly and stressful mistakes. 

The tax perspective on pensions 

First of all, let’s take a look at how the Spanish tax authorities class pensions. For tax purposes, tax is considered to be income. As a result, pensions are subject to annual income tax regulations and rates

Who has to declare tax on pensions in Spain? 

Whether you need to file an income tax declaration depends both on how much income you have a year and its source. 

Single source

If your annual income comes from a single source (i.e., just your pension) and it’s less than €22,000 a year, you do not have to file an annual income tax declaration. As a result, around 65% of pensioners in Spain are exempt. 

More than one source 

If your income comes from more than one source, for example, your pension and rental income, you must file an income tax declaration every year when:

  • Your total income is higher than €12,000 a year; 
  • AND, the income from the smaller source is more than €1,500 a year. 

What are tax rates on pensions? 

Since pensions are classed as income, they have the same rates as income tax. These currently range from 19% to 47%. 

What about tax retained at source? 

On average, Spanish pensioners are taxed at source at a rate of 7.7%, although the percentage varies depending on your pension. The highest state pensions are taxed at least 19% at source. 

What about personal allowances? 

Pensioners have slightly higher personal allowances. For example, those aged between 65 and 74 have an allowance of €6,700 a year and the over 75s benefit from an allowance of €8,100.

What about pensions collected from outside Spain? 

If you collect a pension from outside Spain and are a tax resident in Spain, you must usually declare the income from this pension.

The only exception is when there’s a specific tax treaty to avoid double taxation. In general terms, however, foreign pensions are taxed in the same way as Spanish pensions. 

What next? 

If you need advice on the tax obligations on your pension, get in touch with our team.

They will be happy to provide assistance to ensure you comply with tax regulations and, importantly, do not pay more tax than you need to.

17 thoughts on “Your guide to tax on pensions in Spain”

  1. Dear Sir / Madam, I would like to ask about the following, regarding my pension and the tax to pay on the pension. A friend of mine and myself we are Spanish residents. In the past, we worked for the UK government, and because of that employment, we have started receiving a “UK civil service pension“ (that is to say, a “UK Government pension”). We are Spanish nationals by origin, and our families are in Spain. But we also have UK citizenship (we are UK nationals as well). That is to say, we have a Spanish passport and a UK passport. We are a bit confused… is this pension taxed in the UK, or in Spain, or in both countries? (I have heard that this is considered to be a special type of pension, with specific rules as to where to pay the taxes on it, and because we have the two nationalities we do not know where to pay the tax). Many thanks in advance for your attention. Kind regards.

    1. Maria Luisa Castro

      Dear Ana,

      Thank you for contacting us. This is Ana Landa from Costaluz Lawyers. It is a pleasure talking to you.

      Please be informed that if you live more than 183 days in Spain in a calendar year or you situate then main base or centre of your activities or economic activities, directly or indirectly, in Spain, you would be considered as a tax resident in Spain, you will be levied with Personal Resident Income Tax, and in general terms, you will pay tax on all your income, no matter where in the world they were earned. However, you can be subject of exemption/deduction.

      We can offer to study your case with your real situation, checking thoroughly the Double taxation agreement signed by Spain and UK and give you a proper answer. We will be pleased to offer you our tailored consultancy, which is a written reply or a tax legal report.

      Therefore, if you like, you can send us all your questions you would like us to answer you and we will send you a quote.

      At your disposal for any further clarification.

  2. I am not sure where you are We are Pensioners but since moving to Spain iat end of 2020 I ve been trying to sell my habigual home .
    But the Pandemic /Brexig fears have meant early sale was impossible .I completed residency In Spain in 2021 and got a sale
    but after months of negotiation survey found we had Sbestis in roof so sale fell through
    Late 2021 we completed works on roof doors windows driveway repairs and waited for buyer also reduced the price by 50000 pound
    We had 5 offers in 2022 but all fell through due to Ukraine war and Global change in interest rates on mortgages etc total turmoil in financial markets
    In 2023 things have calmed life is more expensive and we now have sale but are we still entitled to the CGT concession even though we have been living in Spain firstly in fear of our lives due to Covid and economic woes dtc more recently

    1. Maria Luisa Castro

      Dear Rogers,

      Thank you for contacting us.

      Please be informed that if you live more than 183 days in Spain in a calendar year or you situate the main base or centre of your activities or economic activities, directly or indirectly, in Spain, you would be considered a tax resident in Spain, you will be levied with Personal Resident Income Tax, and in general terms, you will pay tax on all your income, no matter where in the world they were earned. However, you can be subject of exemption/deduction, as exemptions or deductions on the gain derived on the sale of real estate and provided that all the requirements are met.

      We can offer to study your case with your real situation, checking thoroughly the Spanish tax legislation, and the Double taxation agreement signed by Spain and give you a proper answer. We will be pleased to offer you our tailored consultancy, which is a written reply or a tax legal report.

      Therefore, if you like, you can send us all the questions you would like us to answer you and we will send you a quote.

      At your disposal for any further clarification.

  3. Knut Solberg-Knutsen

    As a resident in Andalucia, what is/are the taxation rate for a normal pension from EU-countries?
    Bottom allowance amount and treshold for the different amounts and percentage?
    Tie
    Knut S-K

    1. Maria Luisa Castro

      Dear Knut:

      If you’re a tax resident in Andalucía, Spain, your worldwide income, which includes pensions, will be subject to Spanish personal income tax (“Impuesto sobre la Renta de las Personas Físicas” or IRPF). The taxation of pensions is complex and can vary based on several factors, but generally, pensions from EU countries are taxable in Spain if you’re a Spanish resident.

      Here’s a general overview:

      Personal Allowance: Spain offers a personal allowance for individuals below a certain age (generally below 65) and an increased allowance for those 65 and older. Furthermore, there’s an additional allowance for individuals aged 75 and over. The exact amounts can vary from year to year.

      State Tax Rates: Spain has a dual system where both the state and the autonomous community (in your case, Andalucía) levy taxes. The state tax rates are progressive and can range from around 9.5% to 45% (or even higher) depending on your total income.

      Andalucía Tax Rates: Andalucía sets its own progressive tax rates. Combined with the state rates, you get your total tax rate. The rates in Andalucía can vary, but they’re also progressive, with several bands that depend on your total taxable income.

      Pension Taxation: Typically, state pensions (like retirement pensions from another EU country) are taxable in Spain. The exact rate will depend on your total worldwide income, including the pension, and will be subject to the combined state and Andalucía tax rates.

      Deductions: There might be specific deductions available for pensioners or individuals of a certain age. It’s essential to ensure that all relevant deductions are applied to reduce your taxable base.

      Tax Treaties: Spain has tax treaties with many countries, including EU member states, to avoid double taxation. It’s important to check the specific treaty between Spain and the country from which you receive your pension to understand the exact tax implications.

      Given the complexities involved, it’s strongly recommended to consult with a tax advisor in Spain, particularly one familiar with Andalucía’s tax regulations. This will ensure that you’re not only compliant but that you also benefit from any relevant allowances, deductions, and optimized rates.

      I hope this provides a general overview, we will be pleased to offer our Tax advisor´s services to you.

      Best wishes

      Maria

  4. Elizabeth Fleites

    Good evening, I plan to retire in Spain. The only two incomes I have would be my social security benefits. I’m retiring which would be 1688.00 a month. I am planning on selling my home in the states and the proceeds would be less than $400,000. Would I have to pay taxes on my social security benefits and pay taxes on my proceeds? That would be my livelihood income. Any information would help and of course I would understand better. Thank you so much! Elizabeth

    1. Maria Luisa Castro

      Good evening, Elizabeth,

      Retiring in Spain is an exciting prospect! Regarding your questions about taxes, let’s break down the two primary aspects: taxes on Social Security benefits and taxes on the proceeds from the sale of your home.

      Social Security Benefits:

      US Taxes: U.S. Social Security benefits are taxable by the U.S. for U.S. citizens and residents based on a tiered system. Depending on your total income, a portion of your Social Security benefits may be taxable in the U.S.

      Spanish Taxes: Spain does not tax foreign Social Security benefits. However, you will need to declare them to ensure you’re not taxed, but they will be exempt.

      Proceeds from the Sale of Your Home:

      US Taxes: If you sell your primary residence in the U.S., you can exclude up to $250,000 of the capital gains ($500,000 if married filing jointly) from taxes if you’ve lived in the house for at least 2 out of the 5 years before the sale.

      Spanish Taxes: Spain won’t tax you on the sale of a property located outside of Spain. However, once you transfer or use that money in Spain, there might be other tax implications, especially if you invest it or earn interest.

      Residency and Worldwide Income: Once you become a tax resident in Spain (which generally means you live there for more than 183 days in a year), Spain taxes its residents on their worldwide income. You would need to declare all your global income, even if some of it is not taxed in Spain, like your Social Security benefits.

      Double Taxation Agreement: Fortunately, the U.S. and Spain have a Double Taxation Agreement, which ensures you won’t be taxed twice on the same income. This treaty will be crucial in determining how your income is taxed.

      Wealth Tax: It’s also worth noting that certain regions in Spain impose a wealth tax on worldwide assets, although there are generous exemptions, and this would typically apply to higher net worth individuals.

      Non-Lucrative Visa: If you plan on moving to Spain without working there, you might be looking at the Non-Lucrative Visa. One of the requirements for this visa is proving you have sufficient means to support yourself without working in Spain. Your Social Security benefits and savings from the sale of your home should be factored into this.

      Professional Guidance: Tax laws can be complex, especially when dealing with multiple countries. I strongly recommend consulting with an international tax advisor or attorney who is familiar with both U.S. and Spanish tax laws to guide you through the specifics and ensure you remain compliant. We have an international tax advisor among members of our team.

      I hope this overview gives you a clearer understanding, Elizabeth. Wishing you all the best in your retirement journey to Spain!

      Warm regards,

      Maria L. de Castro

  5. Good evening
    We are 71, marred and in receipt of UK state pension only. We are resident in Spain. We have no property or assets anywhere else. There is no clear answer anywhere whether we are liable to pay tax. We were told we did not need to register for tax as our joint income is less than £24000 per annum. Is this correct? We have residencia, we are on the local Padron. We live in retirement park.
    Thank you
    Anne

    1. Maria Luisa Castro

      Dear Anne,

      Thank you very much for contacting us.

      If you are a tax resident in Spain, you will be taxed by the Personal Income Tax for all your worldwide income, including pensions.

      Regarding the obligation to file a personal income tax return, in your case the limit is 15,000 euros, so in general terms you will be obliged to file an income tax return.

      Please take notice that it is important to review your specific case in order to determine whether you have any deductions/exemptions, and the amount to be paid, in accordance with the tax law in force, the Agreement to avoid double taxation between Spain and the United Kingdom.

      We can offer to study your case with your real situation, checking thoroughly the Spanish tax legislation, the Double taxation agreement signed by Spain and UK and give you a proper answer. We will be pleased to offer you our tailored consultancy, which is a written reply or a tax legal report.

      At your disposal for any further clarification.

      Kind regards,
      Maria

    1. Maria Luisa Castro

      Dear Linda:

      In 2024, Spanish residents who receive income lower than €15,875 are exempt from filing a tax return if their work income comes from more than one payer. This amount corresponds to the sum of 14 payments of €1,134, which is the minimum wage set by the Government. Thus, the general limit of €22,000 per year remains for the 2023/2024 campaign. This amount also applies to those with two payers in any of the following situations:

      When, coming from more than one payer, the sum of the amounts received from the second and subsequent payers, in order of magnitude, does not exceed a total of €1,500 per year.
      When it concerns pensioners whose only work income consists of passive benefits.
      When compensatory pensions from a spouse or alimonies not exempt from taxes are received.
      When the payer of the work income is not obliged to withhold taxes.
      When full work income subject to a fixed rate of withholding is received.
      Hope the above helps

      Best,

      Maria

  6. Thanks Maria
    I still do not understand your reply as my income is less than 22000 and is from a single source-see quote from your website below:

    “If your annual income comes from a single source (i.e., just your pension) and it’s less than €22,000 a year, you do not have to file an annual income tax declaration. As a result, around 65% of pensioners in Spain are exempt. ”

    Do I need to file a tax return or not?
    Thank you
    Anne

  7. Hi
    My Wife and I are both British born. We both collect State pensions in our own right. In the UK we are classed as individuals regarding income tax, is this the same in Spain or would we be classed as a married couple and our pensions added together for tax purposes?
    Many thanks
    Paul

    1. Maria Luisa Castro

      Hi Paul:

      If you are a tax resident in Spain, you will be subject to personal income tax and your foreign pension will be the basis for calculating this tax. If you are married you can choose to calculate the Income Tax jointly with your wife and you can check the amount to be paid by comparing the individual tax and the joint tax, and choose which is the most favourable form of filing in your case. Hope the above helps!

  8. Hi

    what is the sıtuation in Spain for the ones who are retired from an tax exempt institution, living in Spain as tax resident, such as UN pensioners

    Thank you

    1. Maria Luisa Castro

      Tax Situation for UN Pensioners Living in Spain
      Retirees from tax-exempt institutions, such as UN pensioners, have a specific tax situation in Spain. Here are the key points you should know:

      Tax Exemption Status
      UN Pensions:

      Pensions received from the United Nations and other similar international organizations are generally exempt from Spanish income tax. Spain adheres to international agreements that grant tax exemptions on these pensions.
      Becoming a Tax Resident in Spain
      Tax Residency:

      If you live in Spain for more than 183 days in a calendar year, you are considered a tax resident in Spain. As a tax resident, you are generally required to pay taxes on your worldwide income.
      Reporting Obligations
      Annual Tax Returns:

      Even though your UN pension is exempt from Spanish income tax, you are still required to report it on your annual tax return. This is part of the transparency requirements and helps the Spanish tax authorities verify your income sources.
      Wealth Tax:

      Spain also has a wealth tax, which applies to residents based on the value of their worldwide assets. Depending on the value of your assets, you might be liable for this tax. There are exemptions and thresholds that apply.
      Additional Considerations
      Double Taxation Agreements:

      Spain has double taxation agreements with many countries, which may further influence your tax obligations. It’s important to understand how these agreements affect your specific situation, particularly if you have other sources of income.
      How We Can Help
      We provide specialized tax advice tailored to your unique situation as a retired UN pensioner living in Spain. Our services include:

      Initial Consultation: Assess your tax residency status and obligations.
      Tax Return Preparation: Help you prepare and file your annual tax returns.
      Wealth Tax Assessment: Determine if you are liable for the wealth tax and assist with compliance.
      Ongoing Support: Provide continuous support and updates on any changes in tax laws that may affect you.
      If you need further assistance or would like to schedule a consultation, please do not hesitate to contact us.

      Hope the above helps!

      Maria

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