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.
Maria Luisa Castro
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.
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.
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
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.