Tax charged on pension

We are Americans and retired in Spain. The lawyer that files our tax return says pensions are not taxed. I went to the American Embassy website for Spain and found a list of attorneys who file taxes in both Spain and the US. They are bilingual. If you try this, you might find a lawyer who can answer your question. Usually the first consultation is at no charge.

Check out the double taxation agreement between spain and USA

Yes, we checked the double taxation agreement. 

What was your understanding of that ?

In general, in Spain, if you live here, you are taxed on all your worldwide income. That means that a British state Pension is taxable in Spain. There are various allowances (I think it's about 5,500€) and the lowest rate tax, up to about, 12,500€ is taxed at 19%. from 12,500 up to about 20,000€ the tax rate is 24%.

There are lots of additional disregards and personal circumstances can make a significant difference so, as everyone always says, you need to take professional advice.

I found an attorney who specializes in filing income taxes for both Spain and the US (we are US Citizens living in Spain) by checking the website for the US Consulate in our area. You might try that.

My understanding of it, which was confirmed by the attorney here, is that since Spain and the US have an agreement, the taxes we pay in the US are credited to our tax liability here. Usually this means there will not be a tax payment due to Spain, however, you must file the return.

Tax can be a nightmare here in Spain, even going through the tax accountants. It has taken me 15 years to get the Spanish tax authorities to accept that I pay tax in the uk on a Government employees, pension. I have also been fined & they have found extra tacked fir me to pay, even though I have had two different accountants.

You will be taxed on ALL income, from any source, from anywhere in the world.

You are currently not being taxed on your UK State pension in the UK simply because it is below your UK personal allowance.

In Spain the personal allowance is about half the UK, your pension will be higher than that, therefore you will definitely be liable for tax.