All about taxes for expats in Spain

Hi everyone,

Taxation is an important subject, especially when you are an expatriate in Spain. We would like to know what you think about the tax system in your host country. This could be helpful to other people preparing for expatriation in Spain.

How to do your tax return in Spain? Are there different steps beforehand and if so, what are they?

Is it easy or did you have to get help to complete it?

Are there any important elements that should be taken into account when doing your tax return in Spain?

If you are self-employed, do you need an accountant to do your tax return?

Is there a non-double taxation agreement with your home country? In any case, do you have to pay taxes there as well?

Thanks for your contribution!

Diksha,
Expat.com team

Generally, its been fairly simple to follow. Doing the annual Declaracion de la Renta each year was at first a little daunting, but you get the hang of it and its better now that its all online.  The strangest thing I found was how tax works when you change jobs.  I found that rather than having the tax automatically adjusted over a couple of paychecks (as generally happens in the UK), I ended up having to pay back money in the Declaracion, as I hadnt paid enough tax in the tax year.

I have always used a tax accountant, but not without difficulty. I am now on my 3rd & hopefully the last one!
I have to pay a tax in the UK on my Local Government pension, but my old age pension & another small one that I have, has to be paid in Spain, which has caused considerable problems!
Hopefully now this has been sorted, as I am now using a British/Spanish firm, who seem to understand this, where I had difficulties with the other two Spanish firms. I have been here 16 years & have had trouble every year so far & had to pay extra every year! Although the Spanish hacienda, questioned it again this year, as I had changed the accountant & it was in a different tax area, but as I  already had an exemption from another tax office agreed on the LG pension, they couldn’t proceed this year 🙄

Meryl

I hope you know that your crown pension (local authority) as from 2014 MUST be declared in spain.

Whilst it is not taxable in Spain it is used to calculate your marginal tax rate.

That is the rate at which you start to pay income tax on all other income which is taxable in spain.

In my case that means all my other income, including OAP, christmas £10 bonus, premium bonds, etc is taxed at 30%

See Article 18 page 14

https://assets.publishing.service.gov.u … _force.pdf

Hi, yes I do realize & declare it, but that is where the Spanish tax authorities seem to find it difficult & try & tax me in Spain as well on my Gov. pension. Hopefully it is sorted now, but it took a lot of going to & fro to the tax office by my accountants to get it agreed!!

On the tax declaration form there is a specific box for crown pensions. In 2014, the first year the CP had to be declared, a lot of gestors, lawyers, etc got it wrong.  I’m pretty sure your accountant was ill informed and he/she caused you the problem.

I have been instructed by hacienda each year since 2014 , four year after the declaration, that I need to prove my  CP.  A letter from the pension manger showing the income for the spanish in question, has sufficed. Hacienda do not need to know how much tax you paid on the CP, as that does not figure in their calculations.  Some professionals don’t know that !

My understanding is that if you are paying tax on your pension in the UK you should not have to pay it here. However, because of work I  do in the summer months for an English University, I  do have to declare that income. As it is under the threshold, plus being tax resident in Spain, I  do not pay UK tax on my earnings but nevertheless have to declare those earnings here. As Hacienda caught up with me a few years ago for not declaring my UK income, they slapped a juicy fine on me as well. Now that I  am receiving a UK pension paid into an English bank - which is subject to UK tax - what is my position? Should I declare the net UK pension ? I'm a little worried about this because I  have heard some horror stories of people being fined. Thanks for any assistance.

This is the double taxation agreement between U.K. and spain
See here
https://assets.publishing.service.gov.u … _force.pdf

Thanks.

We are Americans living here in Spain. Spain and the US have a taxation agreement. I went to the US Embassy website (or was it the US Consulate website? Can't recall which one) and found a list of English speaking attorneys who specialize in different areas (taxes, real estate, investment, etc.) The attorney I contacted worked in Boston for a large accounting firm. That made me more comfortable because he knows both sides of the taxation situation for us. I found that all income is taxable here -- even distributions from a Roth IRA, which are not taxed in the US. The process was easy. He provided a tax organizer document similar to the one I was used to using in the US which listed everything we needed to provide.

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