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I am having problems with hacienda. I am a police pensioner and therefor I receive a UK government pension. I have no choice but to pay my income tax in the UK. This is covered by the duel taxation treaty which covers the Euro zone to protect people from being taxed twice on the same money..... but not tenerife! it would seem they have decided (or one of the inspectors has decided) that I must pay tax here as well!
Is anyone else in the same boat? and what did/are you doing about it
Government service pensions
If you become a Spanish tax resident, then your pension income will be liable to Spanish income tax.
There is one exception, however: if you have a pension from government service (eg, civil service, local authority, fire service, police, certain teaching posts, but not the NHS) then your pension remains liable only to UK tax and not Spanish tax.
You may be able to avoid this if you are a Spanish national or if you “transfer” your pension to a private scheme, and this is likely to be advantageous as you will read below. You may be able to transfer out as long as you have not reached the age of 59 or commenced the pension. Pensions specialists can assist you with this important decision.
Some Spanish tax inspectors seek to add the UK Government service pension to your other income in order to determine the tax rate on that additional income. So the UK pension remains tax-free, but you end up paying a higher rate of tax on your other income. This is wrong. The Spanish tax inspector should be referred to their head office as the UK Government pension simply does not exist for any Spanish tax purpose.
Note that the UK state pension does not count as a government service pension and is therefore tax-free in the UK, but taxable in Spain. It will be paid to you in Sterling but you can have it transferred into your Euro bank account in Spain if you wish.
So, it sounds as if your Gestor/accountant needs to try to appeal this.
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Thank you Doreen you have just confirmed what I thought. When we first came here we were advised by the Hacienda and an accountant that we didn't have to pay tax or make any declaration in Spain. As my pension is my only income. But we did register with the Hacienda, as hacienda requested. We had no problem until we recently sold our house and bought another one. We declared the profit, and as the house needed a lot of attention deferred the tax payable for two years (the law has since changed) That was the start of our problems!
We had no problem until we recently sold our house and bought another one. We declared the profit, and as the house needed a lot of attention deferred the tax payable for two years (the law has since changed) That was the start of our problems!
I thought you did not have to pay tax on the capital gain of the sale of your house if you reinvested the amount fully in another house (in Spain) within two years, and that that also included major repairs or in fact building your own house. Also, there are further exemptions for the over 65's who have owned for more than 3 years (but I think that is classed as a "fiscal" resident for 3 years)
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Quite right, but you still have to declare the profit made in the first year after the sale (thats where we made a mistake thanks to the unhelpful advice from the HACIENDA!). The tax payable is then deferred for a further year. After which you only pay tax on the amount you have not reinvested into the new house. But you must produce receipts for work done.
The two year rule can be extended if the work is not completed.
Quite right, but you still have to declare the profit made in the first year after the sale (thats where we made a mistake thanks to the unhelpful advice from the HACIENDA!). The tax payable is then deferred for a further year. After which you only pay tax on the amount you have not reinvested into the new house. But you must produce receipts for work done.
The two year rule can be extended if the work is not completed.
Is this only if you are resident in Spain rather than based in the UK?
Is this only if you are resident in Spain rather than based in the UK?
Yup - sorry about that acmar. No roll over relief for non residents. You will pay CGT at 18% on the profit, but in fact, 3% of the total sales price is withheld and it is up to you to claim it back if it is more than the 18% tax would have been.
Yup - sorry about that acmar. No roll over relief for non residents. You will pay CGT at 18% on the profit, but in fact, 3% of the total sales price is withheld and it is up to you to claim it back if it is more than the 18% tax would have been.
Is this only if you are resident in Spain rather than based in the UK?
Not fully sure but I think that if you make any money 'in' Spain by investments, working or property speculation then it will be taxed 'in' Spain wether you are a resident or not. But this is an uneducated guess!
One thing is for sure do not go to the hacienda help desk for advice. If you have to, go with an accountant or other witness, take a camera to photograph the person giving you the advice get them to write the advice down and sign it. get a recording of there voice........thats if you have not been thrown out already, and after all that they still will not admit that they spoke to you
Government service pensions
If you become a Spanish tax resident, then your pension income will be liable to Spanish income tax.
There is one exception, however: if you have a pension from government service (eg, civil service, local authority, fire service, ....
Fire Service pensions are NOT UK Government. Over half of the UK Fire Services are now executive agencies and set their own income directly on the local rating system. Their pensions ARE taxable if you are tax resident in Spain.
Dual Taxation 
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