Cost of Living in Fuerteventura

[FVmouse]

Is that income before or after Spanish income taxes ?

That's a good point, I've assumed UK taxes.

Obviously not a correct assumption. When in Rome one needs to do as the Romans do so worth researching the differences.

It’s always wise to be legal as far as tax is concerned especially in the new normal when tax take will be more important to nations than ever. Laws will be tightened no doubt so if you’re making the move do it properly would be my advice.

And don’t confuse what you want to be the case with reality. Stuff needs to pass the smell test so if you’re living somewhere you’d better have a really good reason why you’re not paying taxes there. Common sense really. Smell test.

[Pete Garyga]

Is that income before or after Spanish income taxes ?

That's a good point, I've assumed UK taxes.

Obviously not a correct assumption. When in Rome one needs to do as the Romans do so worth researching the differences.

It’s always wise to be legal as far as tax is concerned especially in the new normal when tax take will be more important to nations than ever. Laws will be tightened no doubt so if you’re making the move do it properly would be my advice.

And don’t confuse what you want to be the case with reality. Stuff needs to pass the smell test so if you’re living somewhere you’d better have a really good reason why you’re not paying taxes there. Common sense really. Smell test.

As we'll both be received what are classified as government pensions - for the purposes of the pensions articles of the Double Taxation Agreements (DTAs), I think the assumptions are okay?

https://www.gov.uk/hmrc-internal-manuals...intm343040

Not sure how DTA will change post brexit, it may not change at all though as my understanding is the each DTA is agreed between the countries directly.

If you have any experiences to share I'm all ears.

[FVmouse]

Is that income before or after Spanish income taxes ?

That's a good point, I've assumed UK taxes.

Obviously not a correct assumption. When in Rome one needs to do as the Romans do so worth researching the differences.

It’s always wise to be legal as far as tax is concerned especially in the new normal when tax take will be more important to nations than ever. Laws will be tightened no doubt so if you’re making the move do it properly would be my advice.

And don’t confuse what you want to be the case with reality. Stuff needs to pass the smell test so if you’re living somewhere you’d better have a really good reason why you’re not paying taxes there. Common sense really. Smell test.

As we'll both be received what are classified as government pensions - for the purposes of the pensions articles of the Double Taxation Agreements (DTAs), I think the assumptions are okay?

https://www.gov.uk/hmrc-internal-manuals...intm343040

Not sure how DTA will change post brexit, it may not change at all though as my understanding is the each DTA is agreed between the countries directly.

If you have any experiences to share I'm all ears.

In that case you are good to go. You still need to declare the income in Spain so that the Spanish income tax allowances are used up as otherwise you would receive tax free allowances in two countries, but the pension itself should only be taxed in the UK.

You are fortunate that as a result of the DTA you get to use the more generous UK allowances and tax rates against the pension rather than the less generous Spanish ones applicable to UK non-government schemes.

Brexit and COVID permitting of course.

[Johnrgby]

You are fortunate that as a result of the DTA you get to use the more generous UK allowances and tax rates against the pension rather than the less generous Spanish ones applicable to UK non-government schemes.

Brexit and Covid permitting of course.

 I am a little confused here, we have combined UK government pensions circa £17500 p a, are you saying that tax should be could be paid on this in the UK? I also have private pension which I never touch that is paid into an investment account in the UK, what would happen if  I decided to move the income from that over to here?

[Cotillo_Tom]

My understanding is,  any pension which originates in the UK is subject to UK income tax. Yiu are unlikely to pay any tax on your state pension, as it is less than the UK tax allowance. If you have a second pension, you are most likely to pay UK tax on that, assuming your combined state pension and second pension exceed £12,500 p.a.

You will also declare that income in your Spanish tax return as Spanish tax allowances are somewhat lower. You will be given "credit" for the UK tax you have already paid (phew, that's the good news).

Tom.

[TamaraEnLaPlaya]

This was sent to a friend the other day from a Spanish tax advisor:

You are a Spanish Tax Resident because your permanent home or usual place of abode is in Spain. According to the Spain-UK Tax Agreement, a Spanish Tax Resident that receives Private Pensions from the UK must declare that income ONLY in Spain and according to the Spanish Tax Law, and then the UK will implement the measure to avoid the double taxation. The meaning of this last sentence in bold letters is that the UK must stop taxing you at source on your pensions and refund you all the tax they have previously taken since you live in Spain. How does HMRC do that? You need to fill the form that I have attached and obtain a Spanish Tax Resident Certificate.

I suggest that anyone living here, or considering it, should consult a professional Spanish tax advisor and not try to interpret the rules themselves! My friend had thought that because they did UK tax returns, and declared on that that they lived here, they were doing the right thing!

[Cotillo_Tom]

I stand corrected by Tamara, but the information was given to me by a Spanish Tax Advisor. I might just have to re-think going back to her!!!

[Johnrgby]

My understanding is,  any pension which originates in the UK is subject to UK income tax. Yiu are unlikely to pay any tax on your state pension, as it is less than the UK tax allowance. If you have a second pension, you are most likely to pay UK tax on that, assuming your combined state pension and second pension exceed £12,500 p.a.

You will also declare that income in your Spanish tax return as Spanish tax allowances are somewhat lower. You will be given "credit" for the UK tax you have already paid (phew, that's the good news).

Tom.

My state pension is slightly over that apparently back in 1960/1970,s I should have opted out of something or other, but didn,t, and receive an enhanced pension Uk income tax on this is under £100 annually, so not a problem and my income from my private pension is received tax paid and invested in an investment account, so technically I have no income from it, this was set up for me in 2011, but I am beginning to think I will need to get some professional advice.5 ju

[DavidP]

I read with interest the two different scenarios from Tom and Tamara.
Every ones tax situation is unique,you might think you are the same as someone else but a little nuance that you could not have imagined will change things.
I consulted 2 Spanish advisers, 1 English,HMRC and the tax office in Rosario. Each one gave me a different answer.
I thought my situation was very simple.BUT!!

I went with the local tax office advice
I will not put any advice here as it might be totally wrong.

[Tardis]

We are compiling our Spanish tax returns right now.  Our Spanish accountant has told us that as we are resident in Spain, we must declare our worldwide income and wealth here.

This includes:

UK state and private pensions
UK bank interest and other investments
Income from holiday lettings.  Photocopies of passports and names of the 2 people who have paid the most in rent.  The likes of Airbnb & HomeAway are now legally obliged to inform the Spanish tax authorities how much they have paid you.