Tax in Spain on 25% lump sum payment from private UK pension?

I think that if you do a tax declaracion here you must list all income, including the lump sum - which although tax free in England (under their pension rules) will in fact be taxed here. However your allowances will help offset the tax.

OK, thanks - I feared as much. Another little example of how moving countries can never be straight-forward!
I think, then, that the best course of action is to limit the cash lump sum to just below the level of my exempt allowances here.

Can anyone advise if I need therefore to submit an individual return?
The joint return has never yielded a refund for my husband, but did help when we sold a villa at profit and bought a finca instead.
I presume it is possible to separate them, if necessary?

To be honest if your husband is still a UK tax payer I don't see how you can file a joint return here - but take professional advice it is always worth it.

Regarding your pension, the lump sum is free of Uk tax. So it will be recieved in the Uk and you can do whatever you like with it and not need to worry. The pension is classed as taxable income in the UK. When you complete the papers to draw your pension, your pension provider will automatically notify the UK inland revenue. Your total income is then assesed for tax in the Uk using your personal tax allowances. The money usually is paid into your UK bank account and again you should be able to do whatever you like with it as you should not be liable for double taxation. You will have to give the inland revenue your address in Spain and then you will recieve annual documentation telling you of any liability you may have. Although you live in Spain and may be resident you are still domiciled in the UK. If you are working in Spain, when you do your taxes you can tell them about the pension income but you should not be liable for any further tax. Hope this helps.

So what are you saying ? The lump sum is free of both UK and Spanish tax ?

The Tax frre sum in the Uk is tax fre and the pension is taxable as income. In Spain both the tax free sum and the pension can be classed as worlwide income and could be subject to tax although they should not be. This means that depending on the wording on the pension contract and the amount of pension, and then the opinion of the Hacienda it may or may not be subject to tax. It gets complicated in Spain.

"The Tax frre sum in the Uk is tax fre and the pension is taxable as income. "

Yes I think we have established that -

So on that basis why would it be free of tax in Spain ? (unless you mean the persons allowances exceed the income then of course any income is tax free) - the only pensions 'free' of tax are annuity based which can (subject to various terms and conditions) attract a higher rate of allowance which nets down the tax due.

In my experience the Spanish hacienda are very well organised and in my case produced a huge book which appeared top contain all of the UK annuity schemes and other related information.

cookiecrew says that she would recieve 1500 per year. If he/she is not working using the tax allowance she hopefully will pay no tax. If he/she is working it will be added to the income for tax calculation

OK thanks.

I think it is fair to say that in this particular case there will be no tax to pay. However, if you have a larger pension fund you should take advice. There are variations in how local Hacienda inspectors interprut the rules.

you can avoid paying tax alltogether with a QROPS pension transfer



> Hi - I have been resident in Spain for six years, and file a joint return here with my husband. He still works in the UK as a firefighter and is taxed there, although he lives here for many more than 183 days per annum. There is no tax to pay here under the double taxation agreement.

I am considering taking my small private pension fund - with a 25% cash lump sum that would be tax-free in the UK and then a small annuity each year (around 1500 GBP).

Is the cash lump sum taxable here in Spain? I know I need to declare the annuities, but they will be below my allowance limit. Would the joint declaration cause me problems?
It seems to be so hard to track down information here without paying for professional advice - which I am prepared to do when I have determined the best course of action, but not before!

Thanks to anyone who can throw any light on this!

Deb

Perhaps the above poster would like to clarify and re-assure forum users that they are both experienced and have expertise in matters of UK Pension law ? We would also be very grateful if you could confirm your regulation status in both Spain and the UK ....

.

Please correct me if I am wrong, but my understanding is that to give financial and investment advice i.e. what in the UK we would a call an "independent financial advisory firm" / "Independent Financial Adviser" the firm needs to be registered with the CNMV (Comision Nacional del Marcado de Valores) and to SELL products you need to be registered with the DSG.

The DGS is the regulation used by insurance companies - but this only allows them to sell and advice on insurance products but not to give financial nor investment advice.

Hi there,
can you inform me how you are regulated and registered with CNMV, DSG ets including the registration numbers.
Thanks

Tumbit is not regulated in anyway because do offer advise on, or sell, pensions or any other financial investments.

After having seen your website, you recommend and refer people to companies for currency, funeral plans, QROPS as well as insurrance, tax advisors, etc, for commission by any chance???

Yes, that is correct, we refer but do not advise.

No different from us then!