i am moving to spain, have bought a villa, i will be on my early retirement pension from april 2007, i will be living on my savings till then, what taxes will i have to pay?if my pension is taxed at source in the uk, do i have to pay spanish tax, on the pension?i have an nie number and am registered at the local town hall,

ian . 18/7/06

Yes. If you become a Spanish Resident (or if you stay for longer than 183 days), you will have to pay Spanish income tax. This is higher than UK income tax. If you have already paid UK income tax on your income (ie pension and perhaps interest on your savings for example) then this will be deducted from what the Spanish tax man wants. You pay the difference. Spanish income tax is higher than the Uk’s. I am tempted to say much higher - it is for me anyway! Don’t let anyone tell you otherwise. It’s still great to live here though!

Spainbound - 18 July 2006 11:55 PM

Yes. If you become a Spanish Resident (or if you stay for longer than 183 days), you will have to pay Spanish income tax. This is higher than UK income tax. If you have already paid UK income tax on your income (ie pension and perhaps interest on your savings for example) then this will be deducted from what the Spanish tax man wants. You pay the difference. Spanish income tax is higher than the Uk’s. I am tempted to say much higher - it is for me anyway! Don’t let anyone tell you otherwise. It’s still great to live here though!

hi ian,ii will moving to spain soom as i have bought a villa there,although i am not retired i will be living on interest on savings kept in the uk,i understand you say,is it better to keep savings in uk as you get much better interest?,also as i pay tax on savings in the uk deducted at source i understand i wil pay the difference what i owe in spain after allowing for what i have paid tax for in the uk,i hope it is not a lot more otherwise the dream will not be worth it lus i understand you have to pay a wealth tax too?.

prince

ps is it worth getting advice here from an international tax consulatant in the uk prior to going to spain?,or waiting until i get to spain,i know i wil have to get one gestor when i get to spain anyway.

Hola Prince,
1. You do get better interest rates in the UK at the moment. 2. As you say you ‘only’ pay to Spain the difference between the UK income tax and the (higher) Spanish income tax. But in my case it was a fair old difference and really needs throwing into your eqation. It’s not hard to work out really, unless you have a complicated situation. I have to confess that I did not work it out, and it came as quite a surprise!
Yes there is a wealth tax but the free allowances are good. I understand the figures are about 108,000? (ie 216,000? for a couple) on worldwide assets, and 150,000? (300,000? for a couple) on the declared value of your Spanish property. The figures for wealth tax and also for income tax rates are easily found on the web. But yes, this is just me talking and quoting from my own experience; you really ought to take advice - there are other things to consider, for example if you have a mortgage you can get tax relief on it, and you also get a (slightly) better personal allowance if you are over 65.
All of this supposes that you spend more than 183 days a year in Spain and therefore become a resident.

YOU only pay tax in your primary country of residence. Suggest you hit the UK tax web site to get the appropriate forms - FD9 and take it from there. Good luck. Just realised you can attach so you might find the FD9 - no go attachment to large!

“YOU only pay tax in your primary country of residence. Suggest you hit the UK tax web site to get the appropriate forms - FD9 and take it from there. Good luck.”
I (capital I) paid tax in UK and the excess in Spain, as I explained. This was my first taxation year in Spain. So I paid in both countries (the ‘large’ amount to the UK, and the excess to Spain.) However what ROBI says is right in the sense that if you do complete FD9 (UK tax form) you are saying to the UK “I now have residency in Spain, so I now want to only pay tax in Spain.” The net (cost) result should be the same but having sent off FD9 you pay all the tax to Spain. I have just sent off FD9.

Rider to Ian’s earlier question. Am in early stages of evaluating possibility of moving retired residence from UK to Spain and have read most of correspondence already posted on the tax matter. Not a happy read overal!!  My question is income nature specific and Spanish taxes. Most of my income post retirement comes from insurance company wrapped bonds - mix of on shore and off shore comapnies/ holdings. Under UK income taxes, I may draw down 5% of such holdings per year - tax free (if I am a low rate tax payer,) or deferred tax if a higher rate tax payer. Tax man views such draw down as progressive reduction of capital even though idea is most products yield more than 5% so in effect living off intrest.  Anyone know how Spain treats such income flows, since they are zero taxed in UK. Lets just say any answers could be crucial to a complete re think on moving to Spain!!!! Related question is just how long would one have to spend in Spain per year to be caught in Spanish tax net versus remaining in UK tax system?
Many thanks
David

Hi I read recently that the wealth tax has been declared illegal by the EU if you are an EU member country citizen, where can I find further info on this subject ? Anyone else heard about this.

Hi Simon,
When I saw your post I checked into it. In the news headlines over the last month there hasn’t been anything about this. Where did you hear about this? I find it somewhat unlikely as it would make a big dent on the tax incomes of Spain, France and Germany, three of the powerhouse states of the EU…