Law in Spain

Included in the Draft Tax Reform of Income Tax in Spain for Spanish Tax Residents is a significant modifying rule that could be described as a "second chance" to allow those spanish tax residents who have not declared foreign pensions received to rectify the situation.

The arrangement will allow the submission of additional returns without surcharges, interest or penalties for late payment to spanish resident taxpayers who file the corrective returns within 6 months of the date on which the Act comes into force, effectively from 1^st January 2015.

According to tax office sources this grace period has been granted due to the existence of interpretive discrepancies which have now been properly clarified and that for those non-resident taxpayers who do not rectify the situation voluntarily, it is quite possible that they will be subjected to a campaign of subsequent inspection and may be faced with a substantial tax bill.

Furthermore, if during these months a return is made after its deadline which rectifies foreign pensions received before the date on which this arrangement came into force, no surcharges, interest or penalties arising from it will be charged.

If you have already received a settlement by the Spanish Tax Office in this regard, you should contact your tax advisor, as it is possible that if such a settlement is not final, you may be able to benefit from this provision.

If, however, you have received a tax assessment in this regard, which has already been paid prior to this arrangement coming into force, you may be able to request the cancellation of default interest, penalties and surcharges which have been charged, so we recommend that you contact your tax advisor to assess the most appropriate action for you to take.