UK CROWN PENSION TO BE DECLARED IN SPAIN THIS YEAR

But it is like this, and Spain presumably likes it that way. Anyway, I have no interest in developing Spain's economy or changing the way it does things. That's the EU's job, isn't it?! 

P.S. don't answer that, I am being facetious. 

** EDITED - Against forum rules **

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Regarding how Law firms deal with international tax matters. The specialist in international tax matters can be an in-house professional or an external tax advisor. Of course every advise the LawFirm gives and is paid for ( regardless how it is formed), is part of his due diligence liability. 

Brought forward for the info of those affected.

For those with Crown Pensions, who are not aware

Such pension (previously ignored in Spain) as from last year, must be declared to Hacienda so they can be ‘taken into consideration’ when the tax due in Spain is calculated. 

Although such pensions cannot be taxed in Spain, as a result of mine being 'taken into consideration' I paid 150% more tax, on the same total income,  than I had paid the previous year.

As an interesting? adjunct to John's reiterated point about the treatmnent of previously ignored UK Government pensions, I can mention that my own gestor was at a loss regarding why my pension was exempt from Spanish tax. It was not until we read both the English and the Spanish versions at the same time that she realised that the important phrase was "a non-Spanish national" Thus she came to understand that my pension, although taken into account in calculating the gross total income in order to allow whatever allowances pertained, the sum of the pension was then entered as exempt (in box 47). From then on she got it right! Maybe other Gestors would be helped in their understanding the intricacy of the dual taxation agreement by following the same route.

Judging by these posts it would appear that gestors are next to useless when it comes to tax affairs, so why are they employed to do tax returns then?

Marcbernard: ..................... the sum of the pension was then entered as exempt (in box 47). 

There is a typo there, it that should read ''box 470''.

If one has a Crown Pension, and you are in doubt if your professional got it right last year:   Check your copy of the declaration.  If your gross pension is shown correctly in box 470 then all should be OK as far 'taking the crown pension into consideration' is concerned

If that figure is wrong, or you do not see box 470 printed on your copy,  it means your professional has got it wrong  (the box does not appear if it has not been used). 

I have just made my tax declaration for income in year 2016,

The box for showing the amount received as a Crown Pension has changed from box 470  to box 480,

So those affected need to ensure that their gross Crown Pension is shown in box 480 so that the 'spread sheet' contained within the form, will correctly calculate tax due

It's not irrelevant. Tax is not taken from it but it is added to your other income to give the level of tax you have to pay. 

Mariedav_:-  :  It's not irrelevant

Well that shows you are not affected

In 2015 I paid 1,100 euros tax,  Last year, and again this year, with the same overall income, as in 2015,  but with my Crown Pension ‘taken into consideration’ I paid just under 2,900 euros.

A 150% increase in tax is pretty relevant to most.

Sorry johnzx, did you actually read what I posted. "It's not irrelevant" as in that means it is relevant. If I'd put it's irrelevant (like the person I was answering to did) then I could understand your reply. As I didn't, I can't.

Sorry Mariedave, I misread your post,  having been influenced by a mischievous previous post, which has since been removed.

Hello all, new to EyeonSpain so please forgive my massive naivity etc

May I ask something below please?

I've yet to experience the issue with decalring a Crown pension when (if) I plan to reside in Spain...I'll recieve a military pension, so excempt due to DTA (in theory) 

But if I dont have another income, as I plan to buy outright so no mortgage or rent, I take it I wont pay tax at all if this is my only source of income and the Crown pension is exempt?

Thanks in advance

RC

RC2017    Your Crown Pension is taxable only in UK.  

If you do not have any other income worldwide, or own any property worldwide in addition to your principle home in Spain, then you will not have any tax liability in Spain.

Re Crown Pensions,  see Article 18 here:-

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507409/spain-dtc_-_in_force.pdf

Hi Johnzx....thanks and veyry much appreciated for the reply, cheers

Thats good to know, reading other posts though seems that the Spanish authorities are still combining Govt Pension with income from say a property rented out in the UK...hope they clear this up and will just tax on income only not pension too

Any idea on the way they tax you on 'savings' please? I mean you get naff all interest anyway!

RC

RC2017         The rules about where tax must be paid are clear.  The problem is that some do not want to accept them and seek ways to ‘do it their way.   That leads to confusion and thus they often make misleading posts.

I am aware that some (in my personal experience that has been all) professions do not understand the rules and that the Hacienda helpline, available only to professionals, also give wrong and conflicting advice.I overpaid almost 3,000 € to Hacienda last year, despite arguing with my gestor and telling her she was wrong.  A friend in Hacienda confirmed I was right but until now, just over a year, Hacienda have not refunded the over payment.  However, my gestor has given me the almost 3,000 €  on the understanding that it was her fault I overpaid and that if I ever get a refund I can give her the money back,  This year, with me breathing over her shoulder, she got the declaration right.  I still paid a lot more tax that I did on the same income before Crown Pensions were 'taken into consideration.'

You ask about tax on savings.  As I said one pays on income, so there is no income tax on just having savings, although in simple terms if one has assets located outside Spain, in excess of 50,000 euros these must be declared  on form 720 by March of each year.

For resident who have assets, including property, in excess of 1 Million euros, there is a small wealth tax in addition to income tax.  However if one is in that category I would think they should get good (expensive) personal advice.

Just on Crown Pensions. 

                                         There is nothing on the P60 to show it is a Crown Pension, thus professionals in Spain have no way of knowing. That too leads to confusion.   That some Crown Pensioners do not understand the situation also leads to confusion that could result in that pension being taxed in Spain. I know of one case, a retired PC,  where that happened. I met the gestor, explained the rules. She called the Hacienda helpline and eventually what I had told her was confirmed: She revised the Declaration and he got a reduced tax bill.

                                         I have requested HMRC (and the company who administer my Crown Pension) to indicate on the P60 but they say it is often difficult even for HMRC to know who is a Crown Pensioner and who is not. I do not understand that ‘explanation.’     I have also asked the national associations who represent retired police officers, civil servants, military,  teachers etc. to push so that their members get P60's showing they are paid Crown Pensions. They were all as helpful as the Spanish institutions often are !

‘’I overpaid and that if I ever get a refund’’

That’s a confidence builder!

Hi John,

What an amazing gestor you have then if she reimbursed the difference due to he rmistake eh?

I take it they NEVER pay you back if overpaid or owed? Even the HMRC do that!

At the moment I'm looking at below 50K Euro anyway so should be OK but I will most likely rent a property out here in UK but wont get much income due to it just covering the mortgage

I imagine then will be liable for tax on the income on this...only recieve about £150 if lucky post mortgage costs...then if they leave my Crown Pension alone (hopefully)...wont be too bad over there

Thanks again

RC   What an amazing gestor you have then if she reimbursed the difference due to her mistake eh?

It was not quite that simple. 

Like many professionals in Spain she is not really up to the job.   The difference in my case was that I knew she was wrong and I explained to her where and why she was wrong.    I also knew she had failed to reply to communications from Hacienda which would have resolved the over-payment for me (I have a friend in Hacienda., nudge, nudge, wink, wink ! )

Thanks to all the very helpful comments on the DT and Crown Pensions. I think I am finally getting my head round this. Deliberating whether or not to apply for Residencia so important to know how this would affect me financially. Only one tiny point I need to clarify and I'd be very much obliged if anyone could confirm. I understamd the method the Hacienda use to calculate your tax in Spain. However when using the marginal rate tax calculated, I take it this is on the whole Spanish Tax Income withour any Personal Allowance?

TIA