UK CROWN PENSION TO BE DECLARED IN SPAIN THIS YEAR

Hi.Ann 

In effect what you say is correct, however, that does not always seem to mean one will pay more tax.

Before the DTA of 2012 between Spain and UK came into effect, that was when CPs were totally ignored, I was paying around 1,100€ p.a. income tax in Spain.  Three years ago when they ‘euphemistically’ said CP's  ‘would be taken into consideration’ but that would not mean paying tax on them in Spain, my tax bill has increased to around 2,800€ p.a.  I still have a very similar income as previously.   I pay around 29% on all my income ¡excluding my CP   I still pay the same tax as before in UK.

I have a friend who was a Chief Petty Officer in the Royal Navy so has a CP, his tax bill has not increased.  We use the same gestor and I have discussed with her why my friend’s tax has pot increased whilst mine has, and not surprisingly (she is a Spanish professional ! ) she is unable to explain but says she enters my friend’s and my income details using the same MO, boxes etc.  

I guess you know deciding whether to become resident in Spain (not Residencia  that is for non E U nationals only, may apply after Brexit though) whether you are or not is decided by what you do.  Example, if you move your main home to Spain, or your wife and children live in Spain, you are automatically tax resident. If you spend more than 183 days in any year in Spain etc.  Thus not exactly maybe what one would choose given a free hand.

Best of luck,  John

PS  Quote I understand the method the Hacienda use to calculate your tax in Spain.

Having been present on several occasions when either my gestor or a couple of others have called the Hacienda helpline dedicated to assisting professionals, I know many of them, just like many professionals,  do not know !

Sorry for the delay in thanking you for your reply, Johnzx.

Still not sure if, after calculating the % that you're to be taxed at in Spain, as previously outlined, you apply this % to the total income figure of SP and CP, less your Spanish Taxable Allowance or not. 

Does anyone know? 

Hi annac

If you are in the unique situation where as you state ‘’ Deliberating whether or not to apply for Residencia’’ I suppose it may be in your financial interest not to become a Spanish taxpayer. Are you a foreign diplomat or foreign crown servant? Perhaps you could explain further.

Ann as I understand it, you cannot be required to pay tax on the CP in Spain,  but of course on all other income, worldwide, you willbe taxed at the marginal rate.  You will have used up all your tax free allowance in UK so, again as I understand it, you will be taxed on all other income.

Of course if you meet the requirements of being considered tax resident you are tax resident. The only possibility to avoid that is not to live in Spain or spend more than 3 months nor more than 183 days in a year, in Spain.

Best of luck     John

PS Of course Breixit  might resolve it for you !!

Thank you everyone:) It's been a while.

I am now a resident in Spain since June 2019 and am currently back on the DT/CP trail.

It would appear that if I do not receive the Spanish Personal Allowance, (the UK  PA will apply to my CP), and I understand that I don't, unfortunately I am going to be worse off by about £410.00 per annum. Not a huge amount but then the total of both pensions is not a great amount. 

Not a lot that I can do about it, but doesn't seem fair :(

Sorry Ann I am not sure I understand your post in that you will be 410 € a year worse off.

Assuming DT is double taxation, PA is personal allowance and CP is crown pension.

If you have a crown pension, no matter where you live, including Spain,  that pension can only be taxed in U.K. where you will get the tax free allowance.  You must declare that pension in spain if you live here.   That income is not taxed again, so no double taxation, but it may affect how much tax you pay on any other income that is taxed in Spain.  You will not get another tax free allowance in Spain.

 There is nothing unreasonable nor unfair about that.  In fact what was unfair was that until 2015 crown pensioners living in Spain had two tax free allowances,  and were liable to be taxed at a lower rate than non crown pensioners. My tax rate, after the tax free allowance was deducted, used to start at 19%.  Now without the (second)  tax free allowance, I pay at the rate of 29% on all of my other income, including my OAP, Christmas bonus,  investment income from U.K. etc. That is because the crown pension is `taken into consideration´when the marginal rate of tax is calculated.
 

 Those with U.K. income who live in spain, who get any other pension, are taxed only in spain.  In that situation they get the tax free allowance in Spain. 

I hope that answers your post .

PS. I just saw this 

https://www.citizensadvice.org.es/faq/nhs-pension-government-pension-for-tax-purposes-not/

extract:-

Crown pensions :  For RENTA 2016 (declared in 2017) it was box 480 (where the gross amount of the crown pension was entered on the spanish tax declaration) ) but this can vary from year to year.

Since January 2015 UK Government (employment) pensions are decarable for setting the % rate on residual income - but not directly taxable in Spain (ha, ha:  in a way they are  - indirectly )  Well, it is not working in a uniform way across Spain. I have been severely penalised for 2014 (Almeria) - a year when these pensions were not even declarable - I tried  telling Tributaria, or even HMRC !!

* does the tax consultant have the latest software ?

* is box 470 the correct box and does it have to be selected from the database and inserted into the modelo100 form?  (verifiable answers would help everyone - I am still confused by different answers of several 'experts' )

* have these pensions been muddled by experts and denoted as a UK Pension Annuity - which IS taxable, and in my case I think that is what happened.  

* Watch out !!!!! scrutiny of HMRC records on submission of Renta 2021 listing the 2020 income will also focus on 2016 ( the now notorious 4 year catch up with ujnfettered access to HMRC records - as Uk is now a 3rd Country ) -- so --- as well as completing the Renta 2021 ----- advise to review 2016 with the agency who completed the 2016 return.

Many use the term Crown Pension  -  the UK pensions involved,for (hopefully) box 470, as well as the (Crown) - Civil Service, are Armed Forces, Police, Fire, Teachers, Local Government and some NHS workers but not nurses.

Final point -- did anyone look at the wording of Article 18.1 UK, and Articulo 18.1 Spanish language with the Tributaria english translation - they are different in words and meaning. Articulo 18.1 is really only for Spansih Civil Service. Put you Uk government pension in that CIVIL SERVICE box and it could be rejected, as, on scrutiny they will not find Little Puddleton Town Council listed !!!   

good luck everyone. Answers expected - or perhaps not ?   Ian

I have a crown pension.  

In 2014, a friend in Hacienda, made enquiries within his organisation to confirm how the CP should be shown on the declaration, to ensure no error.

For each of years 2014, 2015 and 2016, I have been required by AEAT (hacienda) to prove that the sum I showed as my CP was such.  Each year I have obtained a letter from pension managers, confirming the pension status.  My gestor then sent a translation to the tax office

This year, in relation to my income for 2016, AEAT, despite me taking the same action as previously to prove the pension, took over 4.000 euros from my bank account.  My gestor almost immediately reimbursed my account.

In 2014 when CPs first had to be declared in Spain, I tried to get some official a action to prevent further problems for me and others in my situation. I wrote to the U.K. government signatories to the 2013 Doubke Taxation Agreement, and the professional bodies representing other such pensioners, including the police, civil servants, military, firemen, etc.  Only the police replied and they in effect have done nothing.

If anyone knows how I, and others like me, can get 'officialdom' to fix the problem I should be grateful.

PS. Beiderbeck.  

Re which box.

I know the box in 2015 changed from that in 2014.  Not sure it has remaind the sane since.

I submitted my tax return last year. My Gestor stated that as I had a police pension I needed to obtain a letter from the UK Tax authorities stating that this tax was ONLY taxable in Spain under the article 18 agreement. This I did.  The letter was duly apostiled and along with all my income etc submitted to the Hacienda.  I was further informed that my UK OAP that IS to be taken into account in Spain was under the Spanish tax threshold (14k) and therefore need not be declared in the future.  Incidentally my wife has recently (March this year) contacted the UK tax auths.to obtain the letter which is winging its way to her now.

It might be advisable to visit the UK Gov website and review all those types of Gov jobs, as not all of them are tax exempt under the agreement, but your UK tax advisor should be able to clarify this

This is the list of those who receive a crown pension 
 

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