New taxation law for residents with a UK pension

The Spanish taxman do cometh. Anyone that is resident in Spain and gets a UK pension must declare it to the Spanish taxman. Spain wants the tax, you should not be paying tax in the UK, it should be paid in Spain and reclaimed from HMRC. Chances are if you only have the old age pension there will be nothing to pay as you have personal allowances, but it must be declared. Spain has put 'exceptional circumstances' to pensions, they are going back to 2010 - but by declaring you will not be fined. Also they are looking at people living in Spain that have homes in the UK.

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Sorry Crown pensions tax is paid in the UK. But and there is a big but...it must be declared. If you work here and have a Crown pension it is added to your annual salary. No tax is forthcoming for the Crown pension, but it may put your annual income into a higher tax bracket.

Not new for us, we have been declaring U.K. pensions for many years. Anyone who is a fiscal resident, residing in Spain for 183 days in a year, should declare all worldwide income annually.

In 2012 Modelo 720 was introduced, for foreigners, requiring declaration of overseas bank accounts and investments over 50,000€, plus all overseas property plus value when purchased.

I agree Hepa. You should have been declaring UK pensions to the Spanish authorities, but a lot of people resident in Spain have not been - I should imagine a lot of people have done so innocently as they may have paid tax in the UK or come under the UK taxable threshold. It has now become compulsory to do so. I did a 720 form back in 2012, I have not been obliged to do one since has none of the categories that I declared have increased by 20,000 euros. I have found out though that the 20,000 euros increase is not a yearly increase. The 20,000 euro increase applies to the value declared on your last 720 form.

Where do I go to get the Modelo 720 to complete the declaration of my pension.

Unless you are over 50,000 € in investments income, bank accounts, or property abroad, you do not need to complete the 720. however if you are residing in Spain for 183 days or more, from Jan to Dec., you will have to complete a tax return. I get an accountant to do mine for me, yes it costs, but it is done right and that gives me peace of mind.

You do not need the 720 form for the declaration of your pension. This is on your annual income tax form. If you declare it this year, for 2014, and then you have to pay complimentary tax for 2010 onwards, you will be OK. Get an accountant to do it, mistakes are so easy.