Spanish tax on UK pension lump-sum payout

[DelParticipant]

Dear Mark Stucklin,

In your home-page, you refer to how the Spanish tax system taxes UK lump-sum payouts in Spain. I believe you indicate ´The total value – minus the premiums paid – then 60% of the result taxed at 19%. I have seen a similar explanation on internet, but with completely different figures. However, I have refered to the ´in English´ version of the Agencia Tributaria Website and cannot find any reference to lump-sum taxation – this could be because not all of the ´in English´ site is in English and I do not have Spanish. I have also spoken with a Spanish aquaintance, who is certain that lump-sums are taxable in full.

Would you kindly confirm that your information is correct/up-to-date and where/how it is referred to by the Agencia Tributaria? Of course, if there is anyone else with information regarding the subject, I would be grateful for your comments also.

Kind regards, Victor Derek Bridger

[Mark StücklinKeymaster]

Victor,

I don’t write about cross-border tax issues because I don’t have the qualifications to do so. You may have seen something written by one of the specialists I collaborate with, but I can’t find any reference to the text you refer to. Can you find a link to the article and post it here?

Thanks.

[freddoParticipant]

 

Lump sums

Pension lump sums are fully taxable in Spain if received while you are a Spanish tax resident. So if you wish to protect a lump sum from Spanish income tax, you should receive it before you become a resident of Spain. Alternatively, if you believe you will qualify for the much reduced annuity taxation system, you may be better off not taking a lump sum at all and having a larger pension.

 

 

• This reply was modified 2 years, 5 months ago by  freddo. Reason: error

[Chris NationParticipant]

I can, in a 2nd hand sort of way, confirm Freddo’s first sentence. On a forum on this subject elsewhere a woman made a lump sum draw-down after becoming resident. The result was a 5-figure tax bill. In some ways, a nice problem to have but one she’d rather not have had.

• This reply was modified 2 years, 5 months ago by  Chris Nation.

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