Advice on living in Spain, moneywise

Presumably, these are the tax bands after allowances have been deducted from income received.
To complete the picture, do you have the main allowances?

Bee wrote:I took the €22000 from Costa Luz Lawyers so I am sure it is correct. The income must be just from one source i.e one pension. As I read it if the income is from different sources i.e a private pension and the state pension and rental income then it is back to the normal tax bands starting at income tax band of up to €12450 and on up through the different bands.

Currently the Spanish income tax rates are as follows:

Spanish income tax for incomes up to €12,450: 19%
Spanish income tax for incomes ranging from €12,451 to €20,200: 24%
Spanish income tax for incomes ranging from €20,201 to €35,200: 30%
Spanish income tax for incomes ranging from €35,201 to €60,000: 37%
Spanish income tax for incomes ranging from €60,000 to €300,000: 45%
Spanish income tax for incomes over €300,000: 47%

The Andalucia Forum is very good on tax matters. This is their Faq on Income tax. You might glean an extra bit of information from it.

https://www.andalucia.com/forums/viewto ... 42&t=27576

Bee

I still think Bee that the paragraph in your link, referring to the €22000, is all about "legal employment".

Later the blog states: "You can see from this that apart from some wage earners almost everyone else is obliged to make a tax declaration". No mention of pensioners.

Unless we have some members on here who can confirm that they never submit an income tax return, I can't see people who rely solely on one pension being exempt. There must be a very large number of pre-Brexit pensioners, and native Spaniards, who receive less than €22000 per year from one source and they would be able to confirm one way or the other. I am happy to be shown otherwise as I am not 100% on this, it's just what I had previously understood.

RJC wrote:Presumably, these are the tax bands after allowances have been deducted from income received.
To complete the picture, do you have the main allowances?

The main ones are listed in Bee's link.

I don't know the answer Paul. I think the Spanish State Pension is now €1386 per month x 14 months €19404p.a plus the extra payment for a dependent spouse so the €22000 doesn't look too far out. The full state retirement pension is quite good by other country standards. I do see articles about some Autonomous Communities having different less generous pension payments so are the Moncloa figures guidelines and is it up to each Autonomous Community to decide their own.


To RJW the allowances are in the Andalucia Forum link
https://www.andalucia.com/forums/viewto ... 42&t=27576

Bee

From your link Bee and where I think you're tripping yourself up:

"If you are in legal employment you will normally pay the Spanish equivalent of PAYE. If your income is under €22000 and from only one source you are not required to declare but it may be advantageous to do so."

That does not say or mean that no tax is due under that level of income simply that, because of being on a PAYE scheme where tax has already been paid, a separate declaration is neither required nor necessary.

The bottom line is that, save for potential benefits due to age or disability, the tax thresholds, allowances, and rates, are the same for all.

For Paul: My wife is on a low income with just her state pension and after submitting her first return (necessary both to get into the tax system and qualify for free prescriptions) each year since when accessing the tax return web page has been greeted with "No Obligado".

Darro wrote:From your link Bee and where I think you're tripping yourself up:

"If you are in legal employment you will normally pay the Spanish equivalent of PAYE. If your income is under €22000 and from only one source you are not required to declare but it may be advantageous to do so."

That does not say or mean that no tax is due under that level of income simply that, because of being on a PAYE scheme where tax has already been paid, a separate declaration is neither required nor necessary.

The bottom line is that, save for potential benefits due to age or disability, the tax thresholds, allowances, and rates, are the same for all.

For Paul: My wife is on a low income with just her state pension and after submitting her first return (necessary both to get into the tax system and qualify for free prescriptions) each year since when accessing the tax return web page has been greeted with "No Obligado".

OK thanks. I guessed that the salaried employees, and possibly Spanish pensioners too, would pay their income tax through PAYE. This wouldn't apply to UK state pensioners and I'd be gobsmacked if anyone else with an income as high as €22k could legally avoid tax by simply not declaring. The circumstances of your wife I had not heard of, but I can believe that a declaration would not be obligatory for a 'low income' however that may be defined - much lower than €22k I assume. If she was to start receiving income above the threshold from a second source, such as bank interest, which many others must do, she would then need to declare it voluntarily I suppose. In the UK many low earners are reportedly now having to pay tax as a result of the personal allowances not keeping up with earnings inflation, including state pensioners who have received increases totalling circa 18% in the past two years. In any case it is best for anyone new to the system to consult an accountant as it can get complicated.

Sounds to me like a good Spanish financial advisor would be worth the money..

..

Actually Paul for many the net pension increase has been more than 18% and that's because the headline triple lock figure applies only to the basic state pension whereas in fact the SERPS or graduated pension elements also increase, albeit under different formulas.

My increase works out to 9% and my wife's 9.1%.

Darro wrote:Actually Paul for many the net pension increase has been more than 18% and that's because the headline triple lock figure applies only to the basic state pension whereas in fact the SERPS or graduated pension elements also increase, albeit under different formulas.

My increase works out to 9% and my wife's 9.1%.

Interesting. So there's a chance some of the 'no obligado' people will fall into the tax bracket at some point. I wonder how they are alerted to their crossing the threshold if they don't normally declare. They could be illegally evading tax without knowing it. I know my wife's tax liability here increased hugely when she started receiving her state pension (on top of other existing passive incomes).

Yes Paul it was the "income from more than one source" and how it affected the calculation of your tax liability that I found puzzling. It is difficult to know the Spanish tax system when you are not familiar with it. Using our own tax system the personal tax allowances are set so that those on State Pension are kept outside the tax income and similarly with those on minimum wage. Spain looks to me to be quite similar. The Communidad Valenciana is considered to be one of the best autonomous communities where tax allowances are concerned. As with all tax you need the services of a professional be that Accountant, Gestor or the Tax Office itself to set you straight and the Tax Office are quite good on helping people and they come with their mobile office every year to Torrevieja, but if you don't speak Spanish that is no good to you. These professional people are dealing with the tax system and how it operates on a daily basis.

Bee