NEW SPANISH TAX RULES 2014 - DOUBLE TAXATION AGREEMENT

Does anyone fully understand the new amendment, Article 22 Section B to the above treaty, whereby income from the UK, e.g. Army / Police / Civil Service pensions, previously exempt from Spanish tax under the Double Taxation Agreement may now be taken into account when calculating Spanish Tax liability?
The amendment potentially opens the door to being taxed twice on the same income.
My UK MP was unable to answer the question, but has kindly passed on the "problem" to the UK Treasury Minister for comment. His response, via my own MP is eagerly awaited.
Raymondo1

I presume that if you have an MP in the uk then that is your domicile, I may be wrong, therefore, surely that is where you pay taxes, so, no need to worry about double tax then.I maybe looking at this simplistically, however, having an MP means you are a constituent, if so, then that is your domicile.
Have your money kept in your uk bank would be the best solution, thus avoiding dual taxation.

You can't be taxed twice on the same income. However, up until now, lots of us have had the advantage of two lots of tax allowances. One on the UK government pensions which are taxed at source and then getting the Spanish allowance on private or state pensions (OAP as was).
Your UK government pension will still be treated the same with the tax allowance granted and tax paid if applicable.
However, if you get two pensions, the second one will be included in your income and the tax allowance granted on that. If you've already got over the allowance on your state pension, you will not get any extra allowance in Spain and will pay tax ( less what you've already paid in UK).
It's exactly the same as if you lived in UK and they add both pensions together for tax purposes.
You still won't be taxed on your government pension but you will pay tax on the second one with no allowance as you've already had that in UK.
example:
Government pension £10,000. State pension £6,000.
G. pension no tax as you're under the allowance. S. pension in Uk taxed at basic rate.
Previously in Spain, G. pension ignored. S. pension given full tax allowance so no or little tax.
Now, your allowance has been used in UK so your S. pension taxed at lower rate. If you get a very large G. pension, it could put your S. pension into the higher tax bracket just as it would in UK.
In my case, I get an NHS pension on top of my Forces pension. I was under the Spanish tax allowance but now will have to pay about €650 a year in tax which is about the same as if I'd been taxed on it in UK.
Hope that explains it.

Many thanks for the info. My own tax assessment is around 600.00 euros too. Raymondo

Walnut. My domicile is in fact Spain. My UK MP is for the constituency where I voted (overseas voter) for the 2015 General Election and where I still have UK property. The new rules are somewhat more complicated. This is the first time in 9 years that I have been deemed liable to Spanish tax, having previously been covered by my Spanish tax allowance. Not a major problem, but is is a change in the rules originally agreed between Britain and Spain.

Thank you ....very helpful ...

it is not a new tax rule the dual taxation is from 2013, article 18 refers to crown pensions, nothing has changed article 22 refers to income derived from other sources. article18 is quite specific a uk crown pension is only declared if you are a resident and a national of spain. have just done tax declaration for 2014, crown pension exempt, my spanish tax advisor has had no further guidance from the hacienda regarding declaration of crown pensions, the computer programme for submitting tax return has not been changed. the college of gestors are having a meeting to clarify what has been published by some spanish law firms and the british press..eg.. the telgraph. at the moment there is no change to the declaration of crown pensions, but who knows this may change, but until information is published in the government gazzette it is not law

Jim.
Many thanks for the update. I await my final tax assessment.

Good informative post marcliff. Its exactly the same in France.

This is a direct quote from an official UK MP's letter, (HM Treasury) dated 2 June 2015, which, as I understand it, now makes it possible to be taxed twice on the same income, though how its assessed is beyond me! The letter will be presented to my own Spanish adviser.
QUOTE:- .
"What has changed is that Spain has decided to exercise its right to apply a system known as "exemption with progression". This means that all the income received by a Spanish resident is taken into account to calculate the applicable rate of income tax in Spain ------ regardless of whether the income itself is taxed in Spain. So, a UK Government pension, exempt from the terms of the DTC, will nevertheless be taken into account for the purposes of determining the tax rate which applies to income which is taxable in Spain. This is common practise in other States around the world and, while it is now explicitly provided for in the new DTC, it has always been open to Spain to apply it under its domestic law". UNQUOTE
I have nothing further to comment and wish you all good luck with your Spanish tax returns.