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Taxation of pension lump sum

Taxation of pension lump sum

Postby Angela17 » Sun Feb 25, 2018 10:01 am

Please can anyone advise on the taxation of public sector pension lump sums? Both my husband and I will receive a pension lump sum in a few years and I understand that in the UK these will be tax free but do you know if they will be taxed in Spain when we do our annual tax return?
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Re: Taxation of pension lump sum

Postby marcliff » Sun Feb 25, 2018 10:38 am

Pension lump sums are taxable in Spain if you are a fiscal resident.
The taxable amount is calculated as the difference between the amount you receive and the amount you paid in. This difference is taxed at 18%.
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Re: Taxation of pension lump sum

Postby Angela17 » Sun Feb 25, 2018 3:52 pm

Thank you. Can I just check what you mean by the amount we paid in, do you mean the monthly pension contributions taken from our salary?
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Re: Taxation of pension lump sum

Postby marcliff » Sun Feb 25, 2018 4:35 pm

Yes. Along with any extra contributions you may have made, if any.
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Re: Taxation of pension lump sum

Postby jpeg » Sun Feb 25, 2018 6:30 pm

There are ways you can use the lump sum so that you will pay less tax but you really need to see a good financial advisor and I mean good I would recommend a look at Blevin Franks website and read the advice on there.
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Re: Taxation of pension lump sum

Postby Angela17 » Sun Feb 25, 2018 6:53 pm

Thank you both for your help.
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Re: Taxation of pension lump sum

Postby Angela17 » Tue May 08, 2018 11:59 am

marcliff wrote:Pension lump sums are taxable in Spain if you are a fiscal resident.
The taxable amount is calculated as the difference between the amount you receive and the amount you paid in. This difference is taxed at 18%.



Sorry to question this again but to be honest I’m really confused on this. I fully understand that my government pension monthly amounts will only be taxed in the uk, wouldn’t this rule also apply to my government pension lump sum?
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Re: Taxation of pension lump sum

Postby marcliff » Tue May 08, 2018 12:15 pm

Government pension lump sums are not taxable in Spain. Sorry, didn't see the bit about it being a public sector pension (NHS and teachers pensions are not government pensions unless paid by a local authority rather than the private schemes they generally are).
From a legal website:
Pension lump sums are fully taxable in Spain if received while you are a Spanish tax resident(unless it arises from a UK government service pension which are only taxed in the UK). ... So if you wish to protect a lump sum from Spanish income tax, you should receive it before you become a resident of Spain.


As jpeg has pointed out, see a good gestor/solicitor.
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Re: Taxation of pension lump sum

Postby Angela17 » Tue May 08, 2018 12:25 pm

Very happy you clarified this Marcliff, I thought this was the case.

You really are very helpful on this site.
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Re: Taxation of pension lump sum

Postby Hears Johnny » Tue May 08, 2018 1:27 pm

marcliff wrote:Government pension lump sums are not taxable in Spain. Sorry, didn't see the bit about it being a public sector pension (NHS and teachers pensions are not government pensions unless paid by a local authority rather than the private schemes they generally are).
From a legal website:
Pension lump sums are fully taxable in Spain if received while you are a Spanish tax resident(unless it arises from a UK government service pension which are only taxed in the UK). ... So if you wish to protect a lump sum from Spanish income tax, you should receive it before you become a resident of Spain.


As jpeg has pointed out, see a good gestor/solicitor.


:text-goodpost:
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