Talk Quesada forum

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?

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%.

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?

Yes. Along with any extra contributions you may have made, if any.

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.

Thank you both for your help.

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?

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.

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

You really are very helpful on this site.

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.