Retiring to Spain – tax considerations before you leave the UK

The draw of the warmer climate, easy going life style entices some 1050 retirees moving to Spain each month in 2022. However you may leave behind the climate and the UK lifestyle but your tax liabilities travel with you. 

Before you make the move make sure you are aware of the tax situation when you move and that you work with a tax professional that can advise you on Ex Pat Tax issues.

Here are some of the factors that influence your tax liability.

Residence Status

If you are considered a UK tax resident, you may still be subject to UK taxation on your worldwide income, including pensions and investments. The rules for determining tax residency can be complex and may depend on factors such as the number of days you spend in the UK, your ties to the UK, and your intentions.

Double Taxation Treaty

Spain and the UK have a double taxation treaty in place to prevent double taxation of income. This treaty may provide certain exemptions or credits to avoid paying tax on the same income in both countries. It’s important to understand the provisions of this treaty and how they apply to your situation.

Pension Income

If you receive a pension from the UK, whether it’s a state pension or a private pension, the taxation of that income may be governed by the double taxation treaty. In some cases, you may be able to apply for a tax exemption or reduced tax rate on your UK pension income in Spain.

Spanish Tax Residency

After moving to Spain, you may become a tax resident there. Spanish tax laws will then apply to your income, including any income from the UK. Spain has its own tax rules, including tax rates and allowances, so it’s essential to understand how they work.

Tax laws can change over time, so it’s essential to stay up-to-date with the latest regulations and seek advice from professionals who are knowledgeable about the most current tax rules in both the UK and Spain.

We have been advising people in Spain on their UK tax responsibilities for a number of years so if you have any questions or need someone to review your personal circumstances, get in touch.