We begin with the premises under which someone qualifies as a Spanish resident such as a permanence of more than 183 days in Spanish territory, having the main core or base of their business, professional activities or financial interests in Spain and/or having a non-legally separated spouse and minor children dependent on the spouse living in Spain.
Said residents must inform the Spanish Tax Administration about the proprietorship of the assets and rights they have overseas according to the following three categories:
- Bank accounts in financial institutions
- Real property and real property rights
- Securities, rights, insurance and income deposited, managed or obtained overseas.
Income Tax Return Statement
If someone is a TAX RESIDENT in Spain, then he/she is a taxpayer for the Income Tax Return for Individuals (IRPF, for its acronym in Spanish) and must pay taxes in Spain based on its WORLDWIDE INCOME. In other words, said individual “must file a statement in Spain for the revenues he/she obtains in any part of the world.”
This shall not affect what is stipulated in the Agreement subscribed between Spain and the country of origin of the income under consideration, to avoid international double taxation.
If the income was obtained in the United Kingdom:
Due to public pension for “services rendered to a State, a political subdivision or local entity,” commonly drawn by a public official: the same shall be subject to taxation in the United Kingdom and be exempted in Spain. The exemptions shall only apply if the taxpayer presents IRPF statements of other incomes in Spain as “Tax applicable to the remainder income.”
If the resident in Spain has Spanish nationality, such pension shall only pay taxes in Spain.
Due to private pension, received from a previous job in the private sector. These pensions shall only pay taxes in Spain.
In terms of income arising from immovable property for real estate located in the United Kingdom “the same can be subject to taxation both in Spain and the United Kingdom.” That way, the resident taxpayer shall have “the right to apply the deduction for international double taxation in the IRPF in Spain.”
Need A Professional Consultation?
Dividends obtained from a British source can be subject to taxation in Spain according to the stipulations of domestic legislation.
If the United Kingdom is the State of residence of the society that pays for the dividends, the same can be subject to this taxation. But, if the recipient of the dividends is a resident of Spain “the taxes thus demanded in the United Kingdom shall have a maximum limit of 10% or 15% of the gross amount of the dividends.”
That way the taxpayer who is a resident in Spain shall apply up to said limit to the deduction for “international double taxation” in the IRPF statement.
Capital Gains (Wealth Tax):
Regarding capital gains or wealth tax obtained through the disposal of personal and real property located in the United Kingdom that belong to residents of Spain, just as it happens with shares, stock and other assets, the same can be subject to taxation both in Spain and the United Kingdom, and the taxpayer has the right to apply the deduction for international double taxation in the IRPF statement in Spain. You can read our post about capital gains or wealth tax and find more information about this.
In terms of interests coming from the United Kingdom and whose beneficiary is a resident of Spain, those can only be subject to taxation in Spain.
If you live in La Axarquía, in municipalities such as Algarrobo, Torre del Mar, Competa or Frigiliana, you can contact us for accounting or solicitor services related with how to declare income from the UK in Spain or any tax related services.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Author: Rosana Tejada
Biographical Info: Rosana Tejada Crespo is a tax advisor holding a Master’s Degree in International Taxation. She specialises in companies and freelancers, tax regulations concerning foreign employees (Beckham Law), non-resident tax, inheritance tax and Spanish income tax. She is one of the founders of Tejada Solicitors, which comprises a group of English speaking solicitors, economists and architects.