Who taxes what
| Income | Resident in Spain | Resident in the UK, owning in Spain |
|---|---|---|
| UK state pension | Taxed in Spain | Taxed in the UK |
| UK private and occupational pensions | Taxed in Spain | Taxed in the UK |
| UK government service pensions | Taxed in the UK (with exemption method in Spain for progression) | Taxed in the UK |
| Rent from Spanish property | Taxed in Spain | Spain at 24%, UK with credit |
| Gain on Spanish property | Taxed in Spain | Spain at 19%, UK with credit |
| UK rental income | UK can tax; Spain taxes with credit | UK |
British owners who live in the UK
As non-residents of Spain, UK residents pay 24% on gross rental income and imputed income, since they can no longer apply the EU rules, and 19% on gains. They report the same income in the UK and claim credit for the Spanish tax. See rental income for non-residents.
British people living in Spain
Residents declare their worldwide income in Spain, including UK pensions, ISA income, which is not tax-free in Spain, and UK rental income. Government pensions are usually taxed only in the UK, but they are counted to set the Spanish rate on other income. See pension tax.
Dual residence
If both countries consider you resident, the treaty applies tie-breakers: permanent home, centre of vital interests, habitual abode and nationality. A UK certificate of residence is key evidence. See the 183-day rule.
Planning a move
Timing pension lump sums, ISAs and property sales around the move can save significant tax. See moving to Spain.
An illustrative example
Based on situations we commonly see; not a specific client. A British couple moved to Menorca. He received a teacher's pension, a UK government service pension, and she a private pension. We declared her pension in Spain and his only for progression, avoiding the double tax that their previous adviser had caused.
How Castell.tax can help
We plan moves to the Balearic Islands before they happen: residence date, the Beckham regime, pensions, investments and assets abroad, coordinating with your adviser at home. Then we file your first Spanish returns. See our moving to Spain service or contact us for a planning meeting in English or German.
This page is published by Castell.tax, the tax practice of Castell.law in Palma de Mallorca. It is general information; tax rules and rates change, so check your case with us before filing.
Not sure what you owe? Ask before the deadline
Send us your situation or the letter you received. A tax adviser will tell you what applies, what it could cost and what to file.
Frequently asked questions
Where is my UK state pension taxed if I live in Spain?
In Spain.
Are UK government pensions taxed in Spain?
Generally not, unless you are a Spanish national, though they count for the rate.
Are ISAs tax-free in Spain?
No, ISA income and gains are taxable for Spanish residents.
Can UK owners deduct expenses from rent?
No, since Brexit they pay 24% on gross income.