Beware The New Spain-UK Double Tax Treaty

A new Spain-UK Double Tax Treaty has come into force. The new treaty was signed in London in March 2013 by the ambassador of Spain and the Secretary of the British Treasury. It replaces the treaty signed in London on 21st October 1975. Many countries have a double tax treaty with each other to clarify the tax situation of companies and individuals that have fiscal dealings in both countries.

So, if you are resident in Spain and receiving pensions from the UK, you should read this article very carefully.

Under the previous treaty, certain UK pension amounts were exempted from taxation in Spain. This concerned Government Service pensions. This does not change with the new treaty but the point which matters is that with the new treaty the amount of Government Service pension received must now be included in the calculation for what determines how much tax you pay. This means that your income, which is directly taxable in Spain (e.g. private pension), may be pushed into higher rates of tax.

If your tax affairs are not clear over this matter yet, you must be aware that article number 26 of the new Spain-UK Double Tax Treaty states: “ The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention…”.

If you think the new Spain-UK Double Tax Treaty will affect you and you want to know more or help with its implications then do contact me.

Carolina Just Miro

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