🇪🇸 Retiring in Spain? Understand Your Tax Obligations First
If you’re planning to retire in Spain, knowing how you’ll be taxed is just as important as picking the perfect town or healthcare plan. Spain offers a relaxed lifestyle, but it’s still essential to understand how pensions, foreign income, and assets are taxed.
This guide explains what taxes foreign retirees pay in Spain, how to avoid double taxation, and when to file.
👤 Are You a Tax Resident in Spain?
You’re considered a Spanish tax resident if:
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You spend 183+ days per year in Spain
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OR your main economic interests are in Spain (e.g. property, family)
✅ As a resident, you are taxed on your worldwide income — not just Spanish sources.
💰 How Are Pensions Taxed in Spain?
1. Public Pensions (e.g. Social Security, UK State Pension)
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Generally taxable in Spain
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Often taxed at progressive rates: 19–47%
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However, many countries have double taxation treaties (see below)
2. Private Pensions / Retirement Accounts (e.g. IRA, RRSP, SIPPs)
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Typically considered investment income
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Subject to savings tax brackets:
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19% for up to €6,000
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21% for €6,001–€50,000
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23%+ for higher amounts
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✅ Lump-sum withdrawals may be taxed differently — consult a tax advisor.
🌍 Avoiding Double Taxation (DTT Treaties)
Spain has signed Double Taxation Treaties (DTTs) with most countries, including:
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🇬🇧 UK
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🇺🇸 USA
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🇨🇦 Canada
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🇩🇪 Germany
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🇫🇷 France
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🇦🇺 Australia
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🇮🇪 Ireland
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🇧🇪 Belgium
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🇳🇱 Netherlands
These treaties prevent you from being taxed twice on the same income. Depending on the treaty, certain pensions may be taxable only in the source country or only in Spain.
💡 Your lawyer or tax advisor can determine which country has the taxing rights over each pension.
🏠 What About Property Taxes for Retirees?
If you buy a home in Spain:
| Tax | Applies To | Typical Rate |
|---|---|---|
| IBI (annual property tax) | All property owners | €300–€1,000/year |
| Wealth Tax (Impuesto Patrimonio) | Worldwide assets > €700,000 | 0.2%–2.5% (regional) |
| Capital Gains Tax (CGT) | Sale of property or investments | 19%–26% |
✅ Retirees may reduce CGT with primary residence exemptions after holding a property for a set time.
📊 Declaring Foreign Assets: Modelo 720
If you’re a Spanish tax resident and hold foreign assets worth over €50,000, you must file Modelo 720.
Includes:
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Bank accounts
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Real estate
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Shares, pensions, or other investments
⚠️ Failure to declare can lead to serious fines. This is a critical filing for retirees with offshore accounts or pensions.
🗓️ Tax Deadlines for Retirees in Spain
| Tax Type | Deadline (Typical) |
|---|---|
| Income Tax (IRPF) | April–June (for previous year) |
| Wealth Tax | Same as income tax filing |
| Modelo 720 | By March 31 (for previous year) |
| IBI (property tax) | Varies by municipality (usually once/year) |
🛡️ Tax-Free Options & Allowances
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Basic personal allowance: ~€5,500–€6,700/year (varies with age)
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Some state pensions (e.g. certain diplomatic/military pensions) may be exempt
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Primary residence may receive property tax reductions
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No inheritance tax in some regions between spouses/children (see regional rules)
⚖️ How a Tax Advisor Can Help Retirees
Working with a Spanish tax lawyer ensures:
✅ You file taxes correctly — and on time
✅ You avoid double taxation
✅ You take advantage of treaty benefits
✅ You declare offshore pensions and accounts legally
✅ You optimize for inheritance and asset protection
📞 Retiring in Spain and Unsure About Taxes?
Whether you’re just relocating or already living here part-time, our legal team helps you manage your pensions, property, and tax filings in Spain — so you can retire with peace of mind.
👉 Contact us today for personalized tax advice for retirees in Spain.