Income tax return for foreign pensioners

Are you a retired expat living in Spain? Wondering whether your foreign pension needs to be declared or taxed?
You’re not alone—and yes, the rules can be confusing.

In this article, we break down everything you need to know about the income tax return for foreign pensioners: when you need to declare, what exemptions may apply, and how to avoid double taxation. Because retirement should be about enjoying life—not worrying about taxes.

How and Where Should I Pay Tax on a Pension I Receive from Another Country?

If you live in Spain and are considered a tax resident (you spend more than 183 days a year here or your economic interests are based here), you must declare your worldwide income—including foreign pensions.

However, whether you actually pay tax on that pension in Spain depends on the tax treaty between Spain and the country where your pension comes from:

• If the treaty gives Spain taxing rights, you’ll pay Spanish income tax on the pension.
• If the other country retains taxing rights, you may be taxed there—but you may still have to declare it in Spain (and possibly deduct the tax paid abroad).

💡 Spain has double taxation agreements with many countries (like the UK, Germany, France, USA…), which are designed to avoid paying twice on the same income.

To get it right:

1. Check the treaty between Spain and the country where your pension is from.
2. Declare the income in Spain if you’re a tax resident.
3. Use deductions or exemptions where allowed to avoid double taxation.

How to declare foreign pensions in your income tax return

If you’re a tax resident in Spain, you must declare all income worldwide, including foreign pensions. These pensions are reported under the “monetary remuneration” section as income from work.

🏦 What if Tax Was Withheld Abroad?

• No withholdings in the origin country: You pay tax on the full amount in Spain.
• Withholdings applied abroad: You must complete box 96 under “Other deductions – International double taxation” in the Spanish tax return (IRPF).

To avoid double taxation:

1. Enter the gross pension income in the relevant field.
2. Enter the amount withheld abroad in the corresponding box.

The system will automatically calculate the deduction, so you don’t pay tax twice.

⚠️ What Happens If You Don’t Declare?

Failing to declare foreign pensions can lead to several issues:

• It may affect your eligibility for the minimum pension supplement, which is designed to top up pensions below the minimum threshold.
• If you received the supplement without declaring other income (like a foreign pension), Social Security can request a refund of the unduly received amounts.

🧠 Spain requires declaration of any foreign pension income, even if the country of origin does not require a minimum contribution period to grant it.

Exceptions in Tax Treaties: What You Should Know

Tax treaties between Spain and other countries define which country has the right to tax each type of income:

• Sometimes, only the country of residence can tax it.
• Other times, only the country of origin has that power.
• In many cases, both countries can tax the same income—but the country of residence must apply mechanisms to avoid double taxation.

⚠️ Don’t just think of salary—investment returns and capital gains also count as taxable income under these treaties.

Understanding how your income is treated in each case is key to avoiding penalties or overpaying taxes.

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