All foreigners residing in Spain who are currently receiving a pension for services rendered, (whether a public or private pension), from their countries of origin, should declare this income in their tax declaration form in the monetary compensation section under income from work, only of course when they are obliged to file an income tax return form.
It is important to note that all tax residents in Spain must declare their total personal global income for taxation, irrespective of the source of that income.
Normally foreign pensions are not included in the drafts sent by the Treasury, but you must bear in mind that foreign pensions are taxed in the monetary compensation section, and are considered as income from work. Therefore, it is an obligation to include your pension/s in the annual declaration.
However, it is necessary to take into account the corresponding Double Taxation Agreements, which prevail over Spanish Law. Most of the agreements to prevent Double Taxation which Spain signed with other countries establish the following rules with respect to pensions:-
- Generally, no tax is paid in Spain for PUBLIC PENSIONS received, for example, for having worked as an official abroad. These should be taxed in the country in which they are paid. They should be exempt from tax in Spain, however, there are exceptions. Agreements for example with Germany and the United Kingdom establish that these public pensions should be taken into account in the Spanish Income Tax Declaration which means that by this inclusion, the tax rate applied to the total income would be higher.
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