Spain withholds tax from pensions paid to non-residents by default. If your treaty gives the taxing right to the country where you live, that withholding should stop, and what was taken in the open years can be claimed back.
When a pensioner moves abroad and tells the Spanish social security office, the pension stops being subject to resident income tax and becomes subject to non-resident income tax. Without anything else on file, Spain applies its own scale for pensions paid to non-residents, which starts at 8 % and rises steeply with the amount.
Under most treaties, however, a pension from private employment is taxable only in the country of residence. The Spanish withholding is then simply wrong, and it continues month after month until someone proves the pensioner's residence to the paying body.
Pensions paid for service to the Spanish state are different: they generally remain taxable in Spain, whatever the country of residence. As with foreign pensions received in Spain, the origin of the pension decides.
You get a written answer on which country may tax each pension, and at what rate if Spain keeps a limited right.
It must say that you are resident there for the purposes of the treaty with Spain. A general certificate of address is not enough.
With the certificate, the payer is asked to stop withholding or to apply the treaty rate from the next payment.
Tax withheld above what the treaty allows can be reclaimed for the years still open, which is four.
If you kept a home in Spain, it brings its own yearly return as a non-resident owner, which we file alongside: see non-resident property owners.
The yearly service is €210, taxes included: the treaty analysis, the notice to the payer, form 210 where needed and the deemed income return on a Spanish home you kept. Claiming back earlier years is quoted from €405. Obtaining a residence certificate on your behalf, where that is possible from Spain, is €104.
Spanish law taxes pensions paid to non-residents on a scale of its own: 8 % on the first €12,000 a year, 30 % on the next €6,700, and 40 % above €18,700. On a pension of €24,000 that comes to €5,090 a year.
If the treaty with your country gives the taxing right to the country of residence, the correct Spanish withholding on that pension is nil. Over the four years that can still be claimed, the difference in this example is more than €20,000.
Where the treaty lets Spain tax the pension but caps the rate, the refund is the difference between the scale and the cap.
France, Germany, Switzerland, Belgium, the United Kingdom. The destinations of the emigration of the 1960s and 1970s, and of many of their children. All have treaties with Spain under which a pension from private employment is, as a rule, taxable where the pensioner lives.
Argentina, Venezuela, Mexico, Uruguay, Chile, Brazil. Most have treaties with Spain, each with its own pension article. Some keep a shared taxing right.
Portugal, Andorra, Morocco. Frequent choices for retirement abroad, each with a treaty.
In every case the question is the same: what does the pension article say about a pension of this origin? Civil servants' pensions follow the opposite rule nearly everywhere.
The last point matters. Claiming exemption in Spain on the basis of residence elsewhere, without declaring there, invites questions from both administrations.
Answer a few questions on our accounting platform, Salama Tax. You will see which returns apply to you and the fee before you commit to anything.