Pensions & Tax
How Your Pension Is Taxed in Spain — NLV Holder's Guide
Pension tax is one of the biggest financial considerations for anyone moving to Spain on the Non-Lucrative Visa. The good news: Spain's Double Taxation Agreements with the UK, USA, Australia, Canada, and others mean you will not pay tax twice. The important detail: where and how much you pay depends on your pension type. This guide explains it clearly.
The Central Question
Where Will Your Pension Be Taxed?
The most important question for NLV holders drawing a pension is: will I pay tax on my pension in Spain, in my home country, or both? Once you become a Spanish tax resident — which happens when you spend 183 or more days per year in Spain — your worldwide income, including pension income, falls within the Spanish tax net.
However, Spain's Double Taxation Agreements (DTAs) with most English-speaking countries are designed to ensure you are not taxed twice on the same income. The general principle is: taxed once — either in Spain or in your home country, depending on the type of pension and the specific DTA.
The Golden Rule on Pension Tax
- Most private and state pensions become taxable in Spain once you are a Spanish tax resident — your home country stops taxing them
- Government pensions (civil service, armed forces, NHS, teachers) are usually an exception — taxable in the home country only
- US Social Security is exempt from Spanish tax under the US-Spain DTA (but remains subject to US federal tax)
- A DTA does not mean zero tax — it means no double taxation. You pay in one country or the other
- Consult a qualified cross-border tax specialist for your specific situation
British Expats
UK Pension Holders in Spain
The UK is by far the most common country of origin for NLV applicants. Understanding how UK pensions are treated under the UK-Spain Double Taxation Agreement is therefore essential. The rules differ depending on the type of UK pension you receive.
UK State Pension (National Insurance Pension)
Under the UK-Spain DTA, the UK State Pension is taxable in Spain (not the UK) once you are a Spanish tax resident. The UK State Pension is paid gross — no income tax is deducted at source by DWP. You declare the full annual amount on your Spanish Modelo 100 tax return each year.
What to do: Notify HMRC of your Spanish tax residency. You may not need to file a UK return for this income once you are established as a Spanish tax resident, but confirm with your tax adviser.
UK Private / Occupational Pension (Company Pension, Personal Pension, SIPP)
UK private pensions, company pension schemes, and SIPP drawdowns are also generally taxable in Spain under the DTA once you are a Spanish tax resident. Your pension provider may initially deduct UK income tax — if so, apply to HMRC for a No Tax (NT) coding notice which instructs your provider to pay you gross.
What to do: Notify HMRC of your Spanish residency. Complete form Spain-Individual (available on gov.uk) to claim DTA relief. Your pension provider then stops withholding UK tax.
UK Government Pension — the Key Exception
Pensions paid by the UK government for public service — civil servants, NHS employees, teachers, police officers, and armed forces personnel — are taxable in the UK only under Article 18(2) of the UK-Spain DTA (or equivalent provision). Spain requires you to declare them on your Modelo 100, but provides relief so you are not taxed again.
What to do: Continue paying UK income tax on your government pension. Declare it in Spain and claim the DTA exemption. You will likely need to file a UK Self Assessment return each year for this income.
Summary: UK Pension Taxability in Spain
- UK State Pension: Taxable in Spain ✓
- UK Private / Company Pension: Taxable in Spain ✓
- UK SIPP drawdown: Taxable in Spain ✓
- UK Government Pension (civil service, NHS, teaching, armed forces): Taxable in UK only — exempted in Spain ✓
Rules apply once you are a Spanish tax resident (183+ days/year in Spain). Always verify with a qualified tax adviser for your specific circumstances.
American Expats
US Pension & Social Security Holders in Spain
The US-Spain tax situation is the most complex for NLV holders because the United States is one of only two countries in the world (the other is Eritrea) that taxes its citizens on worldwide income regardless of where they live. Even if you become a Spanish tax resident, you continue to owe US federal income tax.
US Social Security Benefits
Under the US-Spain Double Taxation Agreement (DTA), US Social Security benefits are exempt from Spanish income tax. Spain cannot tax your Social Security payments even if you are a full Spanish tax resident. However, you still owe US federal income tax on Social Security income at the standard rates that apply based on your total combined income.
Practical implication: Declare your Social Security income on your US federal return (Form 1040). Report it on your Spanish Modelo 100 as exempt income under the DTA.
US IRA / 401(k) Drawdowns
Distributions from US IRAs, 401(k)s, and similar retirement accounts are generally taxable in Spain as a Spanish tax resident. They are also taxable in the US for US citizens. In practice, the US-Spain DTA and the Foreign Tax Credit (FTC) mechanism reduce or eliminate true double taxation in most cases — but the interaction is complex.
Essential: US citizens drawing from retirement accounts while living in Spain should work with both a Spanish asesor fiscal and a qualified US expat tax accountant (a CPA with international experience).
US Government / Military Pension
US federal government and military pensions are generally taxable in the US only under the DTA. You declare them in Spain (as a Spanish tax resident) but claim DTA relief. You continue filing and paying US federal tax on these amounts.
Practical Reality for US Citizens on the NLV
Most US citizens living in Spain on the NLV need:
- A Spanish asesor fiscal for the annual Modelo 100 (IRPF) return
- A US expat CPA for the annual Form 1040 (and FBAR/FinCEN if holding foreign accounts over $10,000)
- FATCA compliance if holding Spanish bank accounts
Budget approximately €300-600/year for Spanish tax filing and $500-1,500/year for US expat tax preparation.
Other Countries
Australian, Canadian, South African & New Zealand Pension Holders
Spain has Double Taxation Agreements with Australia, Canada, South Africa, and New Zealand. The general principle — that pension income is taxable in Spain once you are a Spanish tax resident — applies in each case, with some country-specific nuances.
Australia — Australian Age Pension & Super
Under the Australia-Spain DTA, the Australian Age Pension is generally taxable in Spain once you are a Spanish tax resident. Notify the Australian Tax Office (ATO) of your Spanish tax residency using the appropriate forms. Superannuation drawdowns are also generally taxable in Spain.
The Australian Age Pension for a single person is approximately AUD $29,000/year (around €17,000/year as of 2026). After Spain's personal allowance for over-65s (€6,700), the taxable amount is approximately €10,300 — taxed at 19% = roughly €1,957/year Spanish income tax. Many Australian Age Pension recipients have low Spanish tax bills as a result.
Canada — CPP, OAS, and RRSP/RRIF
Under the Canada-Spain DTA, Canada Pension Plan (CPP) and Old Age Security (OAS) payments are generally taxable in Spain as a Spanish tax resident. RRSP and RRIF drawdowns are also typically taxable in Spain. Notify the Canada Revenue Agency (CRA) of your Spanish tax residency. Canadian government pensions (like those from the federal public service) may remain taxable in Canada only — check the specific DTA article.
South Africa — Retirement Annuities and Government Pensions
Under the South Africa-Spain DTA, South African pension income is generally taxable in Spain once you become a Spanish tax resident. Notify the South African Revenue Service (SARS) of your residency change. South Africa also has its own exit tax considerations — consult a specialist in SA-Spain cross-border tax before finalising your move.
New Zealand — NZ Superannuation
Under the New Zealand-Spain DTA, New Zealand Superannuation (NZ Super) is generally taxable in Spain once you are a Spanish tax resident. NZ Super for a single person (approximately NZD $24,000/year / ~€13,000/year as of 2026) falls within Spain's lower income tax brackets. Notify Inland Revenue New Zealand (IRD) of your Spanish tax residency.
What You Will Pay
Spanish Income Tax Rates on Pension Income
Spain taxes pension income as general income (renta general) subject to the standard progressive IRPF scale. The rates shown below are combined state and average regional rates — actual rates vary slightly by autonomous community (Andalusia, Valencia, Catalonia, the Canary Islands, and others each set their own regional component).
| Annual Taxable Income | Marginal Rate |
|---|---|
| Up to €12,450 | 19% |
| €12,450 – €20,200 | 24% |
| €20,200 – €35,200 | 30% |
| €35,200 – €60,000 | 37% |
| €60,000 – €300,000 | 45% |
| Over €300,000 | 47% |
Personal Allowances (Mínimo Personal):
| Age | Annual Personal Allowance |
|---|---|
| Under 65 | €5,550 |
| 65 and over | €6,700 |
| 75 and over | €8,100 |
Illustrative Tax Examples (approximate, before regional variation):
| Annual Pension Income | Personal Allowance (age 65+) | Taxable Amount | Approximate Spanish Tax |
|---|---|---|---|
| €15,000/year | €6,700 | €8,300 | ~€1,577/year (19%) |
| €20,000/year | €6,700 | €13,300 | ~€2,749/year |
| €30,000/year | €6,700 | €23,300 | ~€5,653/year |
| €45,000/year | €6,700 | €38,300 | ~€10,441/year |
Key Takeaway on Tax Rates
Many NLV holders — particularly those who were UK higher-rate taxpayers (40%) — find that their effective Spanish tax rate on pension income is similar to or lower than what they paid in the UK. Spain's progressive scale and personal allowances mean that modest pension incomes attract a relatively low tax burden. However, everyone's situation is different — model your specific position with a tax adviser before assuming Spain will be cheaper.
What You Need to Do
Practical Steps for Pension Tax in Spain
Here is a step-by-step guide to getting your pension tax position sorted when moving to Spain on the NLV.
Register as a Spanish tax resident with AEAT
Once you have been in Spain for 183 days in a calendar year, register with the Agencia Tributaria (AEAT). Your NIE number (Número de Identificación de Extranjero) functions as your NIF (Número de Identificación Fiscal) — your Spanish tax ID. You use this to file your Modelo 100 each year.
Notify your home country tax authority
Formally notify HMRC (UK), IRS (USA), ATO (Australia), CRA (Canada), SARS (South Africa), or IRD (NZ) of your change of tax residency. For UK taxpayers, this typically involves completing a P85 form and the relevant Spain-specific DTA form to claim relief from UK withholding tax on your pension payments.
Apply for No Tax (NT) code if needed (UK only)
If your UK private or occupational pension provider is deducting UK income tax, apply to HMRC for a No Tax (NT) coding notice for that income. HMRC will notify your pension provider to pay your pension gross. You then declare and pay tax on it in Spain instead. This process can take 2-3 months — start early.
File your annual Modelo 100 (IRPF) return in Spain
File your Spanish income tax return (Modelo 100) each year between April and the end of June, covering income from the previous calendar year. Include all pension income and investment income. Your asesor fiscal can submit this electronically on your behalf.
Hire a Spanish asesor fiscal
A local Spanish tax accountant (asesor fiscal) is invaluable. They know the Spanish system, understand the common DTA provisions, and can file your return accurately and on time. Expect to pay €150-400/year for a simple pension-based return, or more for complex cross-border situations (US citizens, multiple income sources, overseas property). Many asesores fiscales in expat areas speak excellent English.
Important Tax Disclaimer
This page provides general information about how pension income is typically taxed in Spain for NLV holders. It does not constitute tax advice. Tax rules change frequently, are technically complex, and depend entirely on your individual circumstances — including your pension type, home country, specific DTA provisions that apply to you, and the autonomous community in Spain where you live. Nothing on this page should be relied upon as a substitute for professional advice from a qualified cross-border tax adviser. Always consult a qualified tax specialist before making decisions based on this information.
Common Questions
Pension Tax in Spain — FAQ
Is the UK State Pension taxed in Spain?
Yes — once you become a Spanish tax resident (183+ days/year in Spain), the UK State Pension is generally taxable in Spain under the UK-Spain Double Taxation Agreement, not in the UK. The UK State Pension is paid gross (no withholding tax), so you declare it on your annual Spanish tax return (Modelo 100). You should notify HMRC of your Spanish tax residency.
How do I stop UK withholding tax on my pension?
If your UK pension provider is deducting UK income tax, you can apply to HMRC for a No Tax (NT) coding notice once you have established Spanish tax residency and your pension income falls under the DTA provisions. Your pension provider then pays you gross and you declare and pay tax in Spain instead. This process can take 2-3 months. UK government pensions (civil service, NHS, armed forces) are an exception and remain taxable in the UK only.
Do US citizens pay Spanish tax on Social Security?
No — under the US-Spain Double Taxation Agreement, US Social Security payments are generally exempt from Spanish income tax. However, US citizens continue to owe US federal income tax on Social Security regardless of where they live. US citizens on the NLV typically need both a Spanish tax adviser and a US expat CPA.
What tax rate applies to pension income in Spain?
Spain taxes pension income on a progressive scale: up to €12,450 at 19%; €12,450–€20,200 at 24%; €20,200–€35,200 at 30%; €35,200–€60,000 at 37%; over €60,000 at 45%–47%. There is a personal allowance of €5,550 for under-65s, €6,700 for 65+, and €8,100 for 75+. Regional rates vary slightly by autonomous community.
Do I need to file a UK tax return as well as a Spanish one?
Generally no — once you are a Spanish tax resident and have applied the DTA provisions, most of your income will be taxable in Spain only. You will likely need to file a UK Self Assessment return in the year you depart the UK to finalise your UK tax position. Ongoing UK returns are usually only needed if you continue to have UK-taxable income, such as a UK government pension or UK rental income.
What is Modelo 100 and do I need to file it?
Modelo 100 is Spain's annual personal income tax return (IRPF). If you are a Spanish tax resident, you file Modelo 100 each year between April and the end of June, covering income from the previous calendar year. Your Spanish asesor fiscal can prepare and submit this for you, typically for €150–400 for a straightforward pension-based return.
When is the Spanish tax return deadline?
The annual Modelo 100 (IRPF) return must be filed between 1 April and 30 June of the year following the tax year. For example, the 2025 return (covering income from 1 January to 31 December 2025) must be filed by 30 June 2026. Electronic filing (which most asesores fiscals do on your behalf) is the norm.
Do I need a Spanish tax accountant?
You are not legally required to use a Spanish tax accountant (asesor fiscal), but it is strongly recommended. The Spanish tax system is filed in Spanish, involves understanding which DTA provisions apply to your specific income, and errors can be costly. A qualified asesor fiscal typically charges €150–400 per year for a standard pension-based return. For US citizens or those with complex situations, the investment is even more worthwhile.
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The complete guide to tax on Spain's Non-Lucrative Visa — the 183-day rule, double taxation treaties, and all income types.
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Tax Residency on the NLV
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NLV Income Requirements
The minimum income threshold for the NLV (separate from your tax position once living in Spain).
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