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Is my U.S. pension taxable in Spain?

Tax Law

Francisco Garcia Ramirez

21st of November 1999

Q. I am planning to retire in Spain (from U.S.). Is my pension from U.S. taxable (I will not be paying taxes in U.S.) If so, how much tax would I pay (annual pension of $37,000). When I sell my house in U.S. will I have to pay tax on the proceeds of the sale when I bring the money into Spain (to buy a house there).


    A. Once you come in Spain to reside permanently you will become a resident for tax purposes. This means that you will be taxed on the same basis as any other Spaniard, which would mean paying taxes on your pension. In case the pension was subject to U.S. tax, the Double Tax Treaty between Spain and the U.S. envisages tax relief mechanisms. An annual pension of $37.000 would roughly attract a tax percentage between 20% and 22%, since tax changes from one tax year to another. There are obviously a number of deductions and allowances which will reduce the tax base.

    With regards to the second question, the proceeds of the sale of your property in the U.S. will not be taxable if it is used for buying a property in Spain.

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