Tax rules for French retirees established in Spain

If you are considering the possibility of taking advantage of Spain's pleasant climate for your retirement , it is normal to ask yourself various questions about the taxation that this generates.

In general, from the moment you reside at least six months in the year in a foreign country, you are required to declare all of your income in that country. This is a rule that applies to all residents of the European Union.

Since Spain is part of Europe, it is not exempt from this rule. Therefore, if you are of French nationality and you live in Spain for more than six months in the year, you must declare your income to the Spanish administration.

Taxes for French retirees in Spain

The taxation of retirees in Spain is applied on the principle that the pensions received are equivalent to income from work. As a result, your pension will be taxed in exactly the same way as an employee, it is about paying the IRPF.

When a retiree receives income from social security, a part will be directly deducted by the State as for active people via income tax. However, certain exceptions apply and may affect a large number of retirees.

• You may be exempt from tax; if your pension income is less than € 22,000 each year.

• If as a retiree you have in addition to your pension income from movable investments, you are once again exempt from tax provided that his income does not exceed € 1,600 each year.

• Although orphans, permanent or severe disability pensions, dismemberment or alimony pensions by court order must be declared, they are not taken into account in the calculation of income tax.

• Finally, the last exemption this time concerns the payment of a second pension which may come from abroad. If it does not exceed the sum of € 1,500 per year, the exemption applies. If, on the other hand, you exceed this amount, the exemption will not be established on the ceiling of € 22,000 but rather of € 14,000.

Which administration should you make your declaration to?

Indeed, it is necessary to check your conditions of stay to know in which administration you must declare your income. Initially, it will be necessary to define a tax residence either in France or in Spain. If you decide to choose Spain as your main residence, the declaration of your income will be made to the Spanish administration.

To avoid double taxation, it is necessary to base oneself on the Franco-Spanish convention and in particular on article 18. Without going into legislative detail, the law stipulates that the pension paid by the French State must be subject to tax Spanish if you have declared your main residence in the country. An exception is still applicable in the context where the money paid by the French State corresponds to services rendered. If this is the case, your pension cannot be used in the calculation of income tax in Spain but will be used in France instead.

Take the example of a customs inspector who has decided to retire and who defines his tax residence in the Iberian country. Since he has French nationality, the pension he will receive must be declared in France and not in Spain.

However, if the retired customs inspector has made real estate investments in Spain, he will have to declare his property income to the Spanish tax authorities and not to the French state.

If the person residing in Spain does not have French nationality, the declaration of his retirement must be made in Spain, even if the pension comes from France and it will not be subject to the French administration.