The Supreme Court reprimands the Spanish Tax Agency (AEAT) for skipping double taxation agreements. It points out that what these agreements establish prevails over national legislation.
The Supreme Court puts the Tax Administration in its place for unilaterally skipping the agreements signed with other countries to avoid double taxation, prevent tax evasion, and guarantee legal security for taxpayers. In a ruling dated June 12, 2023 for which Judge Córdoba Castroverde was the rapporteur, the court states that the Administration bodies “are not competent” to prosecute the circumstances in which a tax residence certificate has been issued by another State and, therefore, they cannot dispense with its content issued by the tax authorities of a country that has a double taxation agreement with Spain.
In addition, it points out that the Administration cannot reject the content of the tax residence certificate, nor can it “unilaterally” decide that there is a residence conflict ignoring the rules provided in the double taxation agreement itself to resolve these cases.
The Supreme Court thus resolves the appeal of a citizen with tax residence in the US, a country with which Spain has a double taxation agreement since 1990, from which the Treasury claimed 3.6 million euros for personal income tax for 2008, 2009 and 2010.
Do not hesitate to contact us if you have any doubts of the Bilateral Tax Treaty with the U.S. to avoid the double taxation as well as how to apply any other treaty or agreement to reduce you tax liability in Spain and in the U.S. We have published a WithePaper with a comprehensive list and descriptions of all kinds of agreements. Please check our page on WhitePapers.
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US Tax Consultants +34 915 194 392 info@ustaxconsultants.es
I am a civil service pensioner, having served 30 years in her majesties prison service. I retired to Spain in 1999 and became resident in2003. I received my occupational pension, tax paid in UK, until 2014,free from Spanish tax. Inthe following year, 2015my Spanish tax declaration imposed personal taxes which included a calculation of my civil service pension, despite the fact that my P60 clearly showed that tax had already been paid. For the last10 years I have paid tax twice on the same income. Please advise.
Ian Brown
Dear Ian,
Thank you for your message. I understand your concern — what you describe is a very common issue, particularly among UK public sector pensioners living in Spain, and it almost always comes down to how the UK–Spain Double Tax Treaty is applied in practice.
Key principle (very important)
Under the UK–Spain Double Taxation Agreement, the rule is generally is that UK government pensions (e.g., civil service, police, prison service), are normally taxable ONLY in the UK and Spain should not tax them again, in principle. This is different from private pensions, which may be taxable in Spain.
From what you describe, likely one of the following has happened:
1. Spain is including your pension in your tax return
Spain may include the pension in your taxable income, but apply a foreign tax credit, or incorrectly treat it as taxable income without relief
2. Treaty not properly applied
In many cases, the AEAT (Spanish tax authority) or tax preparer does not apply the treaty correctly, or the pension is reported in Spain when it should be excluded
The correct treatment should be, for a UK civil service pension, either it should be excluded from Spanish taxation, OR included but with full credit for UK tax, eliminating double taxation. You should not be effectively paying tax twice on the same income
If you have been paying double tax since 2015, this is something that may be correctable, at least partially and could allow for refund claims for recent years (typically last 4 years in Spain, depending on statute of limitations). Older years may be harder to reopen, but still worth reviewing your UK pension type (confirmation it is government service pension), your Spanish tax returns (last 4–10 years) and how the pension has been declared, taxed and credited (or not).
We work exclusively with flat fees, and you can review them here: https://ustaxconsultants.es/fees/
I strongly recommend arranging a free introductory consultation via Microsoft Teams, where we can onfirm whether your pension should be UK taxable only, identify exactly where the issue occurred and outline the steps to correct it
You can book here: https://outlook.office365.com/book/USTaxConsultants1@ustaxconsultants.net/?ismsaljsauthenabled=true
We would be very happy to help you resolve this and ensure you are no longer taxed twice.