Does anyone know if a UK War Widows Pension is Taxable in Spain?

My sister is thinking of moving permanently to Spain and is worried that her UK War Widows Pension could become taxable.

In the UK it is Tax exempt, but is this also true for Spain?

Does the ‘double taxation’ agreement work in reverse, i.e. because she doesn’t pay tax in the UK, she doesn’t have to declare it in Spain?

It seems to be hard to track down information here without paying for professional advice. I am prepared to do so, when I have determined the best course of action, but I don’t want to waste money if there is nothing to worry about!

Chris

P.S. Thanks to anyone who can throw any light on this!

Hopefully you will get a direct reply, but I have a friend who is the local RBL chairman and I will ask him.

Obviously she will get Spanish tax allowances which might mean she does not have to pay anyway.

But NO you cannot automatically assume the double taxation treaty gives you exactly the same exemptions it was not set up to do that.

I am sorry I don’t know the answer to this but as Rob says she will get tax allowances that may mean that the pension doesn’t result in a tax bill anyway (or the need to do a tax return).  There is a helpline at HM Revenue & Customs specifically for this sort of query:

http://search2.hmrc.gov.uk/kbroker/hmrc/contactus/search.ladv?sr=0&as=1&cs=ISO-8859-1&sc=hmrc&sf;=&sm=0&nh=50&ha=34&tx0=49672&fl0=__dsid:&tx1=2020&raction=view

They are not very good at answering the phone in my experience or responding to emails.  Good luck.

Advoco -

I don’t see how it is the HMRC responsibility to rule on Spanish tax.

Don’t you have access to PADRE to look it up?

Rob - I didn’t explain my thinking.  I am assuming there is no exemption from the Spanish side - why would they make other countries’ pensions tax exempt?  The only chance would be if the WWP was treated like a Crown pension and the HMRC would know this.  They will have dealt with this issue before.  I will check from the Spanish side.

I agree - the Spanish will not automatically exempt it just because HMRC do - but I thought the Spanish system needs to provide the definitive answer, especially as lots of things are changing at the moment.

I asked a Spanish colleague, much more of a Spanish tax expert than I am, and he referred me back to the Crown Pensions exemption as I thought he would.  For those that don’t know the Spain-UK Tax treaty exempts certain UK government pensions (but not the State Pension) from Spanish tax.

I looked at the double tax treaty and the relevant quote is this:

“Any pension paid by, or out of funds created by, the United Kingdom or Northern Ireland or a local authority in the United Kingdom to any individual in respect of services rendered to the Government of the United Kingdom or Northern Ireland or a local authority in the United Kingdom shall be taxable only in the United Kingdom. “

You can see from this how police, army and civil service pensions would be exempt.  The war widows pension is paid in respect of service in the armed forces so perhaps would be exempt too.  I would either assume it is exempt or confirm it by contacting the HMRC non resident query team at the link I gave above.

I also found a copy of their marriage certificate within the service records, I assume to prove that she was indeed his widow. I dont know if this helps or not as I’m so new to this, but I have found the pensions details for my mothers great aunt, within her uncles service records on ancestry.