UK State Pension, US Social Security and other state pensions in Spain

Key rules

• US Social Security: US Social Security is taxable only by the US, so Spain does not tax it for a resident.
• UK State Pension: If you live in Spain, Spain taxes your UK State Pension, not the UK.
• Government pensions: Government-service pensions are generally taxed by the paying country, with exceptions for people who are residents and nationals of the other state.
• Treaty check: The exact treaty article and any protocol decide your case, so check them for your pension type.

The short answer

A tax treaty between Spain and the paying country decides who taxes your pension. The answer depends on the type of pension. The comparison below shows each type side by side.

UK State Pension

If you live in Spain, Spain taxes your UK State Pension, not the UK. The treaty treats it as an ordinary pension, so the country where you live taxes it. You do not need the UK personal allowance.

Tell the UK pension authorities that you are resident in Spain. The pension is then paid in full, with no UK tax taken off. You then declare it on your Spanish tax return.

US Social Security

US Social Security is taxable only by the US, so Spain does not tax it for a resident. Spain exempts it under the treaty.

The US can still tax it. If you are not a US citizen, expect the US to withhold 25.5% on 85% of the benefit. If you are a US citizen, the US taxes you on your worldwide income, so you may also have a US return to file. Ask a US-Spain tax adviser how to report it.

German, French and Dutch pensions

For these countries, the rule depends on the kind of pension:

• Private and social-security retirement pensions: generally taxed only where you live. As a Spanish resident, you pay tax in Spain.
• Government-service pensions (for example, from working as a civil servant): generally taxed by the country that pays them. There are exceptions if you are both a resident and a national of the other state.
• German social security pensions: under some versions of the German treaty, the paying state taxes them. Check the exact article for your case.

Treaty wording differs by country and pension type. Before you rely on any of this, read the specific treaty article, and any protocol, for your pension. You can also ask a Spanish tax adviser.

Other countries

For a state pension from any other country, find the treaty between Spain and that country. Look at the article on pensions and the one on government service. The same question applies in each case: does the treaty give the taxing right to the country where you live, or to the country that pays?

What to do

1. Identify each pension you receive and its type: state, social security, private or government service.
2. Check what the treaty says for that type.
3. Tell the paying body you are resident in Spain, so it pays gross where the treaty allows.
4. Declare in Spain any pension that Spain taxes.

The FAQ below answers common questions on the UK, the US and government pensions.

Who taxes which pension, by pension type

What to watch for

• Treaties differ. The table shows the usual result. Some treaties let the paying country tax a private pension as well, so read the pension clause in the treaty between Spain and the country that pays you.
• Government pensions vary most. Some treaties also cover pensions paid from funds a state has set up, and some leave out the nationality exception. Check the government-service clause of your own treaty before you decide where to declare the pension.
• "State pension" is not one category. The UK State Pension is treated like a private pension, so the country of residence taxes it. US Social Security is treated differently and stays with the US. Do not assume that one state pension works like another.
• Not sure which row you fit? Ask a tax adviser in Spain or your local tax office before filing your first Spanish return.

Frequently asked questions

Will the UK still tax my State Pension if I live in Spain?

No, the UK does not tax your State Pension once you are resident in Spain, because the treaty gives that right to Spain. You do not need the UK personal allowance. Tell the UK pension service you live in Spain so it pays the pension gross, without tax taken off.

Does the US take tax off my Social Security if I live in Spain?

Yes, the US can withhold 25.5% on 85% of the benefit if you are not a US citizen. If you are a US citizen, the US taxes you on your worldwide income instead. In both cases Spain exempts the benefit under the treaty.

Is a German, French or Dutch government-service pension taxed in Spain?

Usually no, because government-service pensions are generally taxed by the country that pays them. An exception applies if you are both a resident and a national of the other state. Check the exact treaty article for your country before you file.