👵👴 The New Retiree Tax Checklist: Planning Your Move to Spain
Moving to Spain for retirement offers lifestyle benefits, but it requires careful financial planning. As a tax resident, your worldwide income and assets are taxable, making compliance with DTA rules, Wealth Tax, and Inheritance Tax a critical priority.
🔑 Phase 1: Income Tax (IRPF) and DTA Compliance
Your primary concern is how your foreign pensions, Social Security, and investments will be treated by the Spanish Tax Agency (AEAT).
| Task | Action Required / Focus | Key Implication |
| 1. Determine Pension Treatment | Identify the type of foreign pension: Public Sector (Government/Civil Service) vs. Private Sector (Company/Personal Annuity). | Public Pensions are often only taxable in the source country (e.g., UK Government, US Civil Service), but must still be declared in Spain. Private Pensions are generally taxed in Spain as general income. |
| 2. Review Your DTA | Consult the Double Taxation Agreement (DTA) between Spain and your home country (e.g., UK, US). | The DTA article on pensions dictates which country has the right to tax your income, preventing double taxation. |
| 3. Plan Retirement Account Withdrawals | For US plans (401k, Traditional IRA, etc.): withdrawals are taxed as general income (IRPF) in Spain (up to $\approx 50\%$). | Roth IRA/401k earnings are a grey area; they are often taxed in Spain upon distribution (even if tax-free in the US). Plan timing to keep withdrawals in lower tax brackets. |
| 4. Social Security / State Pension | Declare all state-level pension benefits (e.g., US Social Security, UK State Pension). | These are generally taxable in Spain as work income (IRPF), with a tax credit applied for any taxes paid in the source country. |
| 5. Claim Foreign Tax Credit | In your annual IRPF filing, complete the section for the deduction for international double taxation (Box 588 / Box 96 on old models). | This is how you claim credit for any tax already withheld abroad, ensuring you are not taxed twice on the same income. |
💎 Phase 2: Wealth & Asset Preservation
These are long-term considerations that are highly dependent on your chosen Autonomous Community (CC.AA.).
| Task | Action Required / Focus | Key Implication |
| 1. Choose Tax Residency Strategically | Assess the Wealth Tax rules of regions like Madrid or Andalusia (99-100% bonus) versus high-tax regions like Catalonia or Navarre. | Your CC.AA. of residence determines your annual Wealth Tax liability on your worldwide net assets. |
| 2. Assess Wealth Tax Exposure (Modelo 714) | Calculate your worldwide net assets (including the value of accessible pension funds, like 401k/IRA post-age 59.5). | If your net worth exceeds the regional threshold (e.g., national minimum of $\approx €700,000$), you must file Modelo 714 and pay the annual tax. |
| 3. Foreign Asset Declaration (Modelo 720) | Annually declare all foreign assets (bank accounts, investments, real estate) if any category exceeds €50,000. | This is an informational filing, but mandatory. Note: Defined Benefit/Consolidated 401k plans are often exempt from this filing until funds are accessible. |
| 4. Inheritance & Gift Tax Planning | Choose the law of your nationality in your Will (if desired) and factor in the regional tax rules. | If you reside in a region with a 99% relief (e.g., Madrid, Valencia, Andalusia), your children/spouse may pay virtually zero tax on inheritance. If you reside in a high-tax region, planning is essential. |
Tax Guide 2026
If you need an overall view of tax obligations, click on Taxes in Spain Guide 2026.
🏡 Phase 3: Final Administrative Steps
| Task | Action Required | Deadline / Timing |
| 1. Obtain the Tax Residency Certificate (Modelo 01) | Apply to the AEAT to prove you are a Spanish resident for tax purposes. | Use this certificate to request tax-free payment of your pension income from your foreign payer (to stop foreign withholding tax). |
| 2. Final Year Tax Filing (Home Country) | File your final tax return in your home country, ensuring you claim yourself as a non-resident there and declare your new Spanish residency. | Crucial for avoiding confusion and potential audits from the previous tax authority. |
| 3. Local Taxes (IBI) | Ensure the Impuesto sobre Bienes Inmuebles (IBI – Annual Property Tax) is set up and paid to your local town hall (Ayuntamiento). | Annual payment, usually handled via direct debit. |
Tax Guide 2026
If you need an overall view of tax obligations, click on Taxes in Spain Guide 2026.
