Receiving a foreign pension while living in Spain

If you are a tax resident in Spain, yes. Residents pay income tax on their worldwide income, meaning everything you earn, regardless of where it was generated or where the payer lives. The fact that the country of origin has already deducted tax does not exempt you from declaring it in Spain: they are 2 different things, and the latter corrects the former.

You are a tax resident in Spain, broadly speaking, if you stay here for more than 183 days of the calendar year (sporadic absences are added unless you prove tax residency in another country with an official certificate) or if your main centre of economic interests is in Spain. It is also presumed when your non-separated spouse and minor children reside here.

A foreign pension is classified as employment income, exactly like a pension from the Seguridad Social (the Spanish social security system). It is not savings income or an exotic return: it falls into the same conceptual box as a salary or a Spanish pension, and therefore carries the rules for employment income, including those regarding the obligation to declare.

If you spend long periods in 2 countries and are unsure where you are a resident, that is the first point to resolve, because everything else depends on it. Managora prepares the tax residency analysis and the legal opinion that supports your position before Hacienda (the Spanish tax agency) and the administration of the other country.

It depends on the double taxation agreement with that country and, above all, on whether the pension is private or public. This is the distinction that involves the most money and is most often confused.

A pension derived from previous employment in the private sector (a company, an occupational fund, an employment plan) is usually taxed only in the country of residence, meaning only in Spain. Article 17 of the agreement with the United Kingdom states it with this formula: pensions paid to an individual who is a resident of a Contracting State shall be taxable only in that State.

A public pension, paid by a State, a region or a local council for services rendered to that same administration, works the other way around: it can only be taxed by the State that pays it. In Spain it is not ignored, it is declared as exempt income with progression. There is a very important exception: if you reside in Spain and also have Spanish nationality, that public pension becomes taxable only in Spain.

Beware of a common trap: a country's basic state retirement pension (which arises from having contributed, not from having been a civil servant) is not a public pension for the purposes of the agreement. The British state pension, for example, is taxed only in Spain. What decides the classification is the certificate from the paying entity and the agreement, not the name of the organisation that deposits the money.

A nuance that almost no one checks: the Multilateral Convention (the so-called MLI) has been in force for Spain since 1 January 2022 and has modified quite a few bilateral agreements. In the most common agreements for pensioners, the pension rule has not changed, but it has added anti-abuse clauses and there are still new notifications in the BOE (the official state gazette), the latest published in June 2026. Before accepting a rule read years ago, it is advisable to look at the synthetic text of the agreement, published by the Ministry of Finance through the Directorate General for Taxes.

If your paying country does not have an agreement with Spain, the pension is simply taxed here, and what is paid abroad is corrected with the international double taxation deduction.

Because the €22,000 limit only applies when the payer is obliged to withhold income tax, and a foreign entity is not. The AEAT (the Spanish tax agency) itself gives this as a textual example of the scenario in which the limit drops to €15,876: when the payer is not obliged to withhold, for example, pensions from abroad.

Added to this is the second, better-known reason: if you receive a Spanish pension and a foreign one, you have 2 payers. If the amount received from the second and subsequent payers exceeds €1,500 per year, the limit also stays at €15,876. If it does not exceed €1,500, the limit remains at €22,000: the fact that this second payer is foreign and does not withhold tax does not lower the limit when what they pay you does not reach €1,500 a year.

And there is a third case in which there is simply no limit: anyone who wants to apply the international double taxation deduction is obliged to submit a declaration regardless of the amount of their income. In other words, if you have had tax withheld abroad and want to recover it, you have to declare even if you earn little.

These limits are identical in individual and joint taxation, so declaring jointly with your spouse does not exempt you from anything. Managora checks with your tax data whether you have to declare before you decide anything.

With 1 of 2 mechanisms, and they are not interchangeable. The first is exemption with progression, which applies to public pensions that the agreement attributes to the other State: the pension is not taxed in Spain, but it is added to your general taxable base to calculate the average rate, and that rate is then applied to the rest of your income. Practical result: you do not pay for it, but it raises the rate for everything else. That is why it must be declared even if it is exempt.

The second is the international double taxation deduction, for pensions that both countries can tax. The lesser of 2 amounts is subtracted from your tax liability: what was actually paid abroad for a similar tax, or the result of applying your effective average tax rate to the part of the taxable base that was taxed abroad.

There is an additional cap that is always forgotten: you never deduct more than the agreement allows the other country to tax. If the paying country withheld above that limit, the excess is not recovered in Spain, it is claimed from the country that over-withheld. Managora prepares that refund request.

Special case for the United States: the tax that the United States demands from its citizens simply for being citizens does not give the right to a deduction in Spain. It is the United States that must correct this double taxation, not the Spanish tax agency.

No one does it for you automatically. The foreign payer will continue to withhold until they receive the certificate of tax residency in Spain for the purposes of the agreement, issued by the tax agency. It is a different certificate from the generic tax residency one: the one that serves to stop the withholding is the one that expressly mentions the agreement with that country.

It is requested at the electronic headquarters of the tax agency, within the procedure for tax residency certificates, identifying yourself with Cl@ve (the Spanish digital identity system) or a digital certificate, and it can also be requested at an office with form 01. Its validity is 1 year, so it must be renewed every financial year while you receive the pension.

With the certificate in hand, each foreign administration also requires its own internal form and its own deadlines, and many reject the generic certificate. This intersection is where most people get stuck: the wrong certificate is requested, or it is sent without the paying country's form, and the withholding continues year after year.

Managora requests the correct certificate, attaches the form requested by the paying country, translates it when necessary and follows the file until resolution, submitting the appropriate reiterations or appeals. The decision to stop withholding corresponds to the administration or the payer of the other country, so what is committed is the complete processing, not the result.

If you are paid in pounds, dollars or francs, the pension is converted to euros at the official exchange rate, which is the one published by the European Central Bank, directly or through the Bank of Spain. Rounding up or inventing a homemade average is not valid.

Employment income is allocated to the tax period in which it is due, not to the year that suits you. This matters when the paying country settles late or when the first payment arrives accumulated.

For arrears there is a clean route: if you receive amounts in 1 year that correspond to previous financial years for reasons beyond your control, a complementary self-assessment is submitted for the financial year to which they correspond, without penalty, without late payment interest and without surcharge, in the period from when you receive them until the end of the next declaration period. Outside that period, it is no longer free.

An additional warning: if the pension is deposited into an account opened outside Spain, check form 720. The obligation arises when the total of a block of assets exceeds €50,000, and once submitted it is only repeated when that block grows by more than €20,000. The rights of a foreign pension plan are not declared until the contingency that gives the right to collect occurs.

The exemption for permanent absolute disability or severe invalidity pensions can extend to a foreign pension, but it is not automatic. 2 things are needed: that the entity paying it replaces the social security system in that country, and that the degree recognised there is comparable to the Spanish degree. The tax agency requests the recognition resolution, the official medical report with the injuries and functional limitations, and the expert opinion, all translated into Spanish.

Anyone who assumes the exemption because tax is not withheld in their country usually ends up with a tax assessment. Managora assembles the equivalence file with the documentation that the tax agency requires and defends it if they dispute it.

Regarding the territory: the Basque Country and Navarre do not apply a bonus on the state income tax, they have their own tax, with their own scales, reductions and deductions, by virtue of the Economic Agreement and Convention. The Canary Islands, Ceuta and Melilla apply the common income tax. It is best not to get confused here: all autonomous communities under the common regime have been granted regulatory capacity over income tax and all have their own regional scale and their own deductions, not just the Canary Islands. What is specific to Ceuta and Melilla is something else: their own deduction for income obtained in those cities.

The double taxation agreement applies equally wherever you live, because it is a State treaty. What changes is the tax liability: a figure calculated with the scale of one community is not valid for another, much less for a chartered territory. Where you had your habitual residence decides which regulations apply to you.