Can Hacienda claim back taxes?

Q. I read your article on Spanish tax returns. I am 72 and have been a resident here for 12 years. When I became an OAP in 2008, I was informed that (as you pointed out) as a pensioner, I did not pay tax. This year I received a letter from Hacienda. According to the letter, and my accountant, it would appear that on November 27, 2014, a law was passed and my accountant now informs me that I will have to send in my complete bank records of pensions received for the last five years. This is two OAP pensions from England and Scandinavia, plus a small private pension, which total about €12,000 per year.

My accountant now tells me that according to the new Spanish tax laws, OAP residents are liable to taxation. I am now confused and worried, as I may be facing a back tax payment of several thousand euros. Where do I stand?

F W T (Costa del Sol)

A. It seems that you are being audited by the Tax Agency. In Spanish this is called ‘inspección’. And the picture does not look good.

Let us clear up two points. First, I never said that Old Age Pensions are not taxed in Spain. It is only Civil Service or other government service pensions that are taxed in their country of origin. Old Age Pensions are treated as normal income. Second, there is no new Spanish tax law which affects you. Yes, the tax reform package for 2015 was issued in November 2014, but there is no change regarding Old Age Pensions. They are liable for tax in Spain, as I have written various times. If your accountant advised that you were not liable for Spanish tax, he was in error. And you are not liable for fines and penalties because the law has changed, but because you were misinformed. You must now present your records to the Tax Agency. At your level of income, you probably owe little tax, so the charges and interest should not come to much.

Send your questions for David Searl through lawyers Ubeda-Retana and Associates in Fuengirola at Ask@lawtaxspain.com, or call 952 667 090.