How is annuity taxed?

David Searl and his book, ‘YOU AND THE LAW IN SPAIN’

In his book, ‘You and the Law in Spain’ for 2011 David Searl notes that both lifetime and fixed-term annuities have tax reductions. They must be declared in the investment part of the tax form. I have a Swedish annuity with a fixed time of 20 years. I am 80 years old and I have been declaring the annuity as a lifetime at eight per cent. But I think this is wrong. What percentage of the yearly amount should be declared?
H.G. (by email)

A fixed-term annuity of 20 years pays tax on 25 per cent of the yearly income. If you receive €20,000 each year from your fixed-term annuity, you will be taxed on €5,000. You declare this income in the investment part of the tax return. For investment income up to €6,000, the tax rate is 19 per cent, so this would draw tax of €950. However, you can deduct your personal minimo vital from your total income. If you are 80 years old, this reduction is €8,100. You can also apply this reduction to your Swedish pension income. You need a 2018 law book and a Spanish tax advisor.

Send your questions for David Searl through lawyers Ubeda-Retana and Associates in Fuengirola at [email protected], or call 952 667 090.

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David Searl

You and the law in spain Send your questions for David Searl through lawyers Ubeda-Retana and Associates in Fuengirola at [email protected], or call 952 667 090.


    • david t chapman

      16 September 2020 • 11:47

      If a qrops suitability report had an validity life of 3 months and the advisers went ahead and completed the transfer of the UK pension assets after 6 1/2 months without a second report and using a falsified signature , can I assume the contract was voided
      D T Chapman


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