How is annuity taxed? Legal advice from David Searl

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

Here is one of the weekly legal-advice questions, answered by author David Searl

Question:
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) 

Answer:
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.

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