A
purchased annuity might include one where
instead of a lump sum paid, the investor pays
in over several
years.
Whole of life annuity
The tax is reduced as follows:
| Age when first begin to receive payments |
% of annuity liable to Spanish tax |
% of annuity tax-free |
| 39
or less |
45% |
55% |
| 40-49 |
40% |
60% |
| 50-59 |
35% |
65% |
| 60-69 |
25% |
75% |
| Over 69 |
20% |
80% |
This applies
only where you have purchased the annuity.
It does not apply to other pensions plans
(however, read the anomalies of indirect
purchase in the Private pensions section
of Pensions). If the annuity is paid by
a Spanish insurer they will withhold 25%,
but this will be repaid to you if it exceeds
you calculated tax liability. The value
of the annuity would not form part of your
wealth tax return unless it has a redemption
value.
Temporary annuity
The
amount liable to tax depends on the length
of the annuity:
| Length
of annuity |
%
of annuity liable to Spanish tax |
%
of annuity tax-free |
| Under
5 years |
15% |
85% |
| 5-10
years |
20% |
80% |
| 10-15
years |
35% |
65% |
| Over
15 years |
42% |
58% |
Note that the value of the annuity is part
of any wealth tax return.
Source: BlevinsFranks
See also
Pensions
Residency
& Tax |
