Double Taxation Treaties — A Retiree's Guide

The treaty principle

Every modern Spanish DTT assigns each type of income to either the residence state (Spain, for you) or the source state (where the income arises). Where both can tax, the residence state must give a credit for the source-state tax already paid — so you end up paying the higher of the two effective rates, not the sum.

Treaties do not exempt you from declaring the income in Spain. Even income taxed only in the source country is still reported on Modelo 100, just with an exemption claimed.

Quick reference — common retiree incomes

UK retirees — the practical setup

• ✦Tell HMRC you've moved: file form P85 plus the Spain-Individual form (DT-Individual). HMRC sends a NT (no-tax) code to your pension provider so UK income tax stops at source.
• ✦Government pensions (NHS, civil service, military, teachers' pension, police): stay UK-taxed; declared in Spain but exempted under treaty. Still bumps your effective Spanish rate on other income (exención con progresividad).
• ✦State pension and private/occupational pensions: become Spain-taxed only.
• ✦Don't forget Form FD9 to reclaim UK tax already deducted in your moving year.

US retirees — the rare exception

The US is one of two countries that taxes its citizens on worldwide income regardless of residence. As a US-citizen retiree in Spain you file BOTH a US 1040 AND a Spanish Modelo 100 every year.

• ✦Social Security: taxed only in the US under the treaty. Declared in Spain but exempt.
• ✦401(k) / IRA distributions: taxed in Spain on the residence rule. You claim a US Foreign Tax Credit (Form 1116) for the Spanish tax paid, eliminating US tax.
• ✦Roth IRA: contested. Many gestors apply Spanish tax on withdrawals despite the US tax-free status. Get specialist US-Spain advice before withdrawing.
• ✦FBAR + FATCA: continue filing US informational returns on Spanish bank accounts.

Canadian retirees

• ✦CPP / OAS: taxed in Spain under residence rule. Canada withholds 15% on OAS — fully credited in Spain.
• ✦RRSP / RRIF withdrawals: Canada applies a 15% (periodic) or 25% (lump-sum) withholding. Spain taxes the full amount with credit for the Canadian withholding.
• ✦TFSA: not recognised as tax-free in Spain. Gains and income inside become Spanish-taxable.
• ✦File NR73 with CRA to formalise non-residency before leaving.

Avoiding the double-tax trap

• ✦Get a tax-residency certificate (certificado de residencia fiscal) from Spanish Hacienda each year — most foreign payers need it to apply treaty rates at source.
• ✦Reclaim over-withheld tax: most countries have a 4-year window. UK uses form R43; US uses Form W-8BEN to pre-empt.
• ✦Watch the timing of large one-off income (bonus, pension lump sum, property sale) — happening in the wrong tax year can trigger full taxation in both countries.
• ✦When in doubt, ask for the article number: every treaty answer should reference a specific article.