Gregorio worked as a formwork carpenter in Madrid for thirty years and in 2024 went back to Guayaquil, his home city, with a Social Security retirement pension of 17,000 € a year. He gave the pension body his new address so that letters would reach him, opened an account in Ecuador to receive the payments and considered the matter closed. Two years later his nephew points out that the annual certificate still shows IRPF withholding, the tax paid by Spanish residents. Gregorio cannot make sense of it: if he no longer lives here, why is tax withheld as if he did?
A change of address is not a change of tax residence
For a pension payer, the postal address and tax residence are different pieces of data. The pension body having your address in Guayaquil serves to send you correspondence and, where appropriate, to pay you abroad. On its own, it does not tell the payer that you have stopped being subject to IRPF (Spanish personal income tax), or which treaty applies to you.
Until someone proves otherwise, the payer applies the presumption that leaves it best covered: it goes on treating you as resident. And it is not wrong to do so, because tax residence does not depend on where you receive your letters. It depends on the criteria in article 9 of the Spanish income tax act (IRPF): more than 183 days in Spain in the year, the centre of your economic interests here, or the presumption arising from your spouse and dependent minor children living here.
What you tell the payer and with which document
What the pension body needs is a document proving your tax residence in another country, issued by that country's tax administration, preferably stating expressly that you are resident for the purposes of the treaty with Spain. With that document it can do two things, under article 31.2 of the Spanish non-resident income tax act:
- stop applying IRPF and start withholding under non-resident income tax;
- apply what the treaty provides, which may reduce or remove the withholding.
The notice is sent to the unit that manages your pension, through its channels, quoting the file number and attaching the certificate. Keep the dated receipt and check the next payslip. The details of that document, how long it lasts and which defects lead to rejections are in the certificate your payer needs.
What about Modelo 247?
It is the question that comes up in almost every enquiry, because it is the form that appears when you search online. Article 32 of the non-resident income tax act provides for that notice for "employees" who are going to become non-resident because they are moving abroad. The administration issues them a document so that their employer starts withholding as for a non-resident.
It is designed for someone who keeps working for a Spanish company from abroad, not for someone receiving a pension. For a pensioner, the usual route is to prove residence directly to the payer with the residence certificate from the new country. Filing a 247 that does not apply does not fix the withholding and uses up time. We explain it more fully in Modelo 247 when you leave.
What correcting it can bring: it does not always go down
This is what hardly anyone expects. Going from resident to non-resident does not automatically mean paying less. It depends on what the treaty with your country says.
Let us look at Gregorio's two possible scenarios. Suppose, just for the example, that as a resident he had been subject to 9 % withholding: 17,000 × 9 % = 1,530 € a year.
Scenario A: the treaty reserves the pension to the country of residence. Once residence is proved, the Spanish withholding should be zero. Gregorio stops paying 1,530 € a year in Spain, and whatever was over-withheld since he stopped being resident can be claimed back.
Scenario B: the treaty allows Spain to tax the pension, or there is no treaty. Then the pension is taxed here under non-resident income tax, with the scale in article 25.1.b) of the act:
- Up to 12,000 € at 8 %: 960 €.
- From 12,000 to 17,000 € (5,000 €) at 30 %: 1,500 €.
- Total: 2,460 € a year.
In this scenario, correcting residence makes the withholding go up by 930 € a year. And the years in which tax was withheld as for a resident, when he was in fact non-resident, leave no money to recover: what they leave is a difference in favour of Hacienda (the Spanish tax authorities).
| Scenario | Annual withholding | Effect of correcting |
|---|---|---|
| As a resident (assumed figure for the example) | 1,530 € | Starting point |
| A: treaty in favour of the country of residence | 0 € | Saving and refund of past years |
| B: Spain may tax | 2,460 € | Higher withholding and a possible amount outstanding |
Notifying non-residence is compulsory if that is the reality, but it is worth knowing beforehand which scenario you are in. If it is B, the right course is to regularise sensibly, year by year, not to find out from a letter. Years that are not time-barred can be reviewed for four years, and a voluntary regularisation costs less than a formal request.
Knowing which scenario Gregorio is in requires reading the treaty between Spain and Ecuador with his pension decision in front of you. We do not anticipate it here because each treaty has its own wording, and because for Social Security pensions some depart from the general model. If you would like us to look at yours, the pensioners form collects the country, the type of pension and the withholding certificates for recent years.
Recovering the past in scenario A
If the treaty proves Gregorio right, what was over-withheld since he stopped being resident is claimed with a Modelo 210 refund return for each year, accompanied by the residence certificate for that year and the withholding certificate. The limit is four years and is counted from the end of the period in which the payer had to pay in each withholding, so the oldest ones expire first. We develop it with figures in tax is withheld in Spain and I also declare it where I live.
The year of departure, separately
2024, the year Gregorio left, deserves its own analysis. If he left in October, he probably spent more than 183 days in Spain that year and remained tax resident for the whole year: withholding as a resident was correct, and what was required was to file the 2024 income tax return in Spain with the pension for the full year. If he left in March, probably not. The exact date, with tickets and a residence certificate from the new country, is the first thing requested. The year of departure also tends to coincide with the time when the other administration cannot yet certify residence, and that delays the notice to the payer.
What the payer cannot do for you
The pension body applies withholding on the basis of what it knows; it does not decide your residence or interpret the treaty on its own if you do not give it the document. Nor does it refund what was withheld in earlier years: once paid in to Hacienda, only Hacienda refunds it. And it will not warn you if the withholding changes for the worse, as in scenario B. Checking the withholding certificate every year, and comparing it with what it ought to be, is the only way to find out in time.
How that annual review is organised (certificate, notice to the payer and, where applicable, refund or regularisation) is described in the Salama Tax section for pensioners living outside Spain.