Andrés worked as a tax inspector in Valladolid for almost four decades. He retired on a clases pasivas pension (the Spanish civil service pension scheme) of 34,000 € a year and, shortly afterwards, settled in Bordeaux with his wife Hélène, who is French. He expected that once he changed country his pension would be taxed there, as a former colleague from the private sector had been told. A year later he was still seeing Spanish withholding on every payslip and assumed the payer had made a mistake. It probably had not.
Why a civil servant's pension follows a path of its own
The double taxation treaties Spain follows divide pensions into two boxes. Those that reward past employment in the private sector usually go to the country of residence. Those that reward services rendered to a State, a region (comunidad autónoma) or a local authority are dealt with in a different article (article 19 of the OECD model), whose usual rule is that they are taxed only in the paying State.
The logic is simple: the State that paid your salary during your working life keeps the right to tax what it pays you for those same services when you retire. It makes no difference that you now live in France, Argentina or Thailand: if the treaty follows the model, your clases pasivas pension stays in Spain.
The fuller explanation of how the two articles divide pensions, with the borderline cases, is in public or private pension. Here we focus on what is specific to civil servants.
The qualification that can turn it round: nationality and residence together
Article 19 of the model contains an exception that many people overlook. The public pension stops being taxed in the paying State and is taxed only in the State of residence when the recipient is both resident in and a national of that other State. Living there is not enough: you must also hold its nationality.
With that rule, the situations line up as follows:
| Situation of the retired civil servant | Usual result under the model |
|---|---|
| Spanish national living in another country | Taxed in Spain |
| Spanish national living abroad who has acquired that country's nationality | May become taxable only there |
| Foreign national who was a Spanish civil servant and returns to their home country | May become taxable only there |
| Spanish dual national living in the country of their other nationality | The treaty and the nationality rules have to be read |
Andrés is Spanish only. If the treaty with France follows the model on this point, his pension is taxed in Spain and the withholding on his payslip is not a mistake. If Andrés were to acquire French nationality, the answer could change, and what would have to be checked is from what date and with what document that is proved.
We stress the conditional: the specific wording of each treaty governs, and some contain special rules. Before acting, read the text published in the BOE (the Spanish official gazette).
What it costs Andrés to be taxed in Spain as a non-resident
Since he does not live in Spain, Andrés does not file the ordinary income tax return. His pension is taxed under non-resident income tax (IRNR), which for pensions applies its own scale set out in article 25.1.b) of the act: 8 % up to 12,000 €, 30 % between 12,000 and 18,700 € and 40 % on the excess. In addition, article 24.1 of that act calculates the base on the gross amount, without the reductions a resident would have.
The calculation, step by step:
- Up to 12,000 € at 8 %: 960 €.
- From 12,000 to 18,700 € (6,700 €) at 30 %: 2,010 €. Running total: 2,970 €.
- From 18,700 to 34,000 € (15,300 €) at 40 %: 6,120 €.
- Annual tax: 2,970 + 6,120 = 9,090 €, an average rate of about 26.7 %.
If the payer withholds that amount, the Spanish obligation is in principle covered by the withholding. What is worth checking every year is that the payer applies the non-resident scale and not the withholding tables for a resident, which follow a different logic and may give a different result.
The fact that the treaty reserves the pension to Spain does not mean it disappears from the return in the country where you live. Many systems include it to calculate the rate on the rest of your income, or require it to be declared even though it is exempt. How France, or whichever country it is, does this is not something we can answer: the client's adviser there confirms it, and we give that adviser the Spanish calculation.
Who counts as a civil servant for these purposes
In everyday speech the word "civil servant" is used far more broadly than in the treaty. What article 19 looks at is whether the pension rewards services rendered to the State or its administrations in the exercise of public functions. That leaves out some cases people include without a second thought:
- Contract staff of a town hall, a hospital or a public university who paid contributions under the general scheme: their pension is usually a Social Security pension, not a clases pasivas pension, and may fall under the article on private pensions.
- Employees of State-owned companies carrying on a business: the model itself sends those cases to the article on private pensions.
- Civil servants who, because of the date they joined, were brought into the Social Security system: the payer changes, but what has to be examined is whether the pension still rewards public services.
In these borderline cases there is no automatic answer. You have to look at the decision that granted the pension, the scheme it comes from and the text of the applicable treaty.
A civil servant's widow's pension
If Hélène were widowed, she would receive a clases pasivas widow's pension. Does it follow the same path as Andrés's? The model speaks of pensions paid "in respect of services rendered" to the State, and the widow's pension derives from those services even though she did not render them. The usual interpretation places it under the same article, but some treaties have their own wording, and here the nationality question is added: Hélène is French and lives in France, which is exactly the situation the exception covers. It is a case in which the answer may be different for each spouse.
The papers a retired civil servant should keep to hand
Files for retired civil servants living abroad are resolved with few documents, but without them they are not resolved at all:
| Document | What it provides |
|---|---|
| Retirement decision and decision granting the pension | Scheme, corps and the services being rewarded |
| Annual withholding certificate | Whether the payer applies the non-resident scale |
| Proof of nationality and date it was acquired | Whether the article 19 exception comes into play |
| Tax residence certificate from the destination country | Proves where you are resident for treaty purposes |
If your situation fits one of the doubtful cases, tell us about it through the pensioners form with those four documents, or with the ones you have, and we will tell you what is missing.
When the civil servant also receives another pension
It is common for a retired civil servant also to have a Social Security pension for years of contributions in the private sector before sitting the civil service exams, or a pension plan. Each one is analysed separately: the clases pasivas pension may stay in Spain and the other go to the country of residence. What cannot be done is to treat them as a block because the same body pays them or they reach the same account. We develop the case of someone paid by two schemes or two countries in I receive a pension from two countries, and that of the private pension of a retiree who moves abroad in is my Spanish pension taxed in Spain or where I live.
The year you leave
The first year abroad deserves a separate review. Spain does not split the tax year: if in the year of the move you are still tax resident here because of days or interests, the whole pension for that year goes into your ordinary income tax return, and the non-resident scale does not come into play until the following year. It is common in that period for the payer to apply one approach and the return another, and for the two to have to be reconciled afterwards.
Reviewing the clases pasivas pension when the civil servant lives abroad (treaty, withholding and coordination with the adviser in the other country) is part of the work we describe at Salama Tax, together with the other situations of pensioners living outside Spain.