Spanish income tax for 2017

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gerryh
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Spanish income tax for 2017

Postby gerryh » Sun Dec 10, 2017 10:39 am

Are there any changes to allowances, rates etc for the 2017 tax year?
I know my income for 2017 will be less than that for 2016 due to the exchange rate.
I'm in the process of preparing my budget for 2018.
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Gerry
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El Cid
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Re: Spanish income tax for 2017

Postby El Cid » Sun Dec 10, 2017 11:40 am

I'm not aware of any significant changes. The exchange rate looks like it will be close to 1.14

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Re: Spanish income tax for 2017

Postby gerryh » Sun Dec 10, 2017 12:39 pm

Thought that was the case but just checking in case I missed something. My pensions are paid into my Spanish bank so don't need to apply an exchange rate.
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Re: Spanish income tax for 2017

Postby Paddy Pumpkin » Sun Dec 10, 2017 9:32 pm

Slightly off subject...but what exchange rate does your bank use? How near is the rate to the interbank market?

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Re: Spanish income tax for 2017

Postby El Cid » Sun Dec 10, 2017 10:00 pm

The bank is not involved. The pension provider does the exchange and pays the money into your Spanish account with no deductions or commissions.

UK state pensions get a very good rate, probably within 1 point only or less behind the interbank rate. Private pensions do not tend to get such an attractive rate, but still probably better than a Forex company will give you. They also sometimes charge a small amount to make the transfer which the DWP do not.

Either way, by paying it in direct and using the net amount when you declare it for tax will effectively absorb any charges or loss on exchange compared to using the gross GBP figure and applying the official interbank average rate to it.

It’s not a huge amount but is still a good few Euros.

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Re: Spanish income tax for 2017

Postby Paddy Pumpkin » Sun Dec 10, 2017 11:23 pm

Things have moved on a lot since I was a teller in a bank.....it was a way for banks to make a lot of money back then! So to understand it correctly. Say my pension from UK govt is GBP 100 per month. Interbank exchange rate is 1.2000. The rate they give me is 1.1999 and the DWP pay 119.99 EUR direct to my bank account?

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Re: Spanish income tax for 2017

Postby El Cid » Sun Dec 10, 2017 11:44 pm

No, I was approximating that 1 point would be 1 %. So you would get 1.11. DWP usually do slightly better than that but it’s difficult to see the exact rate as it varies all the time and you do not know exactly when they converted the money.

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Re: Spanish income tax for 2017

Postby Paddy Pumpkin » Mon Dec 11, 2017 12:24 am

Hmmm interesting. All government departments use a benchmark rate called ECB 37, private funds tend to use Reuters WMR benchmark rates. They will exchange the GBP with a bank at that rate and the rate is officially published. The only thing we don't know is thr date each month and that will vary so banks can't second guess when the deal will be done. This to make it clear and transparent so there is no room for the fund to make any profit for themselves on the rate. 1% (100 points)is a large margin for these transactions so I wonder where it goes. Either way if you take the pension in GBP you will be able to exchange it at a much better rate yourself.

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Re: Spanish income tax for 2017

Postby Paddy Pumpkin » Mon Dec 11, 2017 12:30 am

but until tonight I didn't know that the DWP offered the possibility to receive your pension paid in the currency of the country you lived. I always thought they paid GBP and the bank where you held your account did the conversion (and ripped you off)


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