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V0696-18 15 March 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención con progresividad

Dutch pensions may be taxed in Spain or exempt with progressive rates under the double taxation treaty

A Spanish resident asks whether Dutch retirement pensions from the Amsterdam municipal government are taxable in Spain or in the Netherlands. The DGT explains that the treatment depends on whether the pensions are considered paid for public services or for prior employment.

The question raised

Question raised: Whether the two aforementioned pensions are exempt from Personal Income Tax in Spain through the application of the Double Taxation Convention.

The DGT's ruling

If the pensions are received due to previous employment that was not for services rendered to the Dutch State or its entities, they are taxed exclusively in Spain. If the Convention allows the Netherlands to also tax them, these incomes shall be exempt in Spain, but the exemption with progression shall apply. This means they will be used to calculate the average tax rate applicable to the taxpayer's remaining income.

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