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V2449-24 4 December 2024 · SG de Fiscalidad Internacional Criterion in force
IRPF · CDI España-EEUU

US Teachers' Pensions in Spain: CDI Spain-US Regime and Double Taxation Relief

A married couple resident for tax purposes in Spain, both US citizens and one also Spanish national, receives pensions from their teaching activities at a public university in Texas: one from the private ORP programme and another from US Social Security. They ask how these pensions are taxed in Spain and how double taxation is avoided with the United States.

The question raised

Question posed: Application of the Convention between the Kingdom of Spain and the United States of America for the avoidance of double taxation and the prevention of fiscal evasion with respect to income taxes on pensions received.

The DGT's ruling

The ORP pension, as it originates from a private management entity and not from the State itself or its subdivisions, does not fall under Article 21 of the DTC (government service) but under Article 20.1.a): it is taxed exclusively in Spain as the State of residence, without prejudice to the fact that the USA may tax under the citizenship clause of Article 1.3 of the Convention, in which case the USA must correct the double taxation (Art. 24.3). The US Social Security pension may be subject to taxation in the USA (Art. 20.1.b) and also in Spain as the State of residence; Spain corrects the double taxation through a deduction of the tax effectively paid in the USA pursuant to Article 24.1.a of the Convention.

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