Greek nationals residing in Spain will be taxed on their public pension in Greece

Tax residence in Spain and a taxpayer's nationality are determining factors in establishing which State has the right to tax public pensions received from abroad. A recent binding ruling from the Directorate General of Taxes (DGT) clarifies the tax treatment of pensions paid by the Greek State to persons residing in Spanish territory.

What the DGT has resolved

According to Article 19.2 of the Convention between Spain and Greece for the avoidance of double taxation, pensions paid by a State may only be taxed in that same State. However, there is a critical exception: if the natural person is a resident and national of the other Contracting State, the taxing power changes.

In the case analyzed, the DGT establishes that if a beneficiary is a Greek national but is tax resident in Spain, the public pension can only be taxed in Greece. Nevertheless, this criterion has an important nuance: if the pension originates from services rendered within the framework of a business activity, Article 18 of the Convention will apply, which implies that taxation will fall exclusively on the State of residence, i.e., Spain.

What this means for you

This criterion directly affects expatriates and residents in Spain who hold Greek nationality and receive a public pension from their country of origin. The fiscal impact will depend on two elements:

• Nationality: Being a Greek national, the right of taxation remains in Greece according to the convention.
• The origin of the pension: If the benefit derives from a business activity, the treatment changes and the pension will be taxed in Spain.

What you should do

It is necessary to verify the nature of the pension received to determine whether its origin is strictly public or if it is linked to previous business activities. The correct application of the Convention between Spain and Greece avoids errors in the Personal Income Tax (IRPF) declaration and ensures that the taxing power is exercised in the corresponding State according to the taxpayer's nationality and residence status.