On August 1st, 2014, the Spanish government decided that foreign retirement income can be declared retroactively without penalty within a certain time period. This rule applies to individuals residing in Spain who receive retirement income from abroad. This includes foreign retirees who are resident in Spain and are therefore subject to taxation, as well as Spanish retirees who had emigrated abroad and have since returned.
Within a period of six months from January 1st, 2015, retirees can retroactively declare foreign retirement income that has not been taxed in Spain. This requires submitting income tax returns for the unexpired calendar years or, if the taxpayer had already filed (incomplete) tax returns, submitting supplementary tax returns. If the income is declared and paid within the designated time period, the tax authority will not impose fines, late payment penalties, or interest.
According to the government, thanks to the expansion and increased effectiveness of international information exchange mechanisms in recent years, the tax authority has identified numerous taxpayers residing in Spain who receive untaxed foreign retirement income. The tax authority has reportedly initiated proceedings against foreign retirees or so-called returning Spanish retirees in 27,696 cases. However, the government has made it clear that these individuals would not be treated as tax evaders. Decisions would be made on a case-by-case basis to avoid unnecessary financial losses for those affected. The government summarizes the reasons for this measure as follows: “Our country is an attractive destination for foreign retirees who enjoy their retirement here. The measure adopted is important for Spain as a destination for affluent retirees, as it helps ensure that these retirees make a contribution to the recovery of our economy.”