UK Pension Tax in Spain 2026 -- Modelo 720, Treaty Rules and Beckham Law

Last reviewed: 26 April 2026

UK pension tax in Spain is one of the most complex areas of financial planning for British nationals who retire to or reside in Spain. The applicable rules depend on which type of UK pension is in payment (State Pension, occupational DB pension, private DC drawdown, annuity, or QROPS transferred pension), whether the UK national is taxed under the standard Spanish IRPF scale or the Beckham Law special regime, and the specific articles of the UK-Spain Double Taxation Convention (DTC) that apply to each income type. The UK-Spain DTC, signed in 1975 and updated by Protocol in 2013, assigns taxing rights on different categories of income between the two countries and provides the primary legal framework for eliminating double taxation. For the full framework of leaving the UK for Spain and UK tax residency cessation, see our UK tax residency guide; for the broader picture of managing UK pensions from abroad, see our UK pension abroad guide.

UK pension tax in Spain is not straightforward and has generated a significant number of HMRC and Agencia Tributaria enquiries in recent years, particularly regarding the State Pension classification and the Beckham Law interaction with private pension drawdown. The OECD Model Tax Convention, which the UK-Spain DTC broadly follows, provides the interpretive framework for disputed treaty applications. Dual-qualified UK and Spanish tax advisers with Spanish IRPF expertise are essential for pension planning in Spain; the interaction of Beckham Law, the DTC, and the Modelo 720 creates numerous points of complexity that generic financial planning advice does not address.

UK-Spain DTC: how taxing rights are allocated

The UK-Spain Double Taxation Convention allocates taxing rights on pension income through Articles 17, 18, and 19. Article 17 covers private pensions: "Pensions, other annuities and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State." For a UK national resident in Spain, Article 17 assigns the right to tax UK private pension income -- occupational scheme pensions, SIPP drawdowns, annuities, and purchased life annuities -- exclusively to Spain. The UK is therefore not entitled to withhold tax on these payments beyond its domestic withholding rate, and any UK tax deducted at source under PAYE must be reclaimed from HMRC (using form FD5 or the HMRC NT (no tax) code application process). Spain taxes the full private pension amount at standard IRPF rates.

Article 18 covers government service pensions: "Notwithstanding the provisions of Article 17, pensions paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State." Government service pensions -- typically teachers’ pensions, NHS pensions, civil service pensions, local government pensions, police pensions, and armed forces pensions -- are taxable only in the UK, not in Spain. A UK national resident in Spain who receives a UK teacher’s pension or NHS pension pays UK income tax on that pension and does not include it in the Spanish IRPF return. UK government pensions are generally paid gross to Spanish residents with an NT tax code issued by HMRC, following a formal application.

UK State Pension: is it taxable in Spain or the UK?

The UK State Pension presents the most common point of confusion in UK pension tax in Spain. The UK State Pension is funded from National Insurance contributions by UK employers and employees; it is paid by the UK Department for Work and Pensions (DWP). The question is whether the State Pension falls under Article 17 (private pensions, taxable only in Spain as the country of residence) or Article 18 (government service, taxable only in the UK). The DTC does not explicitly classify the UK State Pension in either article. HMRC’s published DT Digest (Digest of Double Taxation Treaties) does not provide a definitive classification for the State Pension in the UK-Spain context; the Spanish Agencia Tributaria has issued Consultas Vinculantes (binding rulings) taking the position that the UK State Pension is an Article 17 pension, taxable in Spain as the country of residence.

The practical position adopted by most UK-Spain dual-tax advisers and confirmed by Agencia Tributaria binding consultations is that the UK State Pension is taxable in Spain as a standard Article 17 pension. This means a UK national resident in Spain includes their full UK State Pension in their annual Spanish IRPF return; the full £221.20 per week (2025/26 rate) is added to other Spanish income and taxed at the marginal IRPF rate. At a pension of approximately EUR 13,200 per year (estimated at April 2026 GBP/EUR rate), the Spanish IRPF on the State Pension alone is approximately EUR 1,980 at the 15% starting rate for income in the EUR 12,450-20,200 bracket. UK State Pension is paid gross (no UK tax is deducted on the State Pension at source from 2023, following HMRC policy changes), which removes the need for NT code applications for this income stream.

IRPF rates on pension income in Spain in 2026

Spanish IRPF is levied on pension income (other than government service income taxable in the UK) at the standard progressive scale. State-level IRPF rates for 2026, as published by the Agencia Tributaria, are: 9.5% on income up to EUR 12,450; 12% on EUR 12,450-20,200; 15% on EUR 20,200-35,200; 18.5% on EUR 35,200-60,000; 22.5% on EUR 60,000-300,000; 24.5% above EUR 300,000. These are state-level rates; autonomous community (regional) income tax is added on top, typically doubling the effective rate. In Catalonia, the combined state plus regional rate reaches 54% on income above EUR 175,000; in Madrid (which has the lowest autonomous community rates), the combined top rate is 45%. Pension income is classified as rendimientos del trabajo (employment income) for IRPF purposes and benefits from the reduccion por obtension de rendimientos del trabajo (a progressive deduction reducing from EUR 5,565 for income below EUR 16,825 to nil above EUR 21,399 in 2026, per the Agencia Tributaria 2026 IRPF guide).

UK nationals on Beckham Law do not pay IRPF at the standard scale during the six-year Beckham Law period; they pay 24% on Spanish employment income up to EUR 600,000. However, as discussed in the DTC section, UK private pension income during Beckham Law may be exempt in Spain (because Beckham Law taxes on a non-resident basis, exempting foreign income) while simultaneously being exempt in the UK (because the DTC assigns taxing rights to Spain). This gap in taxing rights for pension income during the Beckham Law period should be discussed with a dual-qualified adviser before pension drawdown is initiated; the resolution may require a private binding ruling from HMRC or the Agencia Tributaria.

Modelo 720: overseas asset declaration in Spain

Spain’s Modelo 720 (Declaracion informativa sobre bienes y derechos situados en el extranjero -- Informative Declaration on Assets and Rights Located Abroad) requires Spanish tax residents to declare overseas assets where any category of asset exceeds EUR 50,000 in value. The three categories are: bank accounts (total balance above EUR 50,000 across all overseas accounts); securities and investments (total value above EUR 50,000 in shares, bonds, investment funds, etc.); and immovable property (properties outside Spain with total value above EUR 50,000). The Modelo 720 is filed annually via the Agencia Tributaria portal by 31 March of the year following the asset reporting year; the first year of filing also requires disclosure of assets held at 31 December of the prior year.

UK pension funds are generally considered to be overseas assets for Modelo 720 purposes where the pension scheme is registered in the UK. A SIPP, a final salary DB scheme, or a stakeholder pension held by a UK-registered scheme with a Spanish-resident member is a declarable asset on the Modelo 720 if its value (transfer value for DB schemes, fund value for DC schemes) exceeds EUR 50,000. Beckham Law holders are exempt from the Modelo 720 filing obligation during the six-year Beckham Law period, per Agencia Tributaria Consulta Vinculante V0067-14; from year seven, the standard Modelo 720 obligation applies. The Modelo 720 was reformed in 2022 following the ECJ ruling (Case C-788/19) that the original penalty regime was disproportionate; the maximum penalty for non-filing is now EUR 20,000. Late filing carries a minimum fine of EUR 1,500 per data group.

SIPP drawdown from Spain: practical steps

A UK national resident in Spain who draws down from a UK SIPP must apply to HMRC for an NT (No Tax) code to ensure the pension administrator pays the SIPP drawdown gross (without UK PAYE deduction). The NT code is applied for using HMRC form DT-Individual (Spain), which requires certification of Spanish tax residency by the Agencia Tributaria on the Spanish certificate of fiscal residency (Certificado de Residencia Fiscal). The NT code application process takes approximately 6-10 weeks; during the interim period, the pension administrator withholds tax at the emergency rate and the member reclaims the overpaid tax via a UK Self Assessment return or through HMRC’s repayment process for non-residents. Once the NT code is in place, SIPP drawdown is paid gross; the member declares the full amount in their annual Spanish IRPF return.

UK pension administrators (SIPP providers, insured annuity providers, occupational scheme trustees) are generally familiar with NT code arrangements for Spanish-resident members but may apply different processes. HMRC’s PAYE for non-residents guidance (PAYE76010 -- DT-Individual processing) is the technical reference for pension administrators. Members who fail to obtain an NT code and allow PAYE deduction to continue will receive a double-tax credit on their Spanish return (credit for UK tax paid under the DTC) but will face a timing mismatch and potential cash flow difficulties. Annuity income and DB scheme pensions paid monthly by UK administrators are most efficiently managed with the NT code in place before the first payment date.

UK State Pension freeze and Modelo 720 interaction

UK nationals resident in Spain receive their UK State Pension uprated annually under the triple lock, unlike UK nationals in Australia, Canada, and many other non-EU countries where the pension is frozen. The UK-EU TCA social security provisions (which Spain benefits from as an EU member) preserve the triple lock uprating for UK State Pension recipients resident in EU member states; the 2025/26 rate of £221.20 per week increased from the 2024/25 rate of £221.20 by 4.1% under the triple lock (the highest of earnings growth, CPI, or 2.5%). As the State Pension increases annually, the Modelo 720 declaration for the State Pension entitlement (if treated as an overseas investment or pension scheme) must also be updated annually; however, Agencia Tributaria guidance as of April 2026 does not uniformly require the capitalised value of the UK State Pension entitlement to be included in the Modelo 720, which focuses primarily on fund values and account balances rather than unfunded state entitlements.

For UK nationals resident in Spain who receive both a private UK pension (Article 17, taxable in Spain) and a government service pension (Article 18, taxable in the UK), the Spanish IRPF return includes only the Article 17 income. A credit for UK tax paid on Article 18 government service pension is available under the DTC to prevent double taxation where the same income is taxed in both countries -- but as long as the treaty categorisation is applied correctly, no such double taxation arises. The Agencia Tributaria’s annual IRPF guide, published each December for the following year’s filing, provides the most current Spanish interpretation of pension income treatment.

Pension lump sums in Spain: IRPF treatment

UK pension lump sums -- including Pension Commencement Lump Sums (PCLS, the 25% tax-free lump sum from UK pensions, now subject to the lump sum allowance of £268,275 following Finance Act 2024 abolition of the Lifetime Allowance) and Uncrystallised Funds Pension Lump Sums (UFPLS) -- are treated as pension income for Spanish IRPF purposes and are taxable in Spain under Article 17. The UK’s 25% PCLS tax-free status does not apply in Spain; the entire lump sum (including the portion that would be tax-free in the UK) is added to the member’s Spanish taxable income in the year of receipt. Agencia Tributaria has confirmed in various binding consultations that foreign pension lump sums do not benefit from any IRPF reduction or tax-free element equivalent to the UK PCLS. A UK national resident in Spain who takes a £268,275 PCLS would add approximately EUR 308,000 to their Spanish IRPF income for that year, taxed at 47% marginal rate if combined income exceeds EUR 60,000.

This article is for general information only and does not constitute tax, legal, financial or immigration advice. Rules and rates change; verify with the primary sources cited or consult a qualified adviser before acting.

FAQ

Is my UK private pension taxable in Spain if I live there?

Yes. Under Article 17 of the UK-Spain Double Taxation Convention, private pension income (occupational schemes, SIPP drawdown, annuities) paid to a Spanish resident is taxable only in Spain -- not in the UK. The UK pension administrator should pay the pension gross (without UK PAYE deduction) once you have applied for an NT (No Tax) code from HMRC using form DT-Individual (Spain). The full pension amount is then declared and taxed in your annual Spanish IRPF return at the progressive scale rate.

Is the UK State Pension taxed in Spain or the UK?

The Agencia Tributaria’s position, based on published binding consultations, is that the UK State Pension is an Article 17 pension, taxable in Spain as the country of residence. This means a UK national resident in Spain includes their full UK State Pension in their Spanish IRPF return. UK State Pension is paid gross by DWP to Spanish residents (no UK PAYE deduction applies). The £221.20 per week 2025/26 rate equates to approximately EUR 13,200 per year, added to other income and taxed at the applicable Spanish IRPF marginal rate.

What is the Modelo 720 and do UK pensioners in Spain need to file it?

The Modelo 720 is an annual informative declaration of overseas assets filed by Spanish tax residents where any category of overseas asset (bank accounts, securities, real estate) exceeds EUR 50,000. UK private pensions (SIPP fund value, DB transfer value) are declarable if the value exceeds EUR 50,000. Beckham Law holders are exempt during the six-year Beckham Law period. Standard Spanish residents must file by 31 March following the reporting year; maximum penalty for non-filing is EUR 20,000 following the 2022 reform.

Is my government service pension (teachers, NHS, civil service) taxed in Spain?

No. Article 18 of the UK-Spain DTC assigns the right to tax government service pensions (teachers, NHS, civil service, local government, police, armed forces) exclusively to the UK. A UK national resident in Spain who receives a UK teachers’ pension or NHS pension pays UK income tax on that pension and does not include it in the Spanish IRPF return. Apply for an NT code from HMRC to ensure the pension is paid under the correct UK tax code; the Spanish certificate of fiscal residency is required as supporting evidence.

How is a UK pension lump sum taxed in Spain?

UK pension lump sums -- including the Pension Commencement Lump Sum (PCLS, up to £268,275 tax-free in the UK under the lump sum allowance) -- are treated as pension income for Spanish IRPF under Article 17 of the DTC. The UK’s PCLS tax-free status does not apply in Spain; the full lump sum is added to Spanish taxable income in the year of receipt and taxed at the applicable IRPF marginal rate (up to 47% for income above EUR 60,000). Taking a PCLS while Spanish-resident can produce a significant Spanish IRPF charge on an amount that would be tax-free in the UK.

Can Beckham Law exempt my UK pension from Spanish tax?

During the six-year Beckham Law period, Spain taxes the individual on a non-resident basis, exempting foreign income. UK private pension income may therefore be exempt from Spanish IRPF during Beckham Law (as foreign income), while the DTC assigns taxing rights to Spain (not the UK). This creates a potential gap where the income is exempt in both countries. The resolution requires dual UK-Spanish tax advice and may involve a private binding ruling from HMRC or the Agencia Tributaria. Do not initiate pension drawdown during Beckham Law without addressing this issue with a qualified adviser.

Sources

1. GOV.UK -- UK-Spain Double Taxation Convention (1975, Protocol 2013) (verified 26 April 2026)
2. Agencia Tributaria -- Modelo 720 guidance (verified 26 April 2026)
3. Agencia Tributaria -- IRPF 2026 guide and rates (verified 26 April 2026)
4. HMRC -- DT Digest: UK-Spain treaty technical notes (verified 26 April 2026)
5. HMRC -- PAYE76010: DT-Individual processing for non-residents (verified 26 April 2026)