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If you receive pension from Finland to Spain from 2022 onwards

A new tax treaty was concluded between Finland and Spain, and it has been applied as of 1 January 2019. The tax treaty provides that if you receive pension from Finland, you must pay tax to Finland even if you live in Spain.

However, a 3-year transition period was agreed to apply to pension income received from the private sector in 2019–2021. During the period, pension recipients did not have to pay tax to Finland. Starting 1 January 2022, you must also pay tax to Finland on earnings-related pension received from the private sector.

However, pension based on motor liability insurance or other such risk insurance will be taxed in Spain only.

Tax paid to Spain is deducted from tax imposed in Finland

Usually tax treaties provide that if double taxation occurs, it will be eliminated by the individual’s country of residence. Exceptionally, however, the tax treaty with Spain states that double taxation on pension income will be eliminated in the country of source. This is called reverse credit.

If you live in Spain but receive Finnish pension on which you must pay tax to Finland, the tax you have paid on the pension to Spain will be credited to you in your taxation in Finland. 

If you not only receive pension from Finland but also other income, which is subject to Spanish taxes, you can figure out the Spanish tax amount directed toward your pension from Finland if you perform a calculation reflecting its proportional part. The calculation must contain the income subject to Spanish tax, taking account of the tax-deductible expenses that support the income.

Example:
You receive €20,000 in pension income from Finland based on your past employment in the private sector. Your other income taxable in Spain amounts to €31,000 a year; and you also have paid €1,000 in deductible expenses for the production of income. You pay a total of €15,000 of tax to Spain. The Spanish tax on the pension, paid to you from a Finnish source and based on past employment in the private sector, is calculated as follows:  

The pension from Finland (€20,000) must first be divided by the total amount of all income subject to Spanish taxes €51,000 (= €20,000 + €31,000), subtracting the expenses for the production of income (-€1,000).  Multiply the result by the amount of tax paid to Spain (€15,000). 

20,000 / (51,000-1,000) × 15,000 = 6,000

The Spanish tax on the earnings-related pension from the private sector paid to you from Finland is thus €6,000.

Note: However, double taxation of pension income from the public sector is normally eliminated in the country of residence, i.e. Spain.

Tax cards for 2022

In December or January, you will receive information about your tax card by post.

In calculating your tax card, the Tax Administration has sought to take into account that you pay tax on your pension to Finland.

The tax card does not enter into force until 1 February 2022. The pension payors paying pension in January 2022 still use the previous year’s tax card information to withhold tax.  Consequently, the pension for January is subject to the health care contribution only, and so the amount of tax that accrues is too small. 

If you also pay tax on your pension income to your country of residence, i.e. Spain, the tax you pay to Spain can be taken into account when the tax rate applied in Finland is calculated. You can request crediting of the Spanish tax in Finland by applying for a revised tax card. In the application, estimate the amount of tax you have paid to Spain.

However, there is no hurry to change the tax card. You can also do it later and simultaneously request crediting of the Spanish tax in Finland for the entire year (reverse credit).

Estimate the amount of tax payable to Spain in MyTax in the section

  • Pay, pensions and benefits, or
  • Non-resident’s pensions and payments.

If you file on paper (Form 6207a, in Finnish), report the tax at Crediting of tax paid abroad (reverse credit).

Note that if the amount withheld during the tax year does not cover the taxes for the entire year, you must pay the missing amount as back taxes after the tax assessment has been completed.

If necessary, call our service number (International income taxation of individuals).

If you move to Spain permanently   

If you move to Spain permanently, report it to the Tax Administration.

The authorities would generally consider your residence in Spain to be permanent if you no longer have a home in Finland. If you still have living quarters in Finland and you stay in Finland a lot, it will be more complicated to determine whether you have moved permanently. In such cases, determining the country of tax residence requires careful consideration of your overall situation.

The taxes you have paid to Spain can be taken into account in your Finnish taxation if

  • you have reported your move to the Tax Administration in sufficient detail;
  • you have submitted a notification of move from Finland to live permanently in Spain to the Digital and Population Data Services Agency;
  • you have a permanent place of residence in Spain; and
  • the Spanish tax authorities consider you to be a resident of Spain in accordance with the tax treaty. Note that if this is the case, your other income from Finland may also be taxed in Spain.

Ask the Finnish Tax Administration for a tax card

If you want that the tax you have paid to Spain is taken into account on your tax card, request a revised tax card in MyTax or on Form 6207a (in Finnish).

Attach a document issued by the Spanish tax authority about your liability to pay tax on your worldwide income to Spain (a certificate of residence). Also attach proof of your having a permanent home in Spain, for example a copy of the deed of sale or rental contract. You should also provide proof that you no longer have a home in Finland. Acceptable proof is, for example, a copy of the deed of sale, a statement showing that you have given notice on your rental contract, or an account stating that you have rented out the apartment you own.

Health care contribution payable to Finland

Even when you live in Spain on a permanent basis, Finland usually reimburses your medical costs to Spain. Because of this, you must pay the insured person’s health care contribution, which is less than 2% of the pension, to Finland. The reimbursement of medical costs is governed by the EU regulations on social security. The health care contribution is included in the withholding rate.

Checklist for persons moving abroad

File a notification of move to the Finnish Digital Agency.

  • If you file a notification of permanent move, information about your move is forwarded to the Tax Administration automatically.
  • If you file a notification of temporary move to the Digital and Population Data Services Agency, you should inform the Tax Administration separately. Print a form for reporting a temporary change of address (3817). If you do not want to use the form, you can send us a letter with the following details: your name, personal ID, new address and the date of move. 

If you live abroad

  • If your address abroad changes during your stay, you must inform both the Digital and Population Data Services Agency and the Tax Administration. 
  • If you are a Finnish citizen, report to the Digital and Population Data Services Agency (DVV) any changes to the following information: address, marriage, divorce or children. See DVV’s website for more information about living abroad

Check with the Social Insurance Institution (Kela) whether you continue to be covered by the Finnish social security or whether Finland will reimburse your medical costs to your new country of residence.