Taxes for Retirees on Mallorca: How Your Foreign Pension Is Taxed
Sandor Farkas
Mallorca expert and author
Plenty of people spend their retirement on Mallorca and quickly find that taxing a foreign pension in Spain works differently from what they knew back home. Once you move your tax residency to Spain, the country generally becomes the central point of contact for your income tax, including the pension you draw from abroad. What the 183-day rule means, which allowances you keep and what to watch for in the Spanish tax return is what this article explains, from the perspective of residents who have taken this step themselves.
At a glance
As a tax resident in Spain (more than 183 days a year on the island) you declare your foreign pension in the Spanish income tax return. Spain, as your country of residence, taxes most pensions in full, but relief for tax already paid abroad usually applies through a double taxation treaty. Government and civil-service pensions are often taxable only in the paying country. A personal allowance applies, and it is higher for retirees aged 65 and over.
When you become taxable in Spain
The rule of thumb: anyone who spends more than 183 days in a calendar year in Spain, or whose centre of life is here, automatically becomes a tax resident. That is independent of whether you have formally registered at the town hall (empadronamiento). As a resident, you tax your worldwide income in Spain, which includes your foreign pension. Where exactly the line runs, we explain in the guide to tax residency and the 183-day rule.
What does it mean to tax a foreign pension in Spain? It means that as a tax resident you declare your pension in the Spanish tax return (Declaración de la Renta). Spain taxes the pension as your country of residence, while your home country may withhold a share depending on the treaty between the two states. Double taxation is avoided through a credit or exemption.
Anyone who still lives mostly in their home country and only owns a holiday property on Mallorca remains taxable there instead.
Which pension type is taxed where
Most double taxation treaties Spain has signed follow the same logic and split taxing rights by the type of pension. This classification decides which country may tax:
- State and private pensions: as a rule taxed in your country of residence, Spain, once you are a tax resident.
- Occupational and personal pensions: likewise taxed in Spain as the country of residence.
- Government and civil-service pensions: under most treaties taxable only in the country that pays them, not in Spain.
Note: the exact split depends on your treaty
Spain has double taxation treaties with the US, the UK, Germany, Ireland and many other countries. The details of which pension is taxed where, and how relief is granted, follow the specific treaty between Spain and your home country. Check your own treaty or ask a tax adviser before you assume a general rule applies to your case.
Spanish tax rates and allowances
Spain levies income tax (IRPF) on regular income such as a pension. It combines a national and a regional part, so the exact rate varies slightly by autonomous community (on the Balearics, by the rules of the Comunitat). The rates are progressive and run roughly from 19 percent to about 47 percent for very high incomes.
Before any tax is due, personal allowances apply. For 2026, as a rough guide:
| Posten | Kosten | Dauer |
|---|---|---|
| Base allowance under 65 | 5,550 EUR | per year |
| Allowance from age 65 | 6,700 EUR | per year |
| Allowance from age 75 | 8,100 EUR | per year |
On top of that there is a flat reduction on pension and earned income that lowers your taxable base further. With an average pension, many retirees end up at an effective tax rate in the low double-digit percentage range. A tax return is mandatory once your annual pension is above the allowance or you have meaningful investment income.
How the tax return works in practice
You file the Spanish income tax return (Declaración de la Renta, Modelo 100) each year for the previous year. The so-called Renta campaign usually runs from early April to the end of June. Here is how to proceed:
Get your pension statement
Obtain the annual statement from your pension provider at home. It is the basis for the figure you declare in Spain.
Document any tax paid abroad
Keep proof of tax withheld in your home country, so the amount can be credited against your Spanish tax where the treaty allows.
File the Renta
You submit the return online through the Agencia Tributaria, a gestor or a tax adviser. The deadline is usually the end of June.
Especially in the first year, it is worth having an English-speaking tax adviser or a gestoría guide you. Crediting the tax paid abroad and classifying the pension type correctly are the most common sources of error. For a broader overview of the Spanish system, see our guide to taxes in Spain for foreigners.
Tip: keep an eye on the exchange rate and transfers
If your pension is paid in a currency other than the euro, banks often add hidden markups on the conversion. Check once a year what the transfer really costs you. For more figures on daily life, see the article on the cost of living on Mallorca.
Official sources
On a topic this important, do not rely on forums alone. These official bodies are the binding points of reference:
Agencia Tributaria (Spanish tax authority)
Official portal for the Renta return and all deadlines in Spain.
Agencia Tributaria - double taxation treaties
Official overview of the treaties Spain has signed, with the full text for each country.
Frequently asked questions
Do I have to stop my pension at home? No. You do not cancel the pension. It continues to be paid from your home country. You do, however, tell your home tax authority about your move and declare the pension in your Spanish tax return from then on.
Will I end up paying more tax than at home? That depends on your pension level and your region. Thanks to the credit for tax paid abroad you do not pay twice. Whether the total burden is higher or lower can only be worked out case by case.
What happens if I ignore both sides? Tax authorities exchange information across borders. Anyone who fails to declare a pension in Spain risks back payments and penalties. A clean registration from the start is far cheaper.
Conclusion
Taxing a foreign pension on Mallorca is not rocket science, but it does ask you to know the rules. As a tax resident you declare your pension in the Spanish Renta, Spain taxes it as your country of residence, and tax already paid abroad is usually credited under the relevant treaty. Government and civil-service pensions often stay taxable only in the paying country. The personal allowances of 6,700 euros from age 65 and the pension-income reduction keep the actual burden moderate for many. Anyone planning the move should bring in an English-speaking tax adviser in the first year and get familiar early with the Spanish tax return.
This article is general information, not tax advice. Your situation depends on your home country's treaty with Spain and your personal circumstances, so confirm the details with a qualified adviser before you act.