“We are trading on Germanybut with a pension instead of a job, and people in their 70s and 80s have to pay attention and complete some complicated procedures so as not to lose a money that it is yours”, explains Mario AlonsoPresident of FAER (Andalusian Federation of Associations of Emigrants and Returnees).
This is the situation in which the current double taxation agreement between Spain and Germany has placed more than 150,000 Spanish pensioners who developed part of their working life in the German country and who are now retiring in the country of origin.
The german treasury Since 2015, he has charged them as a tribute 5% of their pension, either from retirementwidow, disabled or orphaned, and the only possible way they have to recover that money is through the personal income tax return in Spain, from whose presentation a large part of them are exempt due to the meagerness of their pensions.
The half board of the Spanish workers who developed a part of their Laboral life in Germany and have returned to their native country is of 788 euros gross monthly, that is, 11,032 per year (14 payments), just over half of the 22,000 in which the general obligation begins and below the 14,000 in which that of those who have more than one payer who contributes more of 1,500.
In Spain, on the other hand, they are forced to leave 2% of retention monthly minimum in their benefits (220 euros) that, without these bilateral tax regulations, they would have continued to pay every month. Or, at least, the much of them that they would continue to be exempt from declaring personal income tax.
The data of the workers returned to Spain
Germany has been applying this regulation to the twenty million pensioners residing in other countries for a decade
“They have to go to managers or associations of returned emigrantsbecause these are complex procedures that in reality they should not have to carry out because in Spain they are exempt from declaring personal income tax”, notes Alonso, since the only way they have to recover what Germany charges them is a settlement that can be returned to them in Spain.
But they end up carrying out these procedures, and paying for them, since otherwise the normative brings one loss half of 551 euros per year who fly to Germany, a bite that can be unaffordable when it comes to subsisting on just over 900 euros per month, that is, bordering a poverty line that is between 840 and 988 euros per month for single-person households.
The agreement establishes that, exceptionally since it does not apply to work incomeamong which pensions are usually included, the recipients of benefits generated in Germany have been obliged since January 2015 to pay 5% of them (84.1 million per year), a percentage that will rise to 10% in 2030.
“It is an agreement double taxationwhich are normally done to avoid paying taxes in two countries but which in this case is precisely what is imposed”, says Alonso, who recalls how the implementation of this measure has caused disorders thousands of pensioners threatened, and penalized in some cases, for their difficulties in paying the four years of retroactivity (from 2010 to 2013) that were applied to them.
“There was until suicides“, recalls the president of FAER, before the matter was practically closed with an extraordinary regularization process that in 2018 generated more than 300 million euros to the treasury for the liquidations of 147,462 workers returned.
“The formula for applying the double taxation deduction income tax is no different if the taxpayer is a pensioner or not”, explain sources from the Tax agency.
After the passage of Germany, which has a decade applying this regulation to the twenty million pensioners who reside in other countries, others such as France and how Austria study applying similar models of double taxation.
Germany with 152,506 and France with 210,031 are the two countries in which they partially developed their professional career and contribution half of the workers returned to Spain, which are 725,429. Austria’s contribution is much smaller, with only 4,923.
Those pensions generated in two different countries are financed by their States in a coordinated manner through bilateral agreements which they later settle among themselves.
The bill The monthly cost of this facet of the social security system reaches 537.6 million euros for Social Security, with the bulk in the heading of retirements (480,140 totaling 392.3 million), which is followed by far by the benefits of widowhood (208,730 for 124.7 million) and, much more, that of the disability benefits (21,160 for 14.5), orphans (15,683 for 5.6) and family members (536 totaling 288,681 euros).
“He returned pensioner has the benefit divided between the two countries. They are usually people who have worked abroad for five or ten years and who have generated benefits of 300 or 400 euros that are actually supplements to those here,” he explains. Mario Alonso.
In fact, the half board of the returnees is 741 euro payroll (there are 14 payments), with only retirement (817) above that level and with disability (724), widowhood (597), relatives (538) and orphanhood (358) below.
In parallel, others 110,243 workers who fully or partially developed their career in Spain receive benefits abroad that add up to €43 million monthly, in this case with France (25,512), Germany (14,093), Portugal (7,899) and Romania (4,924) as main destinations, although only the latter are subject to the same regime as those returned from there.
The approval of disability benefits abroad
The joint payroll of the returned workers is 14,598,932.62 euros per month for Social Security
The returned workers have another open front in the homologation and in the tax treatment disability or invalidity pensions generated in other countries, either by Work accidents or due to occupational diseases, and especially those of an absolute nature, which are exempt from taxation in Spain.
The Tax Agency chooses to transfer the existence of these pensions to the INSS (National Institute of Social Security) so that their technicians can check them and verify if that benefit is homologable to any of those granted in Spain, with the purpose of later applying the tax treatment derived from its conclusions.
“The Tax Agency asks to demonstrate the validity of the disabilities recognized in other countries, and the most that can be achieved is the recognition of 33%”, indicates Mario Alonso, who claims “that an official approval be made.”
Among other things, due to the difficulty that those affected find in providing the medical certifications on which the State of origin relied to recognize their incapacity. “Where are you going to find the reports from thirty years ago? Why are people of 70 and 80 years old subjected to these situations?”, asks the president of FAER.
“There are countries where the disability qualifications are not homogeneous to those of Spain,” say sources from the Tax Agency, who note that “the personal income tax rule, to guarantee the application with the rules Spanish, provides that it be the INSS that confirms or not that the qualifications of the other country are adequate to that of Spain and, in any case, that the INSS defines in each case the degree of disability“.
In Spain there are a total of 20,160 returned workers who receive benefits for disability in different degreeswith an average amount of €724.15 monthly and a joint payroll of 14,598,932.62 euros per month for Social Security.