Income Tax on United Nations pensions – clarity at last


Confusion and contradictions have existed in Spain for decades on the question of whether pensions paid to a resident of Spain by a United Nations body should incur income tax in Spain.

Technically speaking, we are referring to the United Nations Joint Staff Pension Fund (UNJSPF Rules)

The confusion arises because under the rules of the international treaty for the UN that Spain and most other countries have subscribed to, “emoluments” paid to functionaries of the United Nations are exempt of all taxes.

Unfortunately, the terminology does not specify clearly whether the exemption only applies to working functionaries. As a result, conflicting interpretations have arisen on whether emoluments (in the form of pensions) paid to former UN functionaries are also exempt. The Spanish tax office has for many years taken a typically negative stance against taxpayers denying exemption . Of course, the tax office can do what it likes, and it does, and it gets it wrong from time to time, so many individuals and professionals did not agree with this interpretation.

To be fair, it has to be said that most other countries have taken a similar view, including the UK, USA.

Finally, and this is the bit that rankles, Spain’s Supreme Court has only just ruled on the matter after perhaps 30 years of confusion. The ruling was issued in December 2022 and puts an end to the debate. There is now no question, United Nations pensions are subject to income tax in Spain.

There is no scope for a further appeal on the matter, as far as Spain is concerned, so individuals should really consider this to be the end of the matter. In the case that a person has not declared the UN Pension in their past Spanish income tax declarations, be aware that the Spanish tax office may assess back tax for the last four years, that is 2018, 2019, 2020 and 2021. On the 1 July 2023, 2018 will drop out of account, as long as that year has not been subject to an inspection and assuming that the tax filing for 2018 was made on time, i.e. before 30 June 2019.

Filing back taxes is not a problem in Spain and almost never results in tax inspections, fines or other dramas. You file the tax return, pay the tax due and wait for late payment interest assessment usually issued a month or so later. The interest rates charged are now perfectly reasonable. Failing to pay back taxes and hoping for the best is absolutely not a good idea and will inevitably result in significant fines if caught.

Spence Clarke specialises in the provision of Spanish tax, accounts, law and labour services, mainly to foreigners with interests in Spain. Our cross-border knowledge helps clients adapt to the Spanish system with the minimum of doubt and disruption. If you have any questions about this article or any other matter contact us, with no obligation, to see how we can help you.