Supplementary pension if living abroad
- Thread starter Redfella
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NoRegretsCoyote
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You'll have to give more details.
Is it a contributory pension?
How much of the year will you spend in Spain?
Will you retain an address in Ireland.
Is it a contributory pension?
How much of the year will you spend in Spain?
Will you retain an address in Ireland.
Allpartied
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Hi, I'm assuming this is a Public Sector pension, post 1995 entrant, whereby the retirement pension is coordinated with the Contributory Old Age Pension and that you have not yet reached the age to be qualified for the COAP.
As far as I am aware there are no restrictions on where you live, but your public sector pension (including supplementary) will continue to be taxed by the Irish Revenue and you will be subjected to their regulations in respect of this income.
There are restrictions on holders of supplementary pensions in terms of employment. If you take up paid employment in Ireland, which results in a PRSI contribution, the part of your pension made up of supplementary pension can be withheld. However, if you are living in Spain, I am not sure if this applies. You may be able to do some paid work without effecting your pension payments.
As far as I am aware there are no restrictions on where you live, but your public sector pension (including supplementary) will continue to be taxed by the Irish Revenue and you will be subjected to their regulations in respect of this income.
There are restrictions on holders of supplementary pensions in terms of employment. If you take up paid employment in Ireland, which results in a PRSI contribution, the part of your pension made up of supplementary pension can be withheld. However, if you are living in Spain, I am not sure if this applies. You may be able to do some paid work without effecting your pension payments.
Early Riser
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As Allpartied has said above.
There is nothing in the rules that I have seen to suggest that you will not be entitled to it in Spain. You will have to show you meet the conditions, though. Apart from the employment bar, this also includes getting a confirmation letter/form from your Social Welfare office to say you are not entitled to any benefits from them. I believe this has to be updated yearly - although it may depend on your employer/pension department as to how regularly this is enforced.
It might be worth checking with your trade union regarding this.
There is nothing in the rules that I have seen to suggest that you will not be entitled to it in Spain. You will have to show you meet the conditions, though. Apart from the employment bar, this also includes getting a confirmation letter/form from your Social Welfare office to say you are not entitled to any benefits from them. I believe this has to be updated yearly - although it may depend on your employer/pension department as to how regularly this is enforced.
It might be worth checking with your trade union regarding this.
Allpartied
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Redfella,
I don't know about Spain but in Portugal and Cyprus you pay (aprox) 5% tax on your pension, not sure what the criteria is at the moment. It's why there's quite a few Irish moving to these places. and others thinking about it
I am not sure if this applies to public sector pensions.
The Revenue website is not particularly helpful, as it states,
"You may be receiving an Irish pension from the Government or a local authority. In general, this pension is taxed in Ireland regardless of your residence status. "
I suppose anyone receiving a public sector pension would have to make inquiries about what the words "in general" mean.
I have read on this site about teachers and nurses retiring abroad to Portugal/Cyprus and availing of the low tax arrangement, though it has usually been second or third hand accounts. If there are any public sector workers who have retired abroad to Portugal or Cyprus it would be great to hear how they did it.
I am doubtful, myself, as the government will do everything in it's power to stop public sector pensions being paid in full, without the tax clawback.
Thanks everyone for all the advice. My main worry is the need to retain an Ireland address, but from what I understand, the supplementary pension amount, which I have been granted, will be added to pension amount from my previous health service employer and paid directly to my bank.
Jack Frost
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Hi there,
I know this discussion is a bit old, but it just came to my attention, just to clarify I have lived in Cyprus now for over one year, and as a retired public servant, I can confirm that special arrangement of 5% income tax does not apply to Irish Public Service pensions, unfortunately the tax rate is the same as if i still lived in Ireland, so I dont know where or how these retired public servants managed to get the 5% rate, maybe its just a myth..
Cyprus Tax System: Key Concepts Explained
In order to be subject to the Cyprus tax system it is of course a necessity that you are a tax resident on the island. In order to be such, it is a prerequisite that you fit in on of the following two categories:
Personal Taxation
A person who, in accordance with the regulations explained above, is an established tax resident in Cyprus is subject to tax on all their worldwide income in Cyprus . This is beneficial due to the fact that due to Cyprus’ low taxation rates in combination with the plethora of double tax treaties, your overall income tax is minimized.
Income Tax
Cyprus income tax system for individuals is progressive. This means that the more you earn, the greater percentage of your income will be subject to taxation. The tax-free threshold is €19.500 - you won’t pay any tax on the first €19.500 you earn in any given year. Then, the tax rate progresses from 20% to 35% according to the following scheme:
It is important to stress that, under the progressive taxation regime, a Cyprus tax resident who earns more than €60,000 will not pay a flat rate of 35% of their total income in taxes. Let’s illustrate that on the example of a person whose total annual income is €70,600. Such an individual would pay their taxes according to the following model:
The total amount of tax a Cyprus tax resident who earns €70,600 annually will be required to pay under the country’s progressive tax system is, then, €14,595.
Foreign Pension Income
Cyprus tax system offers a convenient way of settling a person’s taxes on retirement pension coming from their country of origin. All income from pensions is tax-free up to €3.420 per year. If your yearly income from pension exceeds this amount, it is subject a flat-rate 5% tax. However, you can also choose to add your pension to your overall yearly income. That way it will be taxed along with the rest of your annual earnings according to the progressive tax system explained above.
In order to be subject to the Cyprus tax system it is of course a necessity that you are a tax resident on the island. In order to be such, it is a prerequisite that you fit in on of the following two categories:
- You must spend more than 183 days in any given calendar year in Cyprus, or
- You must spend at least 60 days in Cyprus but at the same time not be a tax resident in any other country, must spend fewer than 183 in any single country in a given calendar year, and have both a permanent home in Cyprus (rented or owned) and carry out business or be employed in the country.
Personal Taxation
A person who, in accordance with the regulations explained above, is an established tax resident in Cyprus is subject to tax on all their worldwide income in Cyprus . This is beneficial due to the fact that due to Cyprus’ low taxation rates in combination with the plethora of double tax treaties, your overall income tax is minimized.
Income Tax
Cyprus income tax system for individuals is progressive. This means that the more you earn, the greater percentage of your income will be subject to taxation. The tax-free threshold is €19.500 - you won’t pay any tax on the first €19.500 you earn in any given year. Then, the tax rate progresses from 20% to 35% according to the following scheme:
| Tax Rate | Income (in EUR) |
|---|---|
| 20 | 19,501-28,000 |
| 25 | 28,001-36,300 |
| 30 | 36,301-60,000 |
| 35 | 60,001 and more |
It is important to stress that, under the progressive taxation regime, a Cyprus tax resident who earns more than €60,000 will not pay a flat rate of 35% of their total income in taxes. Let’s illustrate that on the example of a person whose total annual income is €70,600. Such an individual would pay their taxes according to the following model:
| Taxable Income (in EUR) | Rate (%) | Tax Amount (in EUR) |
|---|---|---|
| First: 19,500 | 0 | 0 |
| Next: 8,500 | 20 | 1,700 |
| Next: 8,300 | 25 | 2,075 |
| Next: 23,700 | 30 | 7,110 |
| Rest: 10,600 | 35 | 3,710 |
The total amount of tax a Cyprus tax resident who earns €70,600 annually will be required to pay under the country’s progressive tax system is, then, €14,595.
Foreign Pension Income
Cyprus tax system offers a convenient way of settling a person’s taxes on retirement pension coming from their country of origin. All income from pensions is tax-free up to €3.420 per year. If your yearly income from pension exceeds this amount, it is subject a flat-rate 5% tax. However, you can also choose to add your pension to your overall yearly income. That way it will be taxed along with the rest of your annual earnings according to the progressive tax system explained above.
Last edited:
Jack Frost
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Thanks for the informative reply, No Problem, yes its a good saving on tax if you retire to Portugal or Cyprus, however it doesnt apply to people on Public Service pensions, as the Irish Tax authorities insist on tax being deducted as if you were living in Ireland, but happy days if its a private pension.
Jack
Jack
Ireland has a double taxation agreement with Cyprus. If you're a resident of Cyprus and in compliance with their tax regime, rules and laws I cannot understand how your pension is taxed in Ireland like you say. My friends include teachers and nurses who would have been considered Public Servants while they were working I should have thought. It was they who educated me on the 5% tax rate they were paying. I rest my case.
I recently discussed this with my friend who retired and took up residency in Portugal. At first, after an initial period of 3 years, he was receiving a refund of tax from Revenue but they have now stopped this and tax his, private, pension drawings at regular Irish tax rates.