How Can UK Expats Transfer a UK Pension to Spain?

While direct transfers into Spanish pension schemes are generally not available, UK expats may instead consider alternatives such as Qualifying Recognised Overseas Pension Schemes (QROPS), where eligible, or UK-based international self-invested personal pensions (SIPPs), depending on their circumstances and retirement objectives.

This guide explains how expats can transfer a UK pension to Spain, the key taxation rules for UK expats in Spain, and which pension strategies align with your long-term financial planning goals.

Spanish Pension System

The Spanish pension system is based on three pillars:

1. State pensions
2. Occupational pensions
3. Private pensions

State Pensions

Spain operates a robust state pension system funded through compulsory contributions of eligible working residents. There are two types of state pensions:

1. Contributory state pensions: The “standard” type, where both the eligible employee and the employer contribute to the pension plan.
2. Non-contributory state pensions: Basic, means-tested pensions available to Spanish residents with disabilities or those whose yearly income doesn’t allow sufficient contributions to the system.

Occupational Pensions

Occupational pensions are employer-sponsored arrangements that may be established through employers or collective agreements. Availability varies between employers. There are two types of occupational pensions:

1. Defined benefit pensions: These pensions are typically financed entirely by the employer.
2. Defined contribution pensions: DC schemes involve contributions from both the employee and the employer. Contribution levels are determined by the individual scheme rules and may be funded by the employer, the employee, or both.

Private Pensions

Individuals who seek supplementary means to support themselves in retirement often opt for private pension plans. They are voluntary and provide more flexibility in terms of the amount of contributions and withdrawals.

Note that tax-relievable contributions to Spanish private pension plans are generally capped at €1,500 annually. This limit may vary based on the type of pension arrangement and regional tax legislation.. You may contribute more, but you won’t be eligible for any tax relief on the excess amount.

Which UK Pensions Can Be Transferred Abroad?

The most popular pension schemes in the UK are:

Both types of pensions can be eligible for transfer, but there are exceptions. Unfunded public sector schemes (such as the NHS pension scheme or the teachers’ pension scheme) can’t be moved abroad.

Additionally, the UK State Pension can’t be transferred out of the UK, but you can receive payments from Spain.

Available Options for Transferring a UK Pension to Spain

UK expats have two potential options for transferring their pensions out of the UK while living in Spain:

1. Qualifying recognised overseas pension scheme (QROPS)
2. International self-invested personal pension (SIPP)

Qualifying Recognised Overseas Pension Scheme

A QROPS is an overseas pension scheme that can accept eligible UK pension transfers. Its tax treatment depends on the individual’s country of residence, the jurisdiction of the receiving scheme and the applicable tax rules. His Majesty’s Revenue and Customs (HMRC) has established a list of recognised overseas pension schemes (ROPS) worldwide that meet strict requirements to receive transfers from the UK.

Spain currently has only one pension scheme on HMRC’s ROPS list—Itzarri EPSV de Empleo. However, this plan is only accessible to Basque public sector employees.

The ROPS list is updated twice a month, so it is possible that more Spanish pension schemes will become available in the future.

While QROPS remain appropriate in some situations, many UK expats also consider international SIPPs. The most suitable option depends on individual circumstances, tax residency and retirement objectives.

Can You Transfer Your Pension to a QROPS in Another Country?

Previous QROPS regulations permitted eligible UK expats to transfer their pensions to a QROPS in the European Economic Area (EEA) or Gibraltar and access the pension benefits in their country of residence without incurring tax charges or penalties. The main condition was that the pension holder needed to be a tax resident of the UK, an EEA country, or Gibraltar at the time of the transfer.

The QROPS regulatory framework was revised in October 2024. Under the updated rules, UK expats can move their pensions only to a QROPS in the country where they reside at the time of the transfer.

Not meeting this requirement would expose you to a 25% overseas transfer charge (OTC). The exemption applies only if your country of residence at the time of the transfer matches the jurisdiction of the QROPS.

International Self-Invested Personal Pension

International SIPPs are pension plans designed for UK expats who want to manage their pensions efficiently while retaining the UK regulatory protection. They are especially suitable for international workers who travel frequently, self-employed or freelance expats, and high-net-worth individuals who plan to retire abroad.

For UK expats, international SIPPs offer numerous advantages:

• A broader range of investment options, which may be more suitable for your retirement objectives
• More flexible withdrawal strategies, allowing you to draw only a portion of your pension while leaving the rest invested
• A possibility of pension consolidation, simplifying pension management and increasing investment efficiency
• International accessibility, particularly suitable for expats with short-term residency plans
• Potential tax advantages, depending on your country of residence, the applicable double taxation agreement and your personal circumstances.
• The ability to hold investments and make withdrawals in multiple currencies, which may assist with currency planning.

Pension contributions are generally subject to the UK Annual Allowance. For most individuals this is currently £60,000, although lower allowances may apply depending on your circumstances. If you have relevant UK earnings, you may qualify for UK tax relief on up to 100% of your earnings regardless of your tax residency status.

If you don’t have relevant UK earnings, you may still be eligible for tax relief up to £3,600 gross, provided you were a UK resident in the past five tax years and were a resident at the time you joined the scheme.

How Can UK Expats Contribute More Toward Retirement While Living in Spain?

UK expats may seek supplementary pension planning vehicles to save more for retirement while prioritising tax efficiency. A qualifying non-UK pension scheme (QNUPS) can be an effective tool for long-term retirement and estate planning as it offers the following advantages:

• No limit on contributions
• More investment freedom, allowing expats to invest in residential and commercial property as well as shares of private companies
• Efficient integration with other investment vehicles, such as trusts and life insurance policies

However, saving toward retirement in a QNUPS carries several potential drawbacks:

Taxation of Foreign Pensions in Spain

Spanish tax residents are generally subject to Spanish income tax on their worldwide income, including foreign pension income. For 2026, Spain’s IRPF combines a national progressive scale with a regional add-on set by each autonomous community.

The national scale is divided into six brackets:

The total marginal rates can vary significantly due to the addition of regional brackets. Madrid currently has a range with the lowest top rate (18.00%–45.00%), while Valencia and Catalonia impose more significant combined top rates of 49.50% and 50.00%+, respectively. The choice of autonomous community can therefore make a material difference to overall pension drawdown taxation.

Depending on your current residency status, you may be liable for tax in the UK as well. To prevent their residents from paying taxes in both jurisdictions, Spain and the UK have signed a double taxation agreement (DTA), which states that pensions paid out to an individual who is a resident of a contracting state are subject to taxes only in that state. Under the UK–Spain Double Taxation Convention, most private pensions are taxable only in the country of residence. Different rules may apply to certain government service pensions.

UK Inheritance Tax on Pension Funds

While the UK-Spain DTA covers income tax on pension drawdown, it does not extend to inheritance tax, and the UK IHT treatment of unused pension funds is changing materially as of 6 April 2027.

As per the amended regulations, the majority of unused pension funds and death benefits will fall within the deceased member’s estate for UK IHT purposes and will be taxed at up to 40% above the available nil-rate bands. This includes:

• SIPPs
• QROPS
• QNUPS

Personal representatives will be responsible for reporting and paying IHT, and they may issue a withholding notice directing scheme administrators to withhold up to 50% of taxable benefits for up to 15 months while the IHT position is finalised.

Existing exemptions for transfers to a surviving spouse or civil partner (where they are a long-term UK resident) or a registered charity remain intact. Death-in-service benefits paid from registered schemes are excluded from UK IHT.

For UK expats in Spain, overall UK IHT exposure now also includes long-term resident (LTR) status under the residence-based IHT regime introduced on 6 April 2025. LTR is defined as a UK tax-resident for a minimum of ten of the previous 20 tax years.

If you are a long-settled UK expat who is tax resident in Spain and have ceased to qualify as a long-term UK resident (LTR), certain overseas pension arrangements may fall outside the scope of UK inheritance tax, subject to the applicable legislation in force at the time of death. By contrast, UK-registered pension schemes, such as SIPPs, are expected to remain within the UK IHT regime regardless of LTR status under the current rules.

Spain levies its own succession and gift tax (Impuesto de Sucesiones y Donaciones, ISD), which applies separately to Spanish-resident beneficiaries and is heavily bonified by the autonomous community. There is no UK-Spain inheritance tax treaty, so where double charges arise, you must rely on unilateral relief mechanisms.

Spanish Wealth and Solidarity Taxes

Depending on your total wealth and the autonomous community in which you live, you may be liable for Spanish Wealth Tax. Spanish residents are generally taxed on their worldwide assets, while non-residents are generally taxed only on assets situated in Spain. Whether pension rights form part of the taxable base depends on the nature of the pension arrangement and the stage at which benefits are held or received.

Spanish residents can take advantage of certain deductions, such as a tax-free allowance of €700,000 and an additional €300,000 that can be claimed against the value of their main residence. If the total value of your assets exceeds €2 million, or if a positive liability remains after applying the available allowances, you are generally required to submit a Wealth Tax return.

Additionally, Spanish tax residents with a net worth above €3 million are liable for the Solidarity Tax on Large Fortunes (Impuesto Temporal de Solidaridad de las Grandes Fortunas), which was introduced as a temporary measure in 2022 but made permanent in 2025.

The tax operates as a national top-up that applies across Spain, regardless of regional Wealth Tax bonifications. It ensures that high-net-worth individuals living in autonomous communities with full or partial Wealth Tax relief, such as Madrid, Andalucía or Extremadura, still pay a minimum level of tax.

The progressive rates are:

Spanish residents benefit from the €700,000 general exemption, together with an additional €300,000 allowance for their main residence, meaning the Solidarity Tax generally applies only where net taxable wealth exceeds approximately €4 million. Non-residents are entitled to the €700,000 general exemption but cannot claim the main residence allowance unless they meet the relevant conditions under Spanish law.

Why Timing a Pension Transfer Is Critical

The vehicle you will utilise to transfer a UK pension to Spain is only one component of an effective relocation. The timing of the transfer is another crucial consideration, as it can significantly affect the taxation of your pension income.

As a UK tax resident, you may withdraw up to 25% of your pension pot as a pension commencement lump sum (PCLS), which is entirely tax-free. You may do so upon reaching the pension age of 55 (increasing to 57 in April 2028), and the tax-free withdrawal is capped at the lump-sum allowance (LSA) of £268,275.

Many foreign countries (including Spain) do not recognise the tax-free status of the PCLS. Consequently, if you withdraw it while being a Spanish tax resident, you will pay income tax at your marginal rate on the entire sum.

Where appropriate, some individuals choose to take any available Pension Commencement Lump Sum (PCLS) before becoming Spanish tax resident, as Spain does not generally recognise its UK tax-free status. Doing so may help avoid Spanish income tax on the lump sum. The remaining pension benefits can then be transferred, where appropriate, using the pension structure best suited to your circumstances.

If you are unable to implement this tax-efficient withdrawal method (e.g., if you are already a Spanish tax resident), the best alternative would be to avoid withdrawing the entire PCLS. Rather, you may utilise phased withdrawals to obtain smaller amounts and manage your tax obligations more precisely.