International SIPPs

International SIPP for UK Expats in Spain

By QROP Direct Editorial Team · Reviewed by an independent regulated pension specialist · Reviewed 2026-08-14

The Right Product for Spain Has Been the Least Written About

For most of the last decade, a British expatriate in Spain asking what to do with a UK pension was pointed towards a Qualifying Recognised Overseas Pension Scheme in Malta or Gibraltar. That worked because of a carve-out in the Overseas Transfer Charge rules for the European Economic Area and Gibraltar. The carve-out no longer exists, and a Spanish resident following the old advice today can lose a quarter of the fund on the day the money moves. The vehicle most Spanish residents look at instead is an International SIPP.

Please note: this guide is provided for educational and information purposes only and does not constitute regulated financial, legal or tax advice. Cross-border pension decisions are frequently irreversible, and Spanish tax is partly devolved, so a position that holds in Madrid may not hold in Valencia, Navarra or the País Vasco. We make no personal recommendations. Transferring a pension puts capital at risk, and where a defined benefit transfer value exceeds £30,000 UK law requires formal advice from an FCA-regulated pension transfer specialist before the transfer can proceed at all. Take regulated advice in the UK and specialist tax advice in Spain before acting. QROP Direct can connect you with appropriately licensed professionals.

Key Takeaways

• The product that fits Spain is a UK registered scheme. An International SIPP is not a separate statutory category; it is a UK registered pension scheme administered for people living abroad.
• The 25% charge cannot arise on a registered-to-registered transfer. The Overseas Transfer Charge bites on a recognised transfer to a QROPS. Nothing is exempted, because nothing is charged.
• The taxing right over the income sits in Spain. Article 17 of the UK-Spain Convention gives Spain the exclusive right to tax pensions paid to a Spanish resident, and the treaty has no separate social security paragraph, so the State Pension falls inside it too.
• Government service pensions stay UK-taxable under Article 18(2) — unless the individual is both resident in and a national of Spain, in which case the right flips.
• Spanish income tax is partly devolved. The state scale is fixed; the scale your autonomous community adds is not. What you pay depends on where in Spain you live.

Why Spain Is the Specific Case

The Overseas Transfer Charge applies to a recognised transfer from a UK registered pension scheme to a QROPS requested on or after 9 March 2017, unless an exclusion condition applies. The charge is 25% of the transferred value, and the scheme member and the scheme administrator are jointly and severally liable for it (Source: HMRC Pensions Tax Manual PTM102200, gov.uk, 2026).

Until the autumn of 2024, one exclusion covered transfers where the member was resident in the EEA or Gibraltar and the receiving QROPS was established in the EEA or Gibraltar. That is what made Malta and Gibraltar the standard destinations for Spanish residents. The exclusion was removed for transfers requested on or after 30 October 2024, with a transitional saving only where the request was made before that date and the transfer completed before 30 April 2025 (Source: HMRC PTM102400, gov.uk, 2026).

The exclusions that survive are narrow: a member tax resident in the same country or territory in which the receiving QROPS is established; a QROPS that is an occupational scheme of the member's own sponsoring employer; an overseas public service pension scheme; and a pension scheme of an international organisation. A Spanish resident transferring to a Maltese or Gibraltarian scheme meets none of them.

The same-country exclusion is the one people reach for, so it is worth stating precisely: it requires the receiving QROPS to be established in Spain itself. Whether any Spain-established scheme sits on HMRC's Recognised Overseas Pension Schemes notification list on a given day is a question of fact, not principle. The qualifying conditions for EEA schemes changed from 6 April 2025, HMRC published a removals round on 2 June 2025 affecting schemes in twelve EEA states including Spain, and the list is republished twice a month. Anyone relying on that exclusion must check HMRC's ROPS notification list on the day and take advice on it. Appearing on the list is a notification, not an endorsement.

A further trap catches those who assume an exclusion solves everything: even where one applies, a transfer exceeding your available Overseas Transfer Allowance — standard allowance £1,073,100, reduced by pre-6 April 2024 lifetime allowance usage and by earlier QROPS transfers — attracts the 25% charge on the excess anyway.

The Mechanism: Why the Charge Cannot Arise on an International SIPP

You will read almost everywhere, including elsewhere on this site, that an International SIPP is "exempt from the Overseas Transfer Charge". That phrasing implies a charge which an exemption then switches off, which in turn implies a condition you must satisfy and could later fail. Neither is true.

The charging provision applies to a recognised transfer from a registered pension scheme to a QROPS (Source: HMRC PTM102200, gov.uk, 2026). An International SIPP is a UK registered pension scheme. It is not a QROPS. Moving your existing UK workplace or personal pension into one is therefore a transfer from one registered scheme to another — not a transfer to a QROPS — so the charging provision is never engaged in the first place.

No exemption is claimed, because none is needed. There is no residence condition attached, so nothing fails if you later move from Spain to Portugal or back to the UK. The charge simply does not arise. That structural point, rather than any rate comparison, is why the International SIPP has displaced the QROPS for Spanish residents.

What an International SIPP Actually Is

An International SIPP is not a distinct regulated product type, and no UK authority "approves" or defines the term. It is a UK registered pension scheme — a self-invested personal pension — whose provider and administrator are set up to serve non-UK residents. That is precisely why the mechanism above works: the wrapper never stops being a UK registered scheme.

The distinguishing features are administrative rather than legal: providers accept a non-UK address and non-UK bank details, which many domestic providers will not; multi-currency capability lets a Spanish resident hold assets and take drawdown in euros rather than converting sterling monthly; and open architecture means investments come from the open market rather than a closed list. Because the wrapper remains a UK registered scheme, it stays inside the Financial Conduct Authority's perimeter and, where the relevant firm is covered, within the scope of the Financial Services Compensation Scheme.

The UK allowance framework applies unchanged: the Lifetime Allowance was abolished on 6 April 2024, the Lump Sum Allowance is £268,275, the Lump Sum and Death Benefit Allowance is £1,073,100, and the normal minimum pension age is 55, rising to 57 on 6 April 2028.

Rather than repeat it here, see International SIPPs Explained for the wrapper, Transferring to an International SIPP for the mechanics of a move, and International SIPP Investment Options for the investment side.

How the Income Is Taxed Once You Draw It in Spain

Getting the wrapper right does not reduce your Spanish tax bill; it avoids a one-off 25% loss. What you pay year after year is set by the treaty and by Spanish domestic law.

The UK-Spain Double Taxation Convention was signed on 14 March 2014 and entered into force on 12 June 2014; it is universally referred to as the 2013 Convention. Article 17 reads in full:

"Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration paid to an individual who is a resident of a Contracting State, shall be taxable only in that State."

Two consequences follow. First, once you are Spanish tax resident the UK has no taxing right over your private pension income at all — not a reduced rate, none. Second, and less well understood, the Convention contains no separate social security paragraph. The UK State Pension therefore falls inside Article 17 like any other pension and is taxable only in Spain.

Spanish domestic law then decides how that income is taxed. The Dirección General de Tributos confirmed in binding consulta V1178-19 that a UK private pension paid to a Spanish resident is rendimiento del trabajo — employment income — under Article 17 LIRPF. That places it in the general base, not the savings base, so the savings rates of 19% to 30% that people often quote do not apply to it.

The general base is taxed by adding two scales together. The state scale runs from 9.5% to 24.5% under Article 63.1 LIRPF and is the same throughout common territory; your autonomous community then applies its own separate scale on top. That is why no single "Spanish rate" on pension income exists: the real top marginal rate ranges from roughly 45% in the Comunidad de Madrid to roughly 54% in the Comunidad Valenciana, and Navarra and the País Vasco run their own foral scales entirely outside the common system.

We deliberately do not publish a combined band table. Any such table is one region's numbers presented as though they were national, and on a substantial pension the gap between regions is not marginal. Your Spanish adviser should model your position on your own community's scale for the relevant year.

Government Service Pensions: Article 18(2)

If any part of your pension comes from UK government service — armed forces, civil service, police, fire service or a local authority — Article 18(2) applies instead of Article 17. It provides that such pensions:

"shall be taxable only in that State. However, such pensions ... shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State."

Note the article number: it is Article 18, not Article 19. HMRC's own treaty summary gives government pensions at 18 and other pensions at 17 (Source: HMRC Double Taxation Relief Manual DT17552, gov.uk, 2026).

Not every public-sector pension automatically falls within Article 18(2), and HMRC's Spain treaty summary names no individual schemes. Whether a particular scheme — the NHS or teachers' schemes are the ones most often asked about — is a pension paid by, or out of funds created by, the State, a political subdivision or a local authority for services rendered depends on the specific scheme, and the position must be confirmed with an adviser before a return is filed on the strength of it.

The second sentence is the nuance most guidance omits. The default is that a UK government service pension stays UK-taxable and Spain cannot tax it. But if you are both resident in Spain and a national of Spain — a dual national, or someone who has naturalised — the taxing right flips to Spain. That is worth checking before, not after, an application for Spanish nationality.

Where the pension does remain UK-taxable, Article 22(1)(b) still permits Spain to take the exempt income into account when determining the rate of tax on your remaining income. This is exemption with progression: the government pension is not taxed in Spain, but it can push the rate on everything else upwards.

Getting Paid Gross: The Form Is Country-Specific

Much guidance, including elsewhere on this site, refers to a generic "form DT-Individual". For Spain that is not the right form. The correct route is the country-specific DT-Spain Individual (also published as form Spain-Individual), with its Notes.

The sequence is: obtain a Residencia Fiscal en España Convenio certificate from the Agencia Tributaria — the wording matters, because it must be the treaty version rather than a plain residence certificate; send it with the completed DT-Spain Individual to HMRC; HMRC then issues an NT code to your pension payer so payments are made gross. Until the NT code is in force, UK PAYE continues and has to be reclaimed. General treaty mechanics are covered in Double Taxation Agreements and Your Pension.

The Lump Sum Problem

A UK pension commencement lump sum is tax-free in the UK within the Lump Sum Allowance. Spain does not mirror that treatment. Following V1178-19, the payment is rendimiento del trabajo for a Spanish tax resident and enters the general base like any other pension income.

The chronology point follows directly, and it is why this needs looking at before a move rather than after: whether the lump sum is crystallised before or after Spanish tax residency begins can materially change how it is taxed. Whether any Spanish reduction is available on a lump sum of this kind is not settled by published guidance, so we do not quantify it and nobody should promise you a figure. Take Spanish advice on the specific payment before you take it. Our guide to the pension commencement lump sum overseas covers the UK side.

Spanish Reporting and Wealth Taxes

Modelo 720

Spanish tax residents must file the Modelo 720 overseas asset declaration where assets abroad exceed €50,000 in any one of three categories: accounts held with financial institutions; securities, rights, insurance and annuities; and immovable property. The window closes on 31 March for the preceding calendar year.

Pensions are the nuanced part. Derechos consolidados — consolidated rights in a foreign pension plan — do not fall within Articles 42 bis, 42 ter or 54 bis of the RGAT and are not reportable while no covered contingency (retirement, death, incapacity) has occurred. The trigger is the occurrence of a contingency, not whether funds are theoretically accessible. Two carve-outs matter: where the plan contractually gives a right of surrender on life assurance terms, that right is reportable as a foreign life policy; and once a contingency has occurred and the benefit has arisen, the surrender or capitalisation value is reportable.

On penalties, the Court of Justice of the European Union held in Case C-788/19 (judgment of 27 January 2022) that the Spanish penalty regime was disproportionate and contrary to EU law. Ley 5/2022 replaced it with the ordinary penalty regime of the General Tax Law, so the €5,000-per-item fines, the €10,000 minimum and the 150% imputed-gain surcharge are gone. The filing obligation itself remains fully in force.

Wealth taxes

The Impuesto sobre el Patrimonio has a state default mínimo exento of €700,000, plus an exemption of up to €300,000 for the habitual residence. Those are defaults only: it is a ceded tax, and each autonomous community sets its own mínimo exento, rates and bonificaciones. Madrid has applied a 100% bonificación since 2008 and Andalucía since 2022, both converted to a variable form once the state solidarity tax arrived.

Separately, the Impuesto Temporal de Solidaridad de las Grandes Fortunas is a state tax complementary to the regional wealth tax, biting on net wealth above €3,000,000 at progressive rates of 1.7%, 2.1% and 3.5%, filed on Modelo 718 between 1 and 31 July, separately from the Renta campaign. Introduced initially for two years, it was extended indefinitely by Royal Decree-Law 8/2023 of 27 December and remains live for 2026 under implementing Orden HAC/652/2026 of 26 June.

Whether a UK pension sits inside or outside the base of either tax, and at what stage, is a question for a Spanish tax specialist in your own autonomous community. It is region-sensitive and not something this guide can answer generically.

When an International SIPP Is Not the Answer

We make no personal recommendations, and this structure does not suit everyone. It may not be appropriate where:

• The pot is small. International SIPPs carry higher administration and platform costs than a domestic workplace scheme, and on a modest fund the fee load can outweigh the multi-currency and administrative benefits.
• The pension is defined benefit. The FCA's starting position is that remaining in a DB scheme is likely to be in most members' interests, and a transfer value above £30,000 cannot legally proceed without formal advice from an FCA-regulated pension transfer specialist. See Defined Benefit Pension Transfers for Expats.
• A return to the UK is likely. If the move to Spain may not be permanent, the case for restructuring at all is weaker.
• The individual genuinely lives in a QROPS jurisdiction. Someone tax resident in the same country or territory as the receiving QROPS may fall inside the surviving same-country exclusion — a different analysis, turning on facts checked on the day.

For the wrapper comparison see QROPS vs International SIPP and SIPP vs QROPS Compared. For the Spain-specific options side by side see UK Pension Options in Spain Compared, and for the wider move, Retiring to Spain with a UK Pension.

The April 2027 UK Inheritance Tax Change

UK inheritance tax moved to a residence basis on 6 April 2025. Domicile was abolished as the connecting factor and replaced by "long-term resident" status — UK resident for at least 10 of the previous 20 tax years — with non-UK assets excluded property only where the individual is not a long-term resident. Separately, the Finance Act 2026 (Royal Assent 18 March 2026) brings most unused pension funds and pension death benefits into the deceased's estate for inheritance tax for deaths on or after 6 April 2027. Personal representatives, not scheme administrators, will be liable to report and pay. Death-in-service benefits from a registered scheme and dependants' scheme pensions from defined benefit arrangements are excluded.

Two cautions. First, this is a matter to raise with a regulated adviser well before 2027, not to react to now. Second, and firmly: we make no claim that a QROPS avoids this charge. Anyone presenting an overseas transfer as an inheritance tax escape route should be asked to put that in writing with the statutory basis, alongside the 25% charge the transfer itself would cost a Spanish resident. Our guide to inheritance tax and pensions for expats covers the UK background.

Conclusion

For a UK expat already tax resident in Spain the analysis splits cleanly in two. The wrapper question has a mechanical answer: a transfer into an International SIPP is registered-to-registered, so the Overseas Transfer Charge is never engaged, while a transfer to a Maltese or Gibraltarian QROPS now costs 25% of the fund on the day it moves.

The tax question has no such clean answer, because Spanish income tax, wealth tax and reporting duties are partly devolved and, applied to UK pensions, partly unsettled. That is why this guide gives you the mechanism and the treaty text rather than a rate table. Speak to a regulated UK adviser about the pension, and to a Spanish tax specialist in your own region about the consequences, before anything moves. Our existing Spain guides, UK Pension Transfers for Expats in Spain and Pension Tax in Spain for UK Expats, cover the residency and treaty background in more depth. QROP Direct can introduce you to an independent, cross-border specialist.