In the context of the tax reform, the Spanish government has proposed in the Personal Income Tax Bill (the “Bill”) that the  modifications  to the Personal  Income Tax Act will include a new voluntary disclosure regime through which Spanish tax residents  can declare their non-declared foreign pension income,  with no penalties or surcharges for late payments.

The Spanish government affirms in the  preamble of  the Bill that they are  aware of Spanish tax residents (regardless of whether they are Spanish  nationals) who did not include their foreign pension income in their tax  returns. In line with the circumstances (they are usually old people who find it  difficult to meet their tax obligations), a new, singular period would be opened  for them to declare this income.

The special period would last six months, starting on January 1, 2015, and tax periods open to regularization would be 2010 to 2013, inclusive. As a general rule, previous years are already statute barred for Spanish tax purposes.

Under this voluntary disclosure regime, taxpayers  would be able to file complementary tax returns  for non-declared foreign pension income, and no penalties or surcharges would be imposed. In fact, penalties or surcharges already imposed for failure to declare pension income would be quashed.

If taxpayers file the voluntary disclosure for  foreign pension income, they  should include  not only the pension income, but also any other income  obtained during the taxable periods.

This measure, which forms part of the bills reforming the tax system, may be  amended in parliament before the final law is published in the Official Gazette  of the Spanish State.