Smart strategies for transferring UK pension funds to a Spanish QROPS

October 5, 2026

UK pension QROPS transfer to Spain: the essentials in 2026

A UK pension QROPS transfer to Spain is usually subject to HMRC’s 25% overseas transfer charge unless an exclusion applies [1].
Since 30 October 2024, transfers to a QROPS elsewhere in the EEA, such as Malta, are no longer excluded for Spanish residents [1][2].
HMRC’s list of recognised schemes currently includes only one Spanish scheme, a Basque employment scheme, so the same-country exclusion is rarely available [3].
A Spanish tax resident pays Spanish income tax on a UK private pension whether or not it is transferred [4].
In the Valencian Community, combined income tax rates on the general base range from 18.5% to 54% [5].
From 6 April 2027, most unused pension funds and death benefits fall within UK inheritance tax [6].

Why the rules on a UK pension QROPS transfer to Spain have changed

For many British residents in Spain, a UK pension QROPS transfer to Spain was once presented as a simple way to move retirement savings out of the UK system.

The position in 2026 is very different.

The UK removed the exclusion for EEA schemes in October 2024, introduced the overseas transfer allowance in April 2024 and is bringing pensions into inheritance tax from April 2027.

This guide explains how these rules interact with Spanish tax law, so that you can decide with your regulated financial adviser whether a transfer still makes sense.

HMRC charges 25% of the transferred value on a transfer to a QROPS unless an exclusion applies [1].

What a QROPS is

A qualifying recognised overseas pension scheme (QROPS) is a non-UK pension scheme that meets the conditions set by UK legislation, originally the Finance Act 2004, so that UK pension savings can be transferred to it without an unauthorised payment charge.

HMRC publishes a notification list of recognised overseas pension schemes, updated on the 1st and 15th of each month [3].

Appearing on that list confirms UK recognition only; it says nothing about how Spain will tax the scheme or its payments.

The list currently shows a single Spanish scheme, Itzarri EPSV de Empleo, an employment pension scheme in the Basque Country, which is not a practical option for most private retirees [3].

The overseas transfer charge after 30 October 2024

The overseas transfer charge is 25% of the amount transferred, unless the transfer is excluded [1].

For transfers requested on or after 30 October 2024, the exclusion for schemes in the EEA or Gibraltar no longer applies; transfers requested before that date kept the old exclusion only if completed by 30 April 2025 [1][2].

Exclusion	Before 30 October 2024	From 30 October 2024
Member and QROPS in the same country	Excluded	Excluded
Member in an EEA country, QROPS in another EEA country (for example Spain and Malta)	Excluded	Charged at 25%
Occupational scheme and member employed by a sponsoring employer	Excluded	Excluded
Scheme of an international organisation and member employed by it	Excluded	Excluded

Source: HMRC Pensions Tax Manual and pension schemes newsletter 164 [1][2].

Every exclusion also depends on the member having enough overseas transfer allowance, which equals the lump sum and death benefit allowance of £1,073,100 unless the member holds protection; any excess is charged at 25% [1][7].

If circumstances change during the relevant period, which runs for the rest of the tax year of the transfer and the following five tax years, an excluded transfer can become chargeable, for example if the member leaves the country where the scheme is based [1][8].

The default overseas transfer allowance is £1,073,100, equal to the lump sum and death benefit allowance [7].

How Spain taxes UK pensions, transferred or not

Under Article 17 of the UK-Spain Double Taxation Convention, private pensions paid to a resident of Spain are taxable only in Spain [4].

Government service pensions, such as those of former civil servants, teachers or police officers, generally remain taxable in the UK under Article 18.2, unless the recipient is a Spanish national resident in Spain [4].

A Spanish resident therefore pays Spanish income tax on a UK private pension whether it stays in the UK or is moved to a QROPS.

A UK pension QROPS transfer to Spain does not create a Spanish tax advantage by itself.

Regular pension income is taxed in the general base of Spanish personal income tax (IRPF) at progressive rates.

Scale for 2025 income	Lowest rate	Highest rate
State scale	9.5%	24.5%
Valencian Community scale	9%	29.5%
Combined rate for a Valencia resident	18.5%	54%

Source: Spanish Tax Agency, IRPF 2025 practical manual [5].

Lump sums are generally also taxed as general income.

The 40% reduction for contributions made before 2007 applies to lump sums from Spanish pension plans and similar Spanish schemes; we have found no official basis for applying it to UK pensions or QROPS, so it should not be assumed [9].

Our guides to the UK-Spain double taxation treaty and to declaring UK income in Spain explain the reporting steps.

UK inheritance tax on pensions from April 2027

From 6 April 2027, most unused pension funds and death benefits will form part of a person’s estate for UK inheritance tax, under sections 66 to 68 of the Finance Act 2026 [6][10].

The change also extends to qualifying non-UK pension schemes, which affects anyone who has already made a UK pension QROPS transfer to Spain or elsewhere [6].

Spanish inheritance and gift tax may also apply to pension assets passing on death, depending on the region and the relationship to the deceased.

Our guides to international inheritances in Spain and to writing a Spanish will cover the Spanish side.

The UK Government estimates that in 2027 to 2028 about 10,500 estates will pay inheritance tax for the first time because of the pension change, and about 38,500 will pay more [6].

Reporting obligations after a transfer

A QROPS must report payments to HMRC for 10 years after the transfer, with each payment reported within 90 days [11].

In Spain, pension income must be declared in the annual income tax return, and the tax agency’s deadlines are summarised in our guide to Spanish tax deadlines.

Whether foreign pension rights must also be included in Spain’s informative return on overseas assets depends on the type of scheme, and should be checked individually.

Alternatives to a QROPS transfer

For most Spanish residents, the realistic alternative to a UK pension QROPS transfer to Spain is to keep the pension in a UK scheme and draw it from Spain.

Under the double taxation convention, a UK private pension paid to a Spanish resident is taxed in Spain, and the pensioner can apply to HMRC under the convention so that the pension is paid without UK tax deducted at source.

Some UK schemes offer flexible drawdown, which allows income to be taken in stages and can help manage the Spanish progressive rates.

Others may prefer to consolidate several UK pensions into one UK scheme before retiring, which keeps the funds outside the overseas transfer charge.

Each option has different investment, currency and succession consequences, so comparing them before any UK pension QROPS transfer to Spain is essential.

Our article on reducing your tax burden in Spain explains the wider planning tools available to residents.

Practical steps before deciding

Step	What to check
1. Residence	Confirm your Spanish tax residence and how long you expect to stay
2. Scheme	Check the receiving scheme on HMRC’s current notification list and where it is established
3. Charge	Test the transfer against each exclusion and your overseas transfer allowance
4. Spanish tax	Model income tax on payments and lump sums at Valencian rates
5. Succession	Review UK inheritance tax from April 2027 and Spanish inheritance tax
6. Advice	Obtain regulated financial advice on the transfer itself, alongside legal and tax advice in Spain

A Valencia example

Consider a British retiree living in Valencia with a defined contribution pension in the UK.

Before October 2024, moving that fund to a Maltese QROPS would usually have avoided the overseas transfer charge.

Today the same transfer would normally be charged at 25%, because the retiree and the scheme are in different countries [1].

Leaving the pension in the UK and drawing it as a Spanish resident would produce the same Spanish income tax treatment, without the transfer charge.

The retiree would still need to declare the pension in the Spanish income tax return each year and review the position again before April 2027.

For this retiree, a UK pension QROPS transfer to Spain is unlikely to be worthwhile unless a specific exclusion applies.

Still contributing to a UK scheme while living here? Our guide to UK pension contributions in Spain explains how they are treated.

Common mistakes to avoid

These are the errors we see most often around a UK pension QROPS transfer to Spain.

Relying on marketing that still describes the EEA exclusion as available.
Assuming that a transfer reduces Spanish income tax.
Ignoring the overseas transfer allowance on larger funds.
Moving country within the relevant period without checking whether the charge is triggered.
Applying the Spanish 40% lump sum reduction to a UK pension without confirmation.
Overlooking UK inheritance tax on pensions from April 2027.

How Delaguía y Luzón can help

Our tax law and accounting team in Valencia has advised British clients in Spain since 1960.

We analyse the Spanish tax and succession consequences of a UK pension QROPS transfer to Spain, prepare the related tax returns and work alongside your regulated financial adviser on the transfer decision.

Speak to our tax team about your UK pension

Contact our legal team for personalised guidance on your case.

We work in English, French, Spanish and Russian from our office in Valencia.

Email: felix.delaguia@delaguialuzon.com
Phone: +34 963 74 16 57
Office: Avinguda Regne de València, 6, 1º-2º, 46005 Valencia

Frequently asked questions about a UK pension QROPS transfer to Spain

Is a transfer to a Maltese QROPS still free of the overseas transfer charge for Spanish residents?

No.

For transfers requested on or after 30 October 2024, the EEA exclusion no longer applies, so the 25% charge normally applies.

Are there Spanish QROPS?

HMRC’s list currently includes only one Spanish scheme, a Basque employment scheme.

It is not a practical option for most private retirees.

Does a QROPS reduce my Spanish income tax?

Not by itself.

Spain taxes a resident’s UK private pension income whether or not it is transferred.

Where are UK government pensions taxed?

Generally in the UK, under Article 18.2 of the UK-Spain convention.

Private pensions are taxed in Spain for Spanish residents.

What income tax rates apply in Valencia?

Combined state and regional rates on the general base range from 18.5% to 54%.

The rate depends on total taxable income.

What is the overseas transfer allowance?

It is the limit on excluded transfers, normally £1,073,100.

Any value above it is charged at 25%.

Can the charge apply after the transfer?

Yes.

A change of circumstances during the rest of that tax year and the following five tax years can trigger it.

How long must the QROPS report to HMRC?

For 10 years after the transfer.

Each payment must be reported within 90 days.

Will my pension be subject to UK inheritance tax?

From 6 April 2027, most unused pension funds and death benefits fall within UK inheritance tax.

This also applies to qualifying non-UK schemes.

Do I need a financial adviser as well as a lawyer?

Yes.

A pension transfer is a financial decision on which we recommend regulated financial advice, while we advise on the Spanish legal and tax consequences.