According to El Economista, the Central Economic-Administrative Court (TEAC) in Spain revealed that certain residency certificates issued in Portugal to Spanish retirees are not recognised in Spain. This situation opens the way for the collection of tax on pensions received from the Spanish Social Security system.

The regime in question allowed foreign pensions to be tax-free in Portugal; however, from 2020 onwards, pensions became subject to a 10% tax rate, lower than the 48% tax rate applicable to other taxpayers.

Although it will be abolished in 2024, foreign retirees who have already acquired the status will be able to maintain it for 10 years.

Spain accuses Portugal

Despite opposition from Portuguese authorities, who say that taxpayers are subject to Portuguese taxes and that the system allows exemptions or reduced rates on income, the TEAC rejects these claims.

On 20 April, according to El Economista, the Spanish court classified the Portuguese system as "veiled," "obscure," and "pernicious." The entity also considered Portugal's position to be "deceptive or hypocritical."

The Spanish court believes that the retirees in question should not be protected by another Iberian agreement, the Agreement to Avoid Double Taxation, signed between the two countries in 1993.