Eyeing election, Spain's retirees battle foreign pension tax

Eyeing a year-end general election, Spanish retirees who worked abroad have stepped up their protests against the cash-strapped government's bid to collect back taxes on their foreign pensions.

When Spain went into recession in 2008, the government scrambled to find ways to boost state coffers, and since 2013 has tapped a new vein: back taxes on foreign pensions from hundreds of thousands of former expatriate Spaniards who returned home to live out their retirement.

In some cases people have been given just 15 days to pay up.

"These people have suffered great moral and economic harm," said Eva Foncubierta, the president of the Spanish Federation of Returned Emigrants (FAER).

"These former emigrants greatly contributed to Spain's development and they don't deserve to be treated this way," said Foncubierta, whose parents emigrated from the southern Andalucia region to the Netherlands and now find themselves targeted by the tax office.

About 800,000 people are affected by conservative Prime Minister Mariano Rajoy's measure, according to FAER.

Foncubierta points out that Spanish pensioners are only required to pay tax on annual income above 22,000 euros provided they have only one source for the revenue.

The problem is that the tax office considers a basic pension and a supplementary pension, even if they are paid by the same country, to be two separate revenues, resulting in a lowering of the tax threshold.

"We demand that pensions be considered as a single income," said Maruchi Alvarez, the spokesman of a Galician association of emigrants.

 Chained to tax office -

By the end of July around 145,000 retirees had settled their tax bill, increasing state coffers by 309 million euros ($352 million), according to budget ministry figures.

"This is robbery and an injustice," said Miguel Martinez, who worked as an autoworker in Paris between 1964 and 1974 and receives a monthly pension of 330 euros from the French state.

He was shocked to receive a registered letter last year demanding the payment of back taxes on his French pension for the past five years of around 5,000 euros -- a sum equivalent to one third of his total yearly income.

"Before I paid 85 euros in taxes on my Spanish pension of 11,700 euros. When the extra 4,000 euros (in pensions) from France were taken into account, the amount jumped to 962 euros," he said.

Martinez, who lives in the town of Callosa de Segura in the eastern Mediterranean province of Alicante, has chained himself to three different tax offices in protest.

He says his anger is fuelled by the fact that he has a letter issued in 2011 by the tax authorities certifying that his French pension was not taxable.

"When 800,000 people of this age are affected, it is hard to believe that they all decided to defraud at the same time," said Foncubierta.

Juan Antonio Pichel, who lives in the northwestern region of Galicia, was asked to pay 8,000 euros to the tax office in just two weeks.

"I was forced to take a loan from the bank," said Pichel, who worked for years as a construction worker in Switzerland.

- First success -

 Associations set up to defend the rights of emigrants, mostly in Galicia and Andalucia, two high-migration regions, have staged noisy street protests.

The groups obtained their first success last year. The Spanish tax office agreed to stop imposing fines for late payments on back taxes and reimburse the 20 million euros in fines it has already collected.

The budget ministry says it has paid back 13 million euros in fines to 32,414 people as of the end of July.

"But as the elderly themselves must take steps to be reimbursed, there is still seven million euros that have not been claimed," said Foncubierta.

As a tight general election nears, the retirees are planning more protest actions.

"We will take advantage of this election period to request special treatment," said Foncubierta.

Foncubierta recommends that emigrants planning to return to Spain check first how much tax they will have to pay.

"They might be surprised," she said.