Is it worth although I am a foreigner living in Euskadi?
The money you can put into a pension plan or those so-called EPSV (basque pension plans) while working in Euskadi have a direct impact on the amount of income to be taxed.
Say, if you have earned 20.000 euros on the whole year (either as employment income or economic activyties «autonomo» income), you can pay into a maximum of 5.000 euros to decrease this amount. Thus, you will pay taxes for 15.000 euros (social security costs are also deductible) having a minor tax rate and therefore some withholdings back.
Here you can find the withholdings for employment income year 2020.
In the rest of Spain the maximum amount is 8.000 euros (or the 30% of your employment income). In Navarra this amount is 3.500 euros.
How long do I have to keep my Pension Plan or EPSV?
The good news is that Pension Plans or EPSVs can be taken out only 10 years after your first contribution. This has changed over the last years (Before it was your retirment date, afterwards 15 year, now only 10). You do not need now to wait until your retirement age.
Therefore, even being a foreigner if you are looking for a mid-term investment product while working in the Basque Country this may be a good option for you to save some money for the future while decreasing taxation.
How much can I put into?
This is the last year to contribute with 5.000 euros maximum, you can pay your contributions, until December 31st.
From 2021, the maximum amount will be 2.000 euros although this has not been approved by the government yet.
This 2020 is a key year to plan the mid-term investments in Pension Plans.
It is important to know what is the amount you should pay into to decrease the amount of income to the next inferior level and get some of the whithholdings back.
If you need some calculations, in ExpatEasy we can help you.