Advice needed. Self employed in uk, but moving to Spain. Taxation? Nat insurance?
Jun 28th 2009, 2:01 pm
#1
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Joined: Mar 2008
Posts: 536
Advice needed. Self employed in uk, but moving to Spain. Taxation? Nat insurance?
Hi, moving to spain in September. I have a successful business in the UK, a self employed partnership, and i have been advised to carry this on, as i work on the internet, i can physically operate my business from a laptop anywhere in the world..........however..................
although my accountant is a superb chap, he has not been unable to offer much advice apart from keep my business "as is", and run it from spain,./..
do i have become self employed in spain also?
i did eventually want to start up a spanish "subsidary" of my business.............
What if i just sign on the padron so at least the little one can go to school?
do i have to be self employed in Spain too and if not, why?
What national insurance would i have to pay? The uk had advised me to stop paying into the Uk system and pay into the Spanish national insurance system but i understand the rates are MUCh higher? It will be a while before i earn any money doing actual work in spain, its all going to be in the uk, and of course all my customers pay in pounds so i cannot really close it down.
confused.............!!!!!!!!!!!
although my accountant is a superb chap, he has not been unable to offer much advice apart from keep my business "as is", and run it from spain,./..
do i have become self employed in spain also?
i did eventually want to start up a spanish "subsidary" of my business.............
What if i just sign on the padron so at least the little one can go to school?
do i have to be self employed in Spain too and if not, why?
What national insurance would i have to pay? The uk had advised me to stop paying into the Uk system and pay into the Spanish national insurance system but i understand the rates are MUCh higher? It will be a while before i earn any money doing actual work in spain, its all going to be in the uk, and of course all my customers pay in pounds so i cannot really close it down.
confused.............!!!!!!!!!!!
Last edited by painterhombre; Jun 28th 2009 at 2:03 pm. Reason: blonde moment
Jun 28th 2009, 3:15 pm
#2
Joined: Jun 2006
Location: Granada Costa
Posts: 10,902
Re: Advice needed. Self employed in uk, but moving to Spain. Taxation? Nat insurance?
I'm not surprised!
You have to accept that you will now be living in Spain and come under their jurisdiction regarding tax and social security.
This actually happens when you spend more than 183 days in one calendar year living in Spain and it applies for the whole of that year. That means that you will be tax resident in 2010.
If you want full "NHS" health care for the family you may be able to get a form E106 from the UK which could entitle you to up to two years cover in Spain. After that you will either need private health cover or be paying "Autonomo" social security payments - which are expensive - about €250 a month. They will entitle you to a state pension and any payments into the UK system will also result in a pension paid from the UK. You can have a pension paid individually from any number of different EU governments and the minimum period for the pension entitlement is also aggregated so you will not get into the situation where you have contributed for 40 years but never long enough in any one country to trigger your pension.
If you are tax resident in Spain, you will be taxed on your world wide income which clearly will include income from your UK business. As you are running the UK business as a partnership rather than as a UK company, then there is no point in continuing that arrangement as you will be paying social security and tax in Spain.
You biggest problem will be convincing HMRC in the UK that you are no longer tax resident and getting them to agree to you paying no tax in the UK. The fact that you will be able to prove that you are tax resident in Spain and paying tax in Spain should (eventually) convince them. If you do end up paying tax in both the UK and Spain then you can offset the UK tax paid against the Spanish tax due. Be aware that tax in Spain is generally slightly higher than the UK.
The fact that your clients are paying you in GBP is irrelevant - that's just a foreign exchange issue!
As for "residency"requirements, you should sign on the foreigners register as soon as you arrive - this is mandatory after 90 days but has nothing to do with tax residency. You get an A4 certificate to prove that you now have the right to live in Spain, as opposed to visit as a tourist. You should also sign on the "padron" in your town to ensure that everything is documented if you wish to use local facilities such as the schools. This does not give you any rights to healthcare - I covered that earlier.
I hope this helps to "de-confuse" you!
You have to accept that you will now be living in Spain and come under their jurisdiction regarding tax and social security.
This actually happens when you spend more than 183 days in one calendar year living in Spain and it applies for the whole of that year. That means that you will be tax resident in 2010.
If you want full "NHS" health care for the family you may be able to get a form E106 from the UK which could entitle you to up to two years cover in Spain. After that you will either need private health cover or be paying "Autonomo" social security payments - which are expensive - about €250 a month. They will entitle you to a state pension and any payments into the UK system will also result in a pension paid from the UK. You can have a pension paid individually from any number of different EU governments and the minimum period for the pension entitlement is also aggregated so you will not get into the situation where you have contributed for 40 years but never long enough in any one country to trigger your pension.
If you are tax resident in Spain, you will be taxed on your world wide income which clearly will include income from your UK business. As you are running the UK business as a partnership rather than as a UK company, then there is no point in continuing that arrangement as you will be paying social security and tax in Spain.
You biggest problem will be convincing HMRC in the UK that you are no longer tax resident and getting them to agree to you paying no tax in the UK. The fact that you will be able to prove that you are tax resident in Spain and paying tax in Spain should (eventually) convince them. If you do end up paying tax in both the UK and Spain then you can offset the UK tax paid against the Spanish tax due. Be aware that tax in Spain is generally slightly higher than the UK.
The fact that your clients are paying you in GBP is irrelevant - that's just a foreign exchange issue!
As for "residency"requirements, you should sign on the foreigners register as soon as you arrive - this is mandatory after 90 days but has nothing to do with tax residency. You get an A4 certificate to prove that you now have the right to live in Spain, as opposed to visit as a tourist. You should also sign on the "padron" in your town to ensure that everything is documented if you wish to use local facilities such as the schools. This does not give you any rights to healthcare - I covered that earlier.
I hope this helps to "de-confuse" you!
Last edited by Fred James; Jun 28th 2009 at 3:19 pm.
Jun 28th 2009, 4:21 pm
#3
BE Enthusiast
Thread Starter
Joined: Mar 2008
Posts: 536
Re: Advice needed. Self employed in uk, but moving to Spain. Taxation? Nat insurance?
I'm not surprised!
You have to accept that you will now be living in Spain and come under their jurisdiction regarding tax and social security.
This actually happens when you spend more than 183 days in one calendar year living in Spain and it applies for the whole of that year. That means that you will be tax resident in 2010.
If you want full "NHS" health care for the family you may be able to get a form E106 from the UK which could entitle you to up to two years cover in Spain. After that you will either need private health cover or be paying "Autonomo" social security payments - which are expensive - about €250 a month. They will entitle you to a state pension and any payments into the UK system will also result in a pension paid from the UK. You can have a pension paid individually from any number of different EU governments and the minimum period for the pension entitlement is also aggregated so you will not get into the situation where you have contributed for 40 years but never long enough in any one country to trigger your pension.
If you are tax resident in Spain, you will be taxed on your world wide income which clearly will include income from your UK business. As you are running the UK business as a partnership rather than as a UK company, then there is no point in continuing that arrangement as you will be paying social security and tax in Spain.
You biggest problem will be convincing HMRC in the UK that you are no longer tax resident and getting them to agree to you paying no tax in the UK. The fact that you will be able to prove that you are tax resident in Spain and paying tax in Spain should (eventually) convince them. If you do end up paying tax in both the UK and Spain then you can offset the UK tax paid against the Spanish tax due. Be aware that tax in Spain is generally slightly higher than the UK.
The fact that your clients are paying you in GBP is irrelevant - that's just a foreign exchange issue!
As for "residency"requirements, you should sign on the foreigners register as soon as you arrive - this is mandatory after 90 days but has nothing to do with tax residency. You get an A4 certificate to prove that you now have the right to live in Spain, as opposed to visit as a tourist. You should also sign on the "padron" in your town to ensure that everything is documented if you wish to use local facilities such as the schools. This does not give you any rights to healthcare - I covered that earlier.
I hope this helps to "de-confuse" you!
You have to accept that you will now be living in Spain and come under their jurisdiction regarding tax and social security.
This actually happens when you spend more than 183 days in one calendar year living in Spain and it applies for the whole of that year. That means that you will be tax resident in 2010.
If you want full "NHS" health care for the family you may be able to get a form E106 from the UK which could entitle you to up to two years cover in Spain. After that you will either need private health cover or be paying "Autonomo" social security payments - which are expensive - about €250 a month. They will entitle you to a state pension and any payments into the UK system will also result in a pension paid from the UK. You can have a pension paid individually from any number of different EU governments and the minimum period for the pension entitlement is also aggregated so you will not get into the situation where you have contributed for 40 years but never long enough in any one country to trigger your pension.
If you are tax resident in Spain, you will be taxed on your world wide income which clearly will include income from your UK business. As you are running the UK business as a partnership rather than as a UK company, then there is no point in continuing that arrangement as you will be paying social security and tax in Spain.
You biggest problem will be convincing HMRC in the UK that you are no longer tax resident and getting them to agree to you paying no tax in the UK. The fact that you will be able to prove that you are tax resident in Spain and paying tax in Spain should (eventually) convince them. If you do end up paying tax in both the UK and Spain then you can offset the UK tax paid against the Spanish tax due. Be aware that tax in Spain is generally slightly higher than the UK.
The fact that your clients are paying you in GBP is irrelevant - that's just a foreign exchange issue!
As for "residency"requirements, you should sign on the foreigners register as soon as you arrive - this is mandatory after 90 days but has nothing to do with tax residency. You get an A4 certificate to prove that you now have the right to live in Spain, as opposed to visit as a tourist. You should also sign on the "padron" in your town to ensure that everything is documented if you wish to use local facilities such as the schools. This does not give you any rights to healthcare - I covered that earlier.
I hope this helps to "de-confuse" you!
i think i need a gestor!
Jun 28th 2009, 6:29 pm
#4
Joined: Jun 2006
Location: Granada Costa
Posts: 10,902
Re: Advice needed. Self employed in uk, but moving to Spain. Taxation? Nat insurance?
Yes you do!
Gestors are the best value professionals in Spain. They know the law and all the bureaucracy and also know how to duck and dive round the rules and usually know all the local officials.
I have never regretted any money I have paid to a gestor. Always use a gestor in preference to a lawyer. Lawyers in Spain are more like barristers in the UK and are correspondingly expensive. The concept of a solicitor does not really exist in Spain - the gestor is probably closest to it but he covers a much larger agenda - would you ask your solicitor in the UK to sort out the exchange of your driving licence for example?
Gestors are the best value professionals in Spain. They know the law and all the bureaucracy and also know how to duck and dive round the rules and usually know all the local officials.
I have never regretted any money I have paid to a gestor. Always use a gestor in preference to a lawyer. Lawyers in Spain are more like barristers in the UK and are correspondingly expensive. The concept of a solicitor does not really exist in Spain - the gestor is probably closest to it but he covers a much larger agenda - would you ask your solicitor in the UK to sort out the exchange of your driving licence for example?
Jun 29th 2009, 6:01 am
#5
Forum Regular
Joined: Mar 2009
Posts: 69
Re: Advice needed. Self employed in uk, but moving to Spain. Taxation? Nat insurance?
The HMRC won't issue you an E106 for healthcare if you are working in Spain. Even if your income is coming from UK customers, you should be paying your national insurance here as that is where you are doing your work. Ask at the TGSS. When you do register, you won't have to continue to pay national insurance in the UK. As Fred has said, this will cover you for pension, benefit and healthcare rights as a resident of Spain.
