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Freelancing from Madrid (UK Ltd. Company)

Freelancing from Madrid (UK Ltd. Company)

Old Mar 9th 2018, 9:20 am
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Arrow Freelancing from Madrid (UK Ltd. Company)

Hi there,

My girlfriend is Spanish and has been living in the UK for 5 years and will be getting her citizenship this year, but wants to move back to Spain before she's 30 and her job chances decrease significantly over there. I currently work as a freelance 3D/Technical designer for contacts in the UK and the majority of my work is done at home. I have a VAT registered limited company and I pay myself a combination of salary and dividends.

We are planning to move to Madrid in February for a minimum of 12 months (before Brexit kicks in) and I'm trying to figure out exactly what needs to be put in place before leaving. I will have saved the equivalent of 1 years salary by February and so am not worried about job prospects in Spain and a lot of my contacts will still feed me work regardless of where I'm based.

In addition, I have a flat that is joint owned with a friend, and will rent out my half to another friend to cover the mortgage. I understand this will have to be declared to the Spanish authorities and tax paid on rental income.

I've done quite a lot of research on this forum and elsewhere and I've gathered that:

I'll be a resident in Spain for tax purposes on my salaried income but my UK company will still be liable to UK corporation tax and that one way to draw a salary is to apply to become autonomo and bill my limited company each month. Given that the social security contributions have recently been reduced to 50 euros a month, this seems reasonably plausible. However:

- Do you need to prove that you're limited company is not being run outside of the UK & set up a UK based guarantor to act as sole/joint director
- Autonomo discount applies if we only end up staying 12 months?

I've heard that a few people here have drawn an income from their limited companies without registering as autonomo, and have just paid tax on worldwide income. This seems a bit grey, but I would be interested to know whether I would be able draw from my UK savings without registering as autonomo if I ended up conducting no work in Spain from February onwards (sabbatical)?

Although the downside of this option is having to rely on the EHIC for medical coverage, and not sure if that will continue post March 2019.

Whichever option, I will certainly need to hire the services of a gestor, for administration help as my Spanish is conversational at best and my girlfriend has no working experience in Spain. I'm looking into getting professional advice as well, and will be sitting down with my accountant soon to hash out the details.

Has anyone had any similar experience and could shed some light on any of the above (or anything I've missed?)

Thanks in advance,

Sam
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Old Mar 9th 2018, 9:30 am
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Default Re: Freelancing from Madrid (UK Ltd. Company)

Hi and a warm welcome to the Spanish forum on BE. Myself and Fred James are the moderators for the Spanish forums whilst myself and BEVS moderate Europe. Please read the Site Rules Site Rules | British Expatriate Community adhere to them so that the site runs smoothly. Moderators are there to ensure that the rules of BE are maintained. This is so that members gain the information that they are looking for and find their experiences on the forums to be friendly and worthwhile.

Problems and complaints should always be addressed to a moderator who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are usually friendly and helpful with a wealth of knowledge about the issues of living in Spain. I hope that you enjoy your time participating in the forums.

Please let me know if you need any further help.

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Old Mar 9th 2018, 12:33 pm
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Default Re: Freelancing from Madrid (UK Ltd. Company)

I will leave the tax and financial matters to those who know.

You say you will be tax resident, and will be trying out your plans for 12 months.

Your thinking is flawed due to the fact that after 90 days (or actually, when you arrive, as you intend to stay for over 90 days on entry) you will have to apply to go on the Foreigners register AKA 'Residency' and for that you will have to prove income so as not to be a burden on the State AND that you have (Private for you!) Healthcare that is at least equivalent to the Spanish NHS. An EHIC is purely there for emergencies only, and in any case is NOT suitable for 'residency' FOR SURE.
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Old Mar 9th 2018, 1:06 pm
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Default Re: Freelancing from Madrid (UK Ltd. Company)

Hi Sam,

Are you familiar with the contractoruk forums? The topic has come up on there before and you might find some useful information. (I did an "advanced" search on the forums for title includes "Spain")

Tim
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Old Mar 9th 2018, 4:33 pm
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Default Re: Freelancing from Madrid (UK Ltd. Company)

Thanks for the information Lurchio regarding the EHIC card. Didn't realise. So registering as autonomo and paying the required social security would be the only way to allow me to use the Spanish healthcare system?

Thanks todonnell, read a few of their info pages and a couple of forum posts, but I'll do more digging.

All in all, just looking if anyone has had a similar experience and has anything worthwhile sharing. Whatever I dig out of the "professionals" down the line I'll post here for other people's benefit.
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Old Mar 9th 2018, 4:41 pm
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Default Re: Freelancing from Madrid (UK Ltd. Company)

Yes, Autonomo has health cover included. Trouble is you first need to obtain Residency to be Autonomo. Vicious circle.I can't see an alternative to initial private health cover. Not as bad as it sounds, dependent on age and existing conditions, cover is cheaper here.
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Old Mar 10th 2018, 2:16 am
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Default Re: Freelancing from Madrid (UK Ltd. Company)

Hi Sam,
First off this is easily done. Basically if you are a tax resident here in Spain (spend 6months or more here in a year) you pay the difference between the UK tax and the Spanish tax and the best way for you too do this would be to become Autonomo at the end of your first year living here...assuming you plan to stay

Because of the double taxation agreement you don't pay tax twice, you just pay the difference between what you should pay in Spain (higher taxation than the UK) and what you did pay in the UK.
You need to find a good Gestor in Madrid that can help you sort this out.. Don't think of Autonomo as like your LTD company - its just you become self employed/Autonomo. If you are registered in the UK for VAT, its going to be difficult for you to bill your UK company as a self employed person here in Spain. Normally you just use the self employed status (Autonomo) as a vehicle to make your tax payment - the Autonomo payment itself is tax deductible!

I will make a few observations though -

We are planning to move to Madrid in February for a minimum of 12 months (before Brexit kicks in) > You need to do this well before - No one knows for certain what will happen next March with Brexit. I would suggest that you apply for and gain residency well before next March!

You will need to plan this well in advance -

1)open a non residency bank account - you probably want to do this at least 4-5 months before applying for residency.
1a)you have to prove income into your Spanish bank account for residency - start paying €2000 a month into this account - give it a reference of salary and your name.
I would suggest at least €2000 a month as it needs to be a convincing figure to support yourself paying rent on an apartment in Madrid etc. You need to show income for at least three months before applying for residency as you are not a UK pensioner.

The bank will need to provide you with a certificate to take to the interview for residency - if you have used the term salary and your full name as the money transfer reference each time, it will make it easy for the bank to show your "Salary" on the certificate.

2)use a Gestor to apply for an NIE number for you - this will make life easier for you, if you get the Gestor to do it (I am guessing your girlfriend won't need one).
You can open the bank account without the NIE, but the bank will need it ASAP.
3)find a flat to rent - you must have a tenancy agreement
4)go to your local town hall and get on the Padron - you will need the Padron certificate
5)take out SPANISH private health insurance - It's much cheaper than in the UK - if you are 40 or under with no pre conditions it should be €50 or less a month for excellent coverage.
6)use the services of the Gestor to guide you through the process of what is needed locally for residency. Following the steps above will give you everything you need in a timely manner.

I understand this will have to be declared to the Spanish authorities and tax paid on rental income. This can be painful - as they want you to prove it, by showing all of the documentation. Although tax will only be paid on any income gained after the mortgage and bills are paid. - Something to worry about much later when you have residency and have been here more than 6 months.

Do you need to prove that you're limited company is not being run outside of the UK & set up a UK based guarantor to act as sole/joint director No one cares - You are the sole employee of your LTD company. The Spanish authorities are only interested if you are an employee of a Spanish company for the purpose of the residency application.

Autonomo discount applies if we only end up staying 12 months?
Do not apply for Autonomo until you have been here a year and plan to stay - You can't become self employed here until you are a resident and it will take you 3-5 months to work through that alone!

I've heard that a few people here have drawn an income from their limited companies without registering as autonomo, and have just paid tax on worldwide income
You could work it this way, but again you need advice from a suitable Gestor that has experience with this. I would suggest though that becoming an Autonomo gives you full access to the Spanish health care system and that the payment for being Autonomo is tax deductible! But worry about this at the end of your full year of being here.

would I be able draw from my UK savings without registering as autonomo if I ended up conducting no work in Spain from February onwards That would be the same as paying money from one account to the next - assuming you set up a bank account here and apply for residency.. .. otherwise you are here withdrawing money on your UK visa card etc

rely on the EHIC for medical coverage This gives you emergency holiday cover only - it won't give you treatment - Also you can not apply for Spanish residency without health insurance.

Last edited by Smithy73; Mar 10th 2018 at 2:31 am.
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Old Mar 10th 2018, 2:31 am
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Default Re: Freelancing from Madrid (UK Ltd. Company)

I did this myself 18months ago and I am just in the process of shutting down my UK Ltd company now (IT contractor).
My partner keeps his, as his business is UK based.
It was important for us to apply for residency as soon as we could - we own property here and wish to live here etc.
I do feel that you will have possibly missed the boat by not starting this process until next February. The date for withdrawal is set for 30 March 2019.. You need to be living in Madrid and have your residency application approved long before this time!

I hope this helps and I wish you luck
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Old Mar 10th 2018, 6:29 am
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Default Re: Freelancing from Madrid (UK Ltd. Company)

Originally Posted by Smithy73 View Post
I did this myself 18months ago and I am just in the process of shutting down my UK Ltd company now (IT contractor).
My partner keeps his, as his business is UK based.
It was important for us to apply for residency as soon as we could - we own property here and wish to live here etc.
I do feel that you will have possibly missed the boat by not starting this process until next February. The date for withdrawal is set for 30 March 2019.. You need to be living in Madrid and have your residency application approved long before this time!

I hope this helps and I wish you luck
Hi and a warm welcome to the Spanish forum on BE. Myself and Fred James are the moderators for the Spanish forums whilst myself and BEVS moderate Europe. Please read the Site Rules Site Rules | British Expatriate Community adhere to them so that the site runs smoothly. Moderators are there to ensure that the rules of BE are maintained. This is so that members gain the information that they are looking for and find their experiences on the forums to be friendly and worthwhile.

Problems and complaints should always be addressed to a moderator who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are usually friendly and helpful with a wealth of knowledge about the issues of living in Spain. I hope that you enjoy your time participating in the forums.

Please let me know if you need any further help.

Rosemary
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Old Mar 10th 2018, 9:19 am
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Default Re: Freelancing from Madrid (UK Ltd. Company)

Smithy 73 thanks for such a detailed and well written post, this gives me lots to think about and was just what I was after.

We have been in discussions about becoming pareja de hecho as we have been living together here in the UK for more than 12 months. This, hopefully, would grant me semi permanent residency and a right to work, but I'm going to read up on the details today.

We frequently visit Spain and will try and put this in motion this year, but I think getting setting up with a gestor and bank account is first priority.

Thanks again,
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Old Mar 10th 2018, 10:08 am
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Default Re: Freelancing from Madrid (UK Ltd. Company)

Originally Posted by sampbarham View Post
We have been in discussions about becoming pareja de hecho as we have been living together here in the UK for more than 12 months. This, hopefully, would grant me semi permanent residency and a right to work
No worries, but here you are putting the cart before the horse! You need to be resident, registered and living in Madrid for one year before you can do this.

Madrid is expensive, have you thought of living somewhere other than Madrid and Barcelona? The rest of Spain is a LOT cheaper. The reason I mention this, although they don´t document the “income” required for residency anywhere online.. It will be less for other regions as the cost of living is less.
My lawyer advised me last year that for Gandia (Valencia) the civil servant would want to see €6000 in the account and at least €600 coming in a month for the 3 months before applying. She only knew this as her husband is a police officer and could ask what was expected at the interview.

In the UK you would expect this kind of information to be documented somewhere, so you know what is expected. Each region of Spain requires different income amounts as far as I am aware, nothing is documented on this and when you actually turn up, you get the feeling some of it is on the mood of the civil servant that you see.
Don´t let this put you off though, just be aware that you may not be granted residency, on the first appointment.

In my mind this is why you need to start as soon as you can before the Brexit cut off point, as we have no idea what will happen afterwards..
Also remember, if you are marrying someone from outside the EU, you have no automatic right to bring them to the UK - you have to apply and meet the criteria.
Although I think Spain makes this easier than the UK, you do need to be married.
So don´t make the assumption that this will clear your path once Brexit happens - It may and it might not.

Last edited by Smithy73; Mar 10th 2018 at 10:22 am.
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