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Limited Company while living in Spain

Limited Company while living in Spain

Old Nov 12th 2020, 6:47 pm
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Default Limited Company while living in Spain

Hi all,

So I recently moved to Spain, I'm a resident and I have my TIE card. I've been here for two months. I have a limited company in UK that has been running for five years. In two weeks I start a contract role, client based in London. This client will be paying me into my Limited company, but I wont be drawing from it till next year. It's my understanding that after 183 days from Jan 1st 2021 I will be liable for tax here in Spain. Once I start paying myself next year I will be liable for Spanish tax, and cannot be taxed in UK (double tax treaty), but I am unsure if I have understood correctly and how I go about paying this tax? and the most efficient way to draw it out.

Many thanks for your help.

John.
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Old Nov 13th 2020, 8:39 am
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Default Re: Limited Company while living in Spain

Hi John, welcome to the forum.
There are other threads on this if you search the forum.
I think you need to take professional advice as you seem to be potentially overlooking a number of issues, although from the brief details you give it's hard to be sure.
For instance:
There are different rules for corporate tax and personal tax. Corporate tax is normally due in the country where the company is established.
There are different rules for dividends and salaries. Dividends are normally subject to tax in your country of residence. Salaries are normally subject to tax in the country where the work was physically carried out. Salaries are normally also subject to social security contributions in the country where the work was carried out, ie you need to be registered as a worker with that country's authorities.
But first of all you need to carefully read the Spain-UK tax treaty, especially the section about Spanish residents owning UK companies. Many tax treaties have restrictions on what is and is not allowed, for instance it may not be legal for a person to live in one country and be sole owner of a company in the other country unless the majority of that company's business activity is based in the country where it is established - ie its headquarters are there, most of its employees are there and most of its turnover derives from that country. That for instance is what the France-UK tax treaty says and I believe Spain is similar. In France the sole owner of a UK company cannot live in France, trade or provide services mainly in France and hold company meetings/take business decisions in France, without setting up a business structure in France..

Last edited by EuroTrash; Nov 13th 2020 at 9:03 am.
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Old Nov 13th 2020, 9:10 am
  #3  
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Default Re: Limited Company while living in Spain

AFIK, as soon as you are tax resident you should be paying Spanish tax.
Be careful you don't fall foul of IR35 rules.
You need professional advice.
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