somerby

Hi

I've been living in Spain for 6 months and love it here. I operate as a UK registered limited company and have a contract with a UK company (basically, I "work from home" - just that my home is in Spain rather than the UK). I pay UK personal and corporation tax.

Currently I don't have NIE status, but am considering it now I want to be here for the long-time.

Basically, my question to the forum is if I get NIE status do I then start paying taxes to Spain rather than to the UK, or can I just carry on as I am now?

Mitzyboy

Its difficult for me to comment. I was in exactly your situation but having described what I did to address it after professional advice, someone on here said it was totally wrong.

So the advice you will get here probably is to become autonomo in Spain and pay taxes as a self employed person.

To me that makes no sense, especially if ALL your business is in the UK and nothing at all takes place in Spain, as well as you being a UK company director employee

For me, I did not become autonomo yet declared my income as worldwide income on tax returns in Spain. As you know, as a company director you can be "constructive"

mikelincs

You should already be declaring your income and paying taxes, as you will already be classed as 'tax resident' as you have been in Spain more than 183 days. Going autonomo would mean paying autonomo fees, but it would give you, and any non working family you have there, coverage under Spanish Healthcare.

Mitzyboy

However paying autonomo charges can be more than private health cover, which a few years ago cost my wife and I in mid fifties €1150 a year. When you have paid your autonomo charges which can be €250 a month upwards, then you have to pay your tax also.

snikpoh

But surely one of the big advantages is that you can cover the entire family PLUS no questions are asked about prior problems. With private health care the costs are per person and they may not cover prior illnesses.

pete_l

Do we need to distinguish here between the "me" and the "my company"?
For example, which entity pays autonomo? is it the person, as an employee or is it the company as the employer.
Also, how would spanish income tax work if the OP was paying himself a wage as the company's only employee. Would the wages fall under the spanish tax system, but any/all dividends (paid as a shareholder in a british company) still be payable to HMRC?

I don't think having an NIE number necessarily means you become liable for taxes in Spain. It's just a piece of paper that lets you open bank accounts and satisfy the spanish bureaucrats who need something to fill a space in a form. For example, when I have to sign for parcels at the post office, they require my NIE number. Since I can never remember what it is, I just guess - I probably get some of the numbers wrong, but it doesn't seem to matter and I expect that most of the time, it makes no difference at all. (My NIE certificate doesn't even have a valid address on it )

CapnBilly

I don't see that he's operating in the same way, as I understood you did (but I may be wrong on that score). Having said that, it seems to me that he's not operating as autonomo, he's operating as an employee of a limited company, with a permanent establishment here in Spain. As far as I can see, this is covered by the DTA, and I think the first thing to do is read that. Note, I would read both the old and the new one (not yet in force), as, although I think they are more or less the same for the things that affect you, there is more detail in the new one.

If you've been here more than 6 months, and intend to stay, then you are tax resident here for 2013, and will need to sort your affairs out by June 2014, so you can submit a return. It partly depends how you remunerate yourself, as there are different rules for employment income and dividends etc.

mikelincs

AFAIK autonomo is due to become a lot cheaper in October from other threads on here.

CapnBilly

Its only for a period of time from the first registration. As far as I recall its

Self-employed young people under the age of 30—35 years old for women—will pay a €50 rate for the first six months, €130 for the following six months and €180 for other 18 months; a total of 30 months of assistance.

Over the age of 30, this allowance is limited to 18 months: €50 rate for the first six months, €130 for the following six months and €180 for other six months.

Mitzyboy

As a company director, you are an employee .. you are not always deemed to be self employed. So look at it from the point of view of someone who is employed by a UK company who chooses to live full time in Spain. In that case they would make the necessary tax returns in Spain for their worldwide wealth

As an employee who also makes the main decisions about the company, you are choices as to how you receive your income

pete_l

Yes. However the other side of the coin is that as a company shareholder, you get to receive a dividend (the amount decided by the company directors) as a return for the shares you hold. That divi would attract corporation tax in the country where the company is registered.
Would it also attract tax in spain - unearned income or somesuch? I don't know.

Now, within certain limitations, how the director(s) choose to divide the company profits between salary for the staff and divident for themselves is left to their discretion. Depending on which country's tax authorities take how much, there is some work needed to set the optimal break-point to minimise taxes paid.

CapnBilly

I agree, i think i said "he's not operating as autonomo".

Rosemary

As Concierge for the Spanish section of BE I would like to say hello and welcome.

BE is a very large expat website, so if you have problems finding your way around we have concierges who will try to direct you. The moderators for the Spanish forums are Mitzyboy and Fred James, moderators are there to ensure that the site runs smoothly within the rules of BE. Problems and complaints should always be addressed to a moderador who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are friendly and helpful with a wealth of knowledge of the issues of living in Spain. At the top of the page you will find a quirkily named thread called Free Beer which is full of important and useful information. Hope you enjoy your time participating in the forums.

Please let me know if you need any further help.

Rosemary

Mitzyboy

Well, before in business for instance the company employed my wife for administration purposes, and she was paid (not surprisingly) a salary which took account of the personal allowances. My company car was privately purchased, and I claimed a mileage rate for the miles I did. I had an expense account which paid for many things "I needed for my business". As a company director and employee there is a lot you can do

zenkarma

NIE is just a tax number, it doesn't make you liable for anything.

However, if you've been there 6 months or more than 183 days, you've de facto become a Spanish tax resident and are now liable for Spanish taxes from January 1 2013. If you're a Spanish tax resident you now become liable for Spanish taxes on your worldwide income.

You better start reading up on the Double Taxation Agreement between the HMRC and the Spanish Hacienda and start finding out what taxes you're liable for and how much you will likely have to pay.

On top of that you'll also have to declare your worldwide assets worth over €50,000 including bank accounts, property and investments.