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Receiving a PAYE salary in Spain (Basque) but have not filed a tax declaration

Receiving a PAYE salary in Spain (Basque) but have not filed a tax declaration

Old Oct 5th 2021, 4:23 pm
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Default Receiving a PAYE salary in Spain (Basque) but have not filed a tax declaration

Hi all,

I wonder if any tax wizards can guide me in the right direction.

I have had Spanish residency since October 2019 that coincided with me taking a job with a company in the Basque Country. The intention was that i relocate my family from the UK a few months after but obviously Covid prevented that from happening. I have been working remotely for this company since that time but will be relocating to the USA sometime around April next year. My employer has been making deductions at source but it cropped up in conversation last week that i haven't filled in a Spanish tax declaration. To be honest, i was totally unaware that i had to do this.

My employer is getting a little bit worried as clearly, if this has to be filed every year, I'm late.

However, it seems that since i have residency but have not been a resident, (other than for 2 months from November 19 until Jan 20), i can't just submit a standard declaration. I am quite happy to have paid tax to the Spanish government, so not looking to reverse any of the deductions made by my employer but just need to know what form i need to submit. I guess i would be classed as a non resident tax payer?

Thank you in advance

Mic
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Old Oct 5th 2021, 8:17 pm
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

So you appear to be saying that you were only a resident for approximately 4 months in Spain then returned to UK? During this time however your Spanish boss has been making SS payments etc? If so it is a bit of a mess but would be best dealt with by getting a gestor to sort it out. The hacienda will definitely want to know where you were paying tax if it wasn't Spain. If you have declared in UK then it will probably be okay as you could argue you were not a tax resident as under 183 days in Spain. However, if you haven't declared in UK and were resident in Spain ( irrespective of time limit) you will probably be assumed to have transferred financial centre there and will therefore be tax in Spain with any penalties that may or may not exist. So my advice is get a gestor or tax lawyer to sort it out ASAP
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Old Oct 5th 2021, 8:52 pm
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

it is not only number of days spent in Spain that matters when determining tax residency. one may claim that the centre of your economic activity was Spain => you are tax resident in Spain. talk to Agencia tributaria, and if needed - submit the late tax return and pay a fine.
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Old Oct 5th 2021, 9:21 pm
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

Even if you are not tax resident any income earned in Spain is liable for tax. The same rules apply in the UK and most countries. Being non tax resident in a specific country does not mean you don’t pay tax in that country. The difference is that if you are tax resident in a country then you are liable for tax on your world wide income not just your income generated in that country.

Most people do not understand this and often assume that because they are not tax resident in Spain that they will not be liable for tax on income earned in Spain.

For example, a sportsman who wins a prize after spending two days in Spain will be liable for Spanish income tax as the income was earned in Spain.

Another example is a UK pension paid to a non resident. As the income is earned in the UK it is liable for tax in the UK. However in this case there is a specific clause in the tax agreement that says it can be paid free of UK tax. On the other hand, rental income from a property in the UK is taxable in the UK even if the income is paid to a non tax resident.

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Old Oct 5th 2021, 10:05 pm
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

Originally Posted by Chipmonk View Post
So you appear to be saying that you were only a resident for approximately 4 months in Spain then returned to UK? During this time however your Spanish boss has been making SS payments etc? If so it is a bit of a mess but would be best dealt with by getting a gestor to sort it out. The hacienda will definitely want to know where you were paying tax if it wasn't Spain. If you have declared in UK then it will probably be okay as you could argue you were not a tax resident as under 183 days in Spain. However, if you haven't declared in UK and were resident in Spain ( irrespective of time limit) you will probably be assumed to have transferred financial centre there and will therefore be tax in Spain with any penalties that may or may not exist. So my advice is get a gestor or tax lawyer to sort it out ASAP
Thanks Chipmonk,
Yes, i was only a resident in Spain for a very short time, just over 2 months.
My Spanish employer was making all deductions so tax (etc) has already been paid in Spain.
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Old Oct 5th 2021, 10:07 pm
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

Originally Posted by yevlondon View Post
it is not only number of days spent in Spain that matters when determining tax residency. one may claim that the centre of your economic activity was Spain => you are tax resident in Spain. talk to Agencia tributaria, and if needed - submit the late tax return and pay a fine.
Thanks
Without a doubt, the centre of my economic activity was Spain.

Last edited by Mic1; Oct 5th 2021 at 10:16 pm.
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Old Oct 5th 2021, 10:15 pm
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

Originally Posted by Fred James View Post
Even if you are not tax resident any income earned in Spain is liable for tax. The same rules apply in the UK and most countries. Being non tax resident in a specific country does not mean you don’t pay tax in that country. The difference is that if you are tax resident in a country then you are liable for tax on your world wide income not just your income generated in that country.

Most people do not understand this and often assume that because they are not tax resident in Spain that they will not be liable for tax on income earned in Spain.

For example, a sportsman who wins a prize after spending two days in Spain will be liable for Spanish income tax as the income was earned in Spain.

Another example is a UK pension paid to a non resident. As the income is earned in the UK it is liable for tax in the UK. However in this case there is a specific clause in the tax agreement that says it can be paid free of UK tax. On the other hand, rental income from a property in the UK is taxable in the UK even if the income is paid to a non tax resident.
Thanks Fred,

As i mentioned in my subsequent posts, my employer has paid the relevant taxes etc. Therefore, in my mind, there isn't an issue with unpaid tax, it's simply a case that i haven't filed the relevant tax forms/declarations.

Am i okay to simply file whatever the standard declaration is and not get into whether i was living in Spain or not?

My employer is surprised that the tax authorities haven't chased me up (at the address i was registered at which was a friend's house). I'm guessing that the tax office couldn't have known i had left Spain back in Jan 2020?

Thanks again

Last edited by Rosemary; Oct 6th 2021 at 7:06 am. Reason: corrected quote
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Old Oct 6th 2021, 6:58 am
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

Originally Posted by Mic1 View Post
Thanks Fred,

As i mentioned in my subsequent posts, my employer has paid the relevant taxes etc. Therefore, in my mind, there isn't an issue with unpaid tax, it's simply a case that i haven't filed the relevant tax forms/declarations.

Am i okay to simply file whatever the standard declaration is and not get into whether i was living in Spain or not?

My employer is surprised that the tax authorities haven't chased me up (at the address i was registered at which was a friend's house). I'm guessing that the tax office couldn't have known i had left Spain back in Jan 2020?

Thanks again
The Spanish tax authority will eventually check up but it does usually take a few years.

Last edited by Rosemary; Oct 6th 2021 at 7:08 am. Reason: corrected quote
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Old Oct 6th 2021, 9:03 pm
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

Originally Posted by Chipmonk View Post
The Spanish tax authority will eventually check up but it does usually take a few years.
But i'm guessing that if nothing is owed and all taxes are paid up to date, there would be no need for the authorities to check whether i was resident in Spain or UK at the time that the taxes were settled? Would it make a difference anyway?

Therefore, can you guide me as to which form i should request, populate and return?

Many thanks
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Old Oct 6th 2021, 9:08 pm
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

Failing to submit a tax declaration on time, even if no tax is due, can result in a fine and if unpaid, interest can be added.

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Old Oct 7th 2021, 6:54 am
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

Originally Posted by Mic1 View Post
But i'm guessing that if nothing is owed and all taxes are paid up to date, there would be no need for the authorities to check whether i was resident in Spain or UK at the time that the taxes were settled? Would it make a difference anyway?

Therefore, can you guide me as to which form i should request, populate and return?

Many thanks
Unless you have very good Spanish I would get an assesor to do all this for you. Even if taxes have been paid etc you meed to still make a declaration. Any fine will be minimal.
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Old Oct 7th 2021, 7:36 am
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

Originally Posted by Chipmonk View Post
Unless you have very good Spanish I would get an assesor to do all this for you. Even if taxes have been paid etc you meed to still make a declaration. Any fine will be minimal.
Thanks Chipmonk and everyone else.
I'm embarrassed to say but my Spanish is still quite poor.
I have a Spanish colleague who speaks fluent English, he is happy to translate and fill in the tax declaration on my behalf. However, can anyone advise as to which form i need to fill in considering that i was only in Spain for very short while or would this fact be irrelevant as long as the Spanish government have been paid the correct amount of tax?

Best
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Old Oct 7th 2021, 9:34 am
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

Originally Posted by Mic1 View Post
Thanks Chipmonk and everyone else.
I'm embarrassed to say but my Spanish is still quite poor.
I have a Spanish colleague who speaks fluent English, he is happy to translate and fill in the tax declaration on my behalf. However, can anyone advise as to which form i need to fill in considering that i was only in Spain for very short while or would this fact be irrelevant as long as the Spanish government have been paid the correct amount of tax?

Best
I think the basic declaration is modelo 100. It will be irrelevant how long in so far as you just need to make a declaration so that it can be connected to the money your boss has paid. The level of importance will no doubt depend on exactly how much you earned over the period your boss was making deductions but essentially if you say tax has already been collected then it should be okay and the declaration will just assist them.in getting everything organized. I assume you have been paying tax in UK if you stopped after you left Spain? If you haven't then you will have problems with Spain as they will see that as avoidance' so just make sure you have proof from HMRC if that is the case.
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Old Oct 7th 2021, 4:17 pm
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

Originally Posted by Chipmonk View Post
I think the basic declaration is modelo 100. It will be irrelevant how long in so far as you just need to make a declaration so that it can be connected to the money your boss has paid. The level of importance will no doubt depend on exactly how much you earned over the period your boss was making deductions but essentially if you say tax has already been collected then it should be okay and the declaration will just assist them.in getting everything organized. I assume you have been paying tax in UK if you stopped after you left Spain? If you haven't then you will have problems with Spain as they will see that as avoidance' so just make sure you have proof from HMRC if that is the case.
I have actually had to pay tax in the UK for a couple of other small incomes, i guess this makes no difference to Spain though?
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Old Oct 7th 2021, 4:31 pm
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Default Re: Receiving a PAYE salary in Spain (Basque) but have not filed a tax declarati

Originally Posted by Mic1 View Post
I have actually had to pay tax in the UK for a couple of other small incomes, i guess this makes no difference to Spain though?
I think it can make a difference in that if you haven't declared your income in Spain nor in UK then the Spanish tax man will consider it deliberate tax avoidance.
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