Paul Dupont

Hello All

I came to Spain about 4 years ago and was spending a lot of time in London working also but got spanish residency December 2020 Just before Brexit. I freelance for London based companies and all my work is done remotely for the the UK. Anyhow when I applied for residency I mentioned this at city hall and they said I could put on my application that I was living on savings and buy private healthcare, I did also give over documents of registration of my UK Ltd company when I applied for residency also. Since then I have not been contacted by the Spanish tax authorities and not registered to pay tax here, although I have been here over 183 days in the years since registering (2021, 2022). If I register I will prob have to register as autonomo and be employed by my UK Ltd company (is this correct). Autonomo social security is ridiculous, something like 200EUR/month even if you're taking a salary of 700/month, I pay private healthcare so I dont need the healthcare part of it, and to receive a pension from it I need to be paying tax for 5 years in Spain I beleive, and I may not live here that long...

My question is - how would the tax authorities know I am here 183 days a year? Also why wpuld they check if I havent heard anything already? My earnings are pretty small (less than 40K a year) and all from UK companies going to my UK account.

Is it worth me registering for tax in Spain?

Thanks for any help!

Paul

christmasoompa

Hi, and welcome to BE.

Maybe I'm missing something but surely it's not a question of 'is it worth it', but just a question of if you're tax resident or not? You can't pick and choose where you pay tax (if you could I'd claim to be tax resident in Monaco!), you need to do so wherever you are deemed to be tax resident and from what you've said, that's Spain.

spainrico

Yes I was thinking the same ....over 183 days here, resident here = tax resident here.

I strongly suggest you take professional advice and get this sorted otherwise you will be faced will tax bills plus interest plus fine.

For more - https://expatsmagazine.org/taxes/

Ronnyone

Basically you have been living under the radar..whether you knew it or not. 4 years without making a tax declaration is fairly serious and hard to believe that a business owner wouldn't have given it a bit of thought. The tax man is not linked to immigration so waiting for the tax to contact you isn't going to happen and everyone should make a tax declaration at least initially even if earning below tax threshold.You probably have two alternatives...return to UK and give up your Spanish residency or get a tax lawyer to contact the Spanish tax man and try and repay the taxes and I'm afraid some fines. Technically after 4 years any debt owing is negated but not if the authorities discover any illegalitites

Listen Very Carefully

As has been said your resident in Spain so you need to be submitting a Spanish tax return detailing all your income It is up to you to register with the tax authorities.I do not think that the "City Hall" gave you good advice frankly.The tax authorities now have you on their radar.Generally you are regarded as working in a country if that is where your bum is when the work is done.As you are now registered as a resident in Spain then the tax authorities will regard you as being liable for tax here .And of course your passport and movements can be tracked via the soon to be introduced EU computer system
I would strongly advise that you get advice from a professional before you get a sudden shock

Barriej

Time for my 2c.
I have run various business's in the Uk and at no time does the tax man come running to see if you are a business entity.
So why should the rules be any different here or anywhere else.

To become autonomo you (or the accountant) has to apply, to set up a company here the same, retired again the same.
The only time you don't do much is if you are fully employed.

I assume you haven't put a 720 in either then?

Im slightly leaning towards the fact you may know you should have, but didn't because someone told you after 4 years they cant get you...
If Im wrong then iI apologise.

Get some advice now, the rules are simple.

Live in Spain and work anywhere in the world, you owe Spain tax. (unless you are from the US and then uncle sam never lets go)...

Paul Dupont

No I wasn't aware of any 4 year thing, I was just previously under the impression that I wouldn't be Liable for tax in Spain until I got residency (which was only last year 2021). So I thought I wouldnt even be due to submit tax until this year (which I know now is wrong of course after finding out about this 183 day rule). So now I'm feeling like as soon as I volunteer myself they're going to have me on the rack like theyre trying to do with Shakira, clobbering me with fines etc. To be honest I have spent a lot of time travelling, also in the UK, Portugal etc, and I'm not really sure how they would account for time in Portugal/France when driving between Spain and those countries...So I just feel like its a case of as soon as I file some accounts they will take me to the cleaners and threaten all sorts, and if I don't - how will they ever know or check? Administration in Spain seems pretty lacking to be honest, my girlfriend applied for an NIE and doesnt have it nearly a year later... I'm just a guy with small money renting a flat here, many people rent a flat here and live in another country etc. so I'm not sure why the authorities would pounce on me, I dont even working with any spanish clients/companies...

Ronnyone

Lots of people are in the same position as you but still have to pay tax- ignorance of the law is no excuse. Basically the first thing the tax man will want to know is...if you didn't pay tax in Spain where did you pay it over the last 4 years. If you paid in UK then you will have some leniency. However if you haven't paid in uk or other countries then you will have a problem and will be fined. You won't be taken to the cleaners. You will have to pay the tax you owe, the fine and obviously pay your accountant. Other than the fine you will pat the same that we all have to.

Listen Very Carefully

Have a look at the Spain UK tax agreement this lays out what income is taxed where but the general rule of thumb is you are due to pay tax in the country where you do the work.So if you return to the UK to do your work the UK gets first dibs.If you do the work in Spain then you need to comply with Spanish law and Spain gets first dibs.It is the rule of bum In any event if you are resident in Spain then the Spanish would expect to see a tax return. In the event of a conflict then where you are resident can have an effect so really a tax pro who understands the tax treaty is a priority really

Paul Dupont

Yes I do pay in the UK of course, corporation tax and SA tax. I wanted to go autonomo in spain and freelance for my Ltd company, then I saw that social security payments are about 200/month even if you're on pay of about 700. It's ridiculous compared to UK NI and PAYE...

Ronnyone

What is your point? Are you saying that you didn't want to register as automino in Spain because you think it's ridiculous and that is your reason for not paying your taxes in spain? Basically it is beginning to sound like you knew that you should pay tax or at least declare to the tax man but you decided that you wouldn't really investigate too much because you didn't like the idea of paying the automino.
You asked for advice and that advice is get a good tax professional to sort things out. Yes it is going to cost but some of that will be what you owe as tax ( and everyone pays that) plus fines and the cost of the lawyer. I have no idea what level of income you receive but when you talk of corporation tax etc it suggests that you have sizeable assets ( over 50.000 euros) in uk and that makes me think you haven't even declared those is Spain which in itself is a crime. So I would focus less on whether things in spain are fair and deal with the tax situation as it stands

Fred James

Paul Dupont

No, as I mentioned previously my company turnover is 40K tops, more likely 35K, gross turnover. I dont own property in Spain or the UK. All my work is done for UK companies freelance. I'm already paying 50EUR a month in healthcare, then add to that 200/month just for being 'autonomo' which is pointless as I'd be working for my own UK company(not even working for spanish companies), healthcare I don't need and a pension I will never have (since you have to be here a number of years, 5 maybe paying the tax, to qualify for the pension) which I'm not likely to do. So yes, it does seem a little ridiculous 200/month... so I can sit in a cafe on my laptop working for England. No?

christmasoompa

Ridiculous maybe, but as you now know, it's not something you can opt out of.

Bottom line is, you have to pay tax in Spain if you are tax resident there. And you'd be far better off owning up now and sorting out your tax affairs by voluntarily admitting you made a mistake so any penalties are minimised, than being found out later down the line and then being seen as a tax evader and facing all the consequences of that.

Lynn R

If you were paying autonomo SS contributions, you would not need to pay €50 per month on top of that for healthcare, because you would be entitled to healthcare in the public system. And just because you don't think you need healthcare at the moment doesn't mean you never will - I had absolutely nothing wrong with me when I moved here, or so I thought, but went for a routine cardiology checkup a few years later because I thought I might as well get something from my private health insurance which I hadn't used for anything else - and discovered I had a faulty heart valve which I'd never known about and was already at the moderate/severe stage, and required open heart surgery 3 years later. A year after that I was diagnosed with cancer (luckily at an early stage so only needed surgery).

I think it's highly likely that you pay less to rent your apartment than you would to rent an equivalent property in the UK - but you don't mind the price difference as long as it's in your favour. Whether you consider the level of autonomo SS contributions to be "ridiculous" or not is irrelevant - you have made a deliberate decision to avoid paying them, or Spanish income tax, therefore run the risk of being fined.

By the way, I speak as someone who will, from next year, be paying double the amount of income tax in Spain than I would pay if I still lived in the UK. But I prefer to live here (and that is mostly offset by lower costs for other things) so I accept that I need to pay it. At least here we have a health service and other public services that work. I don't see ambulances stacked up outside my local hospital unable to transfer patients or people waiting weeks for a GP appointment or being unable to see one face to face. I recently needed to get a new S1 form from the UK and register it with the INSS here. It took 7 weeks for the first S1 to arrive and when I opened the envelope I saw there was an error (quite a serious one) in my address so had to ask for an amended one to be issued. A further two week wait for that to arrive. I then got an appointment with the INSS within a week, was told the document confirming my entitlement to Spanish healthcare would be received in 2 weeks' time and it arrived in less than that.