Spanish or UK Tax
Feb 8th 2019, 3:54 pm
#16
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Posts: 20
Re: Spanish or UK Tax
I think that it is irrelevant where you work if your tesidential base is deemed to be Spain. If you work in UK for 25 % of the year but live in Spain the rest then you declare in Spain not UK. You can't select where you pay. On the whole the tax is higher in Spain as you don't have the same personal tax free bands as uk
I understand that works that way, but I want to cause as less issue to my company as possible.
As far as I understand, that would involved
- Be a posted worker (with max time allowed). With Brexit, this might not be a chance.
- Declare as an autonomo (contractor) and bill my company.
- Ask my company to get a tax code in Spain. Which would be inefficient since they would need to pay for an accountant.
The other possibility is, if I am correct, to make Spain believe that I only work in the UK 5 days a month, and don't state that I work from Spain, but that I live in Spain.
Spain could not know if I do it, since I am working from home. My income would be paid in the UK, and then paying the tax difference in Spain, so I can be a legal resident in Spain.
In order to pay SS, I could open an autonomo account an make the monthly contributions, but dont declare any profit. I heard this in this forum before but some people said its not necessary.
I am not trying to avoid to pay taxes, but to create head aches to my company.
Feb 8th 2019, 4:12 pm
#17
Joined: Jun 2006
Location: Granada Costa
Posts: 10,898
Re: Spanish or UK Tax
Just understand the basic rules.
All income earned in the UK is subject to UK tax irrespective of the tax residency of the earner.
If resident in Spain for more than 183 days in a calendar year you are tax resident in Spain.
If Spanish tax resident, you pay Spanish tax and then deduct any UK tax paid on the same income.
These three rules cover 90% of all circumstances.
All income earned in the UK is subject to UK tax irrespective of the tax residency of the earner.
If resident in Spain for more than 183 days in a calendar year you are tax resident in Spain.
If Spanish tax resident, you pay Spanish tax and then deduct any UK tax paid on the same income.
These three rules cover 90% of all circumstances.
Feb 8th 2019, 4:30 pm
#18
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Joined: Jan 2019
Posts: 23
Re: Spanish or UK Tax
Hi 1sexsmith, thanks for the reply.
I understand that works that way, but I want to cause as less issue to my company as possible.
As far as I understand, that would involved
- Be a posted worker (with max time allowed). With Brexit, this might not be a chance.
- Declare as an autonomo (contractor) and bill my company.
- Ask my company to get a tax code in Spain. Which would be inefficient since they would need to pay for an accountant.
The other possibility is, if I am correct, to make Spain believe that I only work in the UK 5 days a month, and don't state that I work from Spain, but that I live in Spain.
Spain could not know if I do it, since I am working from home. My income would be paid in the UK, and then paying the tax difference in Spain, so I can be a legal resident in Spain.
In order to pay SS, I could open an autonomo account an make the monthly contributions, but dont declare any profit. I heard this in this forum before but some people said its not necessary.
I am not trying to avoid to pay taxes, but to create head aches to my company.
I understand that works that way, but I want to cause as less issue to my company as possible.
As far as I understand, that would involved
- Be a posted worker (with max time allowed). With Brexit, this might not be a chance.
- Declare as an autonomo (contractor) and bill my company.
- Ask my company to get a tax code in Spain. Which would be inefficient since they would need to pay for an accountant.
The other possibility is, if I am correct, to make Spain believe that I only work in the UK 5 days a month, and don't state that I work from Spain, but that I live in Spain.
Spain could not know if I do it, since I am working from home. My income would be paid in the UK, and then paying the tax difference in Spain, so I can be a legal resident in Spain.
In order to pay SS, I could open an autonomo account an make the monthly contributions, but dont declare any profit. I heard this in this forum before but some people said its not necessary.
I am not trying to avoid to pay taxes, but to create head aches to my company.
I'm in an almost identical situation. I want to retain my UK salary but work from Spain. I actually have no problem paying Spainish social security and tax BUT I want to remain employed by UK company - because if not I need to purchase my own (expensive) insurances!
I've taken some advice and they said setup as a sole trader and invoice UK company (is this just their easy "off the shelf" solution ...) which I don't want to do.
Question - is Spanish social security compulsory for tax residents (and not an autonomo)- why can't I just purchase private healthcare?
What's wrong with just declaring my UK salary and paying tax on it!?
I've got lots of people working on this to find a solution so it would be interesting to hear how your situation progresses.
Feb 8th 2019, 4:30 pm
#19
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Joined: Feb 2019
Posts: 20
Re: Spanish or UK Tax
Hi Fred,
Thanks for your reply/
Of course I want to pay taxes in Spain, but as you say.
Doesnt this mean that i pay my UK taxes (as I do right now) and then declare this income in Spain. Would this done by declare my worldwide income in Spain?
If there is any other method please let me know, I would appreciate it a lot.
Regards,
Thanks for your reply/
Of course I want to pay taxes in Spain, but as you say.
If Spanish tax resident, you pay Spanish tax and then deduct any UK tax paid on the same income.
If there is any other method please let me know, I would appreciate it a lot.
Regards,
Feb 8th 2019, 5:48 pm
#20
Joined: Jun 2006
Location: Granada Costa
Posts: 10,898
Re: Spanish or UK Tax
Correct. If tax resident in Spain tax is paid on your worldwide income. My point was that the Spanish taxman has priority and you pay him first and then deduct the UK tax. Doing it the other way round might be to your advantage and we can’t have that, can we!!
Feb 8th 2019, 6:26 pm
#21
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Joined: Feb 2019
Posts: 20
Re: Spanish or UK Tax
Hi Fred, but Spanish Tax is higher than the UK tax, so there would be nothing to pay to the UK. I would then need to ask my company not to put me any tax code, then pay taxes in Spain and tell the UK how much taxes I have paid in Spain.
There is a treaty between Spain and UK to avoid double taxation, so I should not be paying both times for the same amount, just the difference.
Not sure if I am being clear or if I am missing some basic point.
Thanks for taking your time.
There is a treaty between Spain and UK to avoid double taxation, so I should not be paying both times for the same amount, just the difference.
Not sure if I am being clear or if I am missing some basic point.
Thanks for taking your time.
Feb 8th 2019, 6:36 pm
#22
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Joined: Jan 2019
Posts: 23
Re: Spanish or UK Tax
Hi Fred, but Spanish Tax is higher than the UK tax, so there would be nothing to pay to the UK. I would then need to ask my company not to put me any tax code, then pay taxes in Spain and tell the UK how much taxes I have paid in Spain.
There is a treaty between Spain and UK to avoid double taxation, so I should not be paying both times for the same amount, just the difference.
Not sure if I am being clear or if I am missing some basic point.
Thanks for taking your time.
There is a treaty between Spain and UK to avoid double taxation, so I should not be paying both times for the same amount, just the difference.
Not sure if I am being clear or if I am missing some basic point.
Thanks for taking your time.
You are correct in all that BUT - please read back my earlier posts.
In our situations (they are similar) my current advice says - we must set up as a sole trader (autonomo) in Spain and invoice the UK AND pay social security €300 pcm.
its not as simple as Fred is implying!
I'm still researching so will post any developments.
In my particular situation it's expensive and complicated for me because if I were not directly employed by UK company and a sole trader I'd need to purchase my own (expensive) insurances!!
Additionally I personally can see no problem with declaring to Spain my UK income - paying the tax and buying personal healthcare. There's is the double taxation agreement AND means of declaring to UK tax that you don't want tax deducted at source anyway!
BUT
as I said current (Spanish) advice says this isn't possible - autonomo is the only route!
Last edited by chslh66; Feb 8th 2019 at 6:39 pm.
Feb 8th 2019, 6:51 pm
#23
Joined: Jun 2006
Location: Granada Costa
Posts: 10,898
Re: Spanish or UK Tax
No, you cannot deduct the Spanish tax from the UK tax - it's the other way round. You do end up paying no UK net tax, but you have to do it that way round as Spain has the primary claim on the tax.
Yes, there is a tax treaty, recently revised - you can read it here - https://assets.publishing.service.go...-_in_force.pdf
Very few UK incomes are covered directly by this, the best example is UK state pensions which the treaty says will ONLY be taxed in Spain and they can be paid tax free in the UK. Other income comes under the terms I have mentioned.
Yes, there is a tax treaty, recently revised - you can read it here - https://assets.publishing.service.go...-_in_force.pdf
Very few UK incomes are covered directly by this, the best example is UK state pensions which the treaty says will ONLY be taxed in Spain and they can be paid tax free in the UK. Other income comes under the terms I have mentioned.
Feb 8th 2019, 7:49 pm
#24
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Joined: Feb 2019
Posts: 20
Re: Spanish or UK Tax
Sorry guys I need to make this post in order to submit links in the next post.
Feb 8th 2019, 7:49 pm
#25
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Posts: 20
Re: Spanish or UK Tax
Fred, chslh66,
Thanks for the information, now it has sense to me.
I saw that you replied previously this questions Fred, (Living in Spain with a UK salary) and I appreciate a lot your time invested into replying this.
I have seen many websites with contradictory information but this one is the one that has more sense to me.
I will put here a Q&A list, hopefully we can avoid people finding information quicker.
There will be many information missing, but I try to update it as I find more information.
Where do you pay taxes?
In the country of tax residence.
How do you I know which one is?
How do I pay taxes in Spain
You would need to declare your worldwide income / renta mundial.
More information: https://www.agenciatributaria.es/sta...eino_Unido.pdf (SPANISH)
(If someone can find an English link send me a PM).
How much is the tax?
According to: https://www.spainaccountants.com/tax-rates#rates_1
0 - 12450 - 19%
12450 - 20200 - 24%
20200 - 35200 - 30%
35200 - 60000 - 37%
60000 - 45%
This information MIGHT not be correct, as it could apply only to spanish incomes.
Do I need to pay taxes in the UK?
You would need to declare the taxes that you paid in Spain and contact the HMRC
(I dont have clear yet how to do this).
In order to avoid paying taxes in your payslip, your company will need to put you in a Nil Tax Code
(https://harrisonbrook.co.uk/apply-fo...-nil-tax-code/)
How to get medical coverage in Spain?
You would need to register yourself as an autonomo (contractor).
The base is 283,30 euros per month, but there are discounts.
The discounts are:
0 - 12 months - fixed 60 euros months
12 -18 months - 50% (141,65)
18 - 24 months - 30% (198.31)
24 - 283,30 per month.
I am currently reading the following website
https://www.expatica.com/es/finance/...1614/#TaxSpain
It seems to be covering this topics.
Thanks for the information, now it has sense to me.
I saw that you replied previously this questions Fred, (Living in Spain with a UK salary) and I appreciate a lot your time invested into replying this.
I have seen many websites with contradictory information but this one is the one that has more sense to me.
I will put here a Q&A list, hopefully we can avoid people finding information quicker.
There will be many information missing, but I try to update it as I find more information.
Where do you pay taxes?
In the country of tax residence.
How do you I know which one is?
You’re considered a Spanish resident for tax purposes if you meet one of the following criteria:
- you were physically present in Spain for more than 183 days in a given tax year; or
- your centre of economic or vital interests is in Spain.
You would need to declare your worldwide income / renta mundial.
More information: https://www.agenciatributaria.es/sta...eino_Unido.pdf (SPANISH)
(If someone can find an English link send me a PM).
How much is the tax?
According to: https://www.spainaccountants.com/tax-rates#rates_1
0 - 12450 - 19%
12450 - 20200 - 24%
20200 - 35200 - 30%
35200 - 60000 - 37%
60000 - 45%
This information MIGHT not be correct, as it could apply only to spanish incomes.
Do I need to pay taxes in the UK?
You would need to declare the taxes that you paid in Spain and contact the HMRC
(I dont have clear yet how to do this).
In order to avoid paying taxes in your payslip, your company will need to put you in a Nil Tax Code
(https://harrisonbrook.co.uk/apply-fo...-nil-tax-code/)
How to get medical coverage in Spain?
You would need to register yourself as an autonomo (contractor).
The base is 283,30 euros per month, but there are discounts.
The discounts are:
0 - 12 months - fixed 60 euros months
12 -18 months - 50% (141,65)
18 - 24 months - 30% (198.31)
24 - 283,30 per month.
I am currently reading the following website
https://www.expatica.com/es/finance/...1614/#TaxSpain
It seems to be covering this topics.
Last edited by wirt0; Feb 8th 2019 at 7:59 pm.
Feb 8th 2019, 8:27 pm
#26
Joined: Jun 2006
Location: Granada Costa
Posts: 10,898
Re: Spanish or UK Tax
A couple of points.
The option to tell HMRC that you are now tax resident in Spain to get a nil tax rating only applies to pensions paid in the UK. It does not apply to earned income. The article you linked to makes this clear.
The tax rates you quote are a generalisation as tax rates are also determined by the autonomous region that you live in. They are not massively different but they can be significant. Andalucia, for example, has an extra two tax bands.
The option to tell HMRC that you are now tax resident in Spain to get a nil tax rating only applies to pensions paid in the UK. It does not apply to earned income. The article you linked to makes this clear.
The tax rates you quote are a generalisation as tax rates are also determined by the autonomous region that you live in. They are not massively different but they can be significant. Andalucia, for example, has an extra two tax bands.
Feb 9th 2019, 9:10 am
#27
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Joined: Feb 2019
Posts: 20
Re: Spanish or UK Tax
A couple of points.
The option to tell HMRC that you are now tax resident in Spain to get a nil tax rating only applies to pensions paid in the UK. It does not apply to earned income. The article you linked to makes this clear.
The tax rates you quote are a generalisation as tax rates are also determined by the autonomous region that you live in. They are not massively different but they can be significant. Andalucia, for example, has an extra two tax bands.
The option to tell HMRC that you are now tax resident in Spain to get a nil tax rating only applies to pensions paid in the UK. It does not apply to earned income. The article you linked to makes this clear.
The tax rates you quote are a generalisation as tax rates are also determined by the autonomous region that you live in. They are not massively different but they can be significant. Andalucia, for example, has an extra two tax bands.
I could find that information here:
https://www.gov.uk/tax-uk-income-live-abroad
The country where you live might tax you on your UK income. If it has a ‘double-taxation agreement’ with the UK, you can claim tax relief in the UK to avoid being taxed twice.
https://www.gov.uk/tax-uk-income-liv...ad/taxed-twice
You may be taxed on your UK income by the country where you’re resident and by the UK.
You may not have to pay twice if the country you’re resident in has a ‘double-taxation agreement’ with the UK. Depending on the agreement, you can apply for either:
You may not have to pay twice if the country you’re resident in has a ‘double-taxation agreement’ with the UK. Depending on the agreement, you can apply for either:
- partial or full relief before you’ve been taxed
- a refund after you’ve been taxed
https://www.gov.uk/government/public...ain-individual
(Please let me know if there is a way to edit my previous post, so it can be easier to read).
Otherwise I have created a Google Doc that I can edit as I find more information:
https://docs.google.com/document/d/1...it?usp=sharing
Last edited by wirt0; Feb 9th 2019 at 9:20 am.
Feb 9th 2019, 9:22 am
#28
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Joined: Jan 2019
Posts: 23
Re: Spanish or UK Tax
Thanks James, tried to edit my previous post but as far as I can see this is not allowed.
I could find that information here:
https://www.gov.uk/tax-uk-income-live-abroad
and
https://www.gov.uk/tax-uk-income-liv...ad/taxed-twice
And the form
https://www.gov.uk/government/public...ain-individual
(Please let me know if there is a way to edit my previous post, so it can be easier to read).
Otherwise I have created a Google Doc that I can edit as I find more information:
https://docs.google.com/document/d/1...it?usp=sharing
I could find that information here:
https://www.gov.uk/tax-uk-income-live-abroad
and
https://www.gov.uk/tax-uk-income-liv...ad/taxed-twice
And the form
https://www.gov.uk/government/public...ain-individual
(Please let me know if there is a way to edit my previous post, so it can be easier to read).
Otherwise I have created a Google Doc that I can edit as I find more information:
https://docs.google.com/document/d/1...it?usp=sharing
https://www.gov.uk/government/public...ain-individual
does not make any mention of wages - it refers to pension, annuities and interest ....
Feb 9th 2019, 9:40 am
#29
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Joined: Feb 2019
Posts: 20
Re: Spanish or UK Tax
However, this form:
https://www.gov.uk/government/public...ain-individual
does not make any mention of wages - it refers to pension, annuities and interest ....
https://www.gov.uk/government/public...ain-individual
does not make any mention of wages - it refers to pension, annuities and interest ....
Looks like Im back to square one!.
Feb 9th 2019, 9:48 am
#30
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Joined: Jan 2019
Posts: 23
Re: Spanish or UK Tax
As I can see this means paying no UK tax.
But means you are not directly employed by the UK company - which brings disadvantages .... in my case, as a professional person, means me having to have my own personal insurances.