Go Back  British Expats > Living & Moving Abroad > Europe > Spain
Reload this Page >

Work remotely in Spain for a UK compnay - tax and legal advice

Work remotely in Spain for a UK compnay - tax and legal advice

Old Jun 5th 2014, 7:05 am
  #1  
Just Joined
Thread Starter
 
Joined: Jun 2014
Posts: 16
catalicante is an unknown quantity at this point
Default Work remotely in Spain for a UK compnay - tax and legal advice

Hi all,

I know that there have been similar threads relating to what I am about to ask but I can't find any uptodate infomration so I am hoping someone here miight be able to help.

I am moving to Alicante with my fiancée this summer as he has been offered a job there. The company I work for in the UK would like me to continue working for them from home when I relocate to Spain but I am not sure if there will be tax implications or if there is anything I need to do so that I can legally do this.

Do you have any advice you can offer or anywhere you can direct me so that I can get information about this.

Any advice you have would be greatly appreciated.

Many thanks in advance,

Catalicante
catalicante is offline  
Old Jun 5th 2014, 8:09 am
  #2  
MODERATOR
 
Rosemary's Avatar
 
Joined: Mar 2007
Location: Costa Valencia
Posts: 14,808
Rosemary has a reputation beyond reputeRosemary has a reputation beyond reputeRosemary has a reputation beyond reputeRosemary has a reputation beyond reputeRosemary has a reputation beyond reputeRosemary has a reputation beyond reputeRosemary has a reputation beyond reputeRosemary has a reputation beyond reputeRosemary has a reputation beyond reputeRosemary has a reputation beyond reputeRosemary has a reputation beyond repute
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

Hi and a warm welcome to the Spanish forum on BE. I am the Concierge for the Spanish section and thought that you might find it helpful to know that the moderators for the Spanish forums are Fred James and Bevs, moderators are there to ensure that the site runs smoothly within the rules of BE.

Problems and complaints should always be addressed to a moderator who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are usually friendly and helpful with a wealth of knowledge of the issues of living in Spain. I hope that you enjoy your time participating in the forums.

Please let me know if you need any further help.

Rosemary
Rosemary is offline  
Old Jun 5th 2014, 6:55 pm
  #3  
Forum Regular
 
Joined: May 2014
Location: Finland
Posts: 39
hatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond repute
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

Hi, google working abroad for a uk company and the first hits lead you to the tax authority's explanations. No guess work, but facts.
hatecold is offline  
Old Jun 5th 2014, 7:10 pm
  #4  
 
Fred James's Avatar
 
Joined: Jun 2006
Location: Granada Costa
Posts: 10,920
Fred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond repute
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

If you are tax resident in Spain (ie over 183 days in one year) you pay Spanish tax on your worldwide income.

If some of that income was earned in the UK you would also pay UK tax on it, even though you were not UK tax resident. Any tax paid in the UK can be offset against the Spanish tax.

In your case, although you are paid by the UK company you will be taxed only in Spain because the work was carried out in Spain, not in the UK.

http://www.hmrc.gov.uk/cnr/hmrc6.pdf Section 10.4
Fred James is offline  
Old Jun 5th 2014, 8:08 pm
  #5  
Lost in BE Cyberspace
 
Joined: Apr 2009
Posts: 7,749
cricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond repute
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

Originally Posted by Fred James

In your case, although you are paid by the UK company you will be taxed only in Spain because the work was carried out in Spain, not in the UK.

http://www.hmrc.gov.uk/cnr/hmrc6.pdf Section 10.4
Yes you must pay your taxes in Spain. You also need to think about employment contracts and Spanish social security contributions

I am employed soley by a UK company now and live in Spain. The only ways to do this is:
1. You hire an administrator to pay social security contributions on the companies behalf and declare the company as having no physical presence in Spain. You wont have to declare annual accounts but this will still cost around 300 euros per month in admin fees, plus the social security contributions
2. You open a branch in Spain which will cost several thousand euros, and you must file annual accounts (costly) and buy insurance
3. You official work as autonomo but bill the UK company monthly for your hours and social security contributions

I chose option 3 because it will be very difficult persuading a UK company to do option 1 or 2
cricketman is offline  
Old Jun 5th 2014, 8:44 pm
  #6  
Just Joined
 
Joined: May 2013
Posts: 12
mlka is an unknown quantity at this point
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

I'm in the same situation and currently trying to work out what to do.

The one thing I have read though is that there is a income tax exemption in Spain of up to 60100E for work carried out in a foreign country and which has already been taxed in that country.

See http://www.expatfinancialadvicespain...cts-2013/c24ps

Income generated from employment for services rendered in a foreign country is tax exempt up to a limit of €60,100 (2010), provided that the work is performed for a company or entity non-resident in Spain, or for a permanent establishment located in a foreign country and provided that a tax similar to the Spanish Personal Income Tax is applied in the territory where the work is performed. In addition, the territory must not be considered a ‘tax haven’ by the Spanish tax authorities. At present, the UK Dependent Territories of the Channel Islands and the Isle of Man, as well as Bahrain, Hong Kong and Singapore, are all included on a ‘blacklist’ of tax havens maintained by the Spanish Tax Authorities. International assignees moving to Spain, may, if certain conditions are met, choose to be taxed under the special taxation regime for expatriates described below.

Last edited by mlka; Jun 5th 2014 at 9:03 pm.
mlka is offline  
Old Jun 6th 2014, 4:48 am
  #7  
Forum Regular
 
Joined: May 2014
Location: Finland
Posts: 39
hatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond repute
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

Here is some useful info from the horse's mouth http://www.hmrc.gov.uk/international/ni-abroad.htm
hatecold is offline  
Old Jun 6th 2014, 5:01 am
  #8  
 
Fred James's Avatar
 
Joined: Jun 2006
Location: Granada Costa
Posts: 10,920
Fred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond repute
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

Originally Posted by mlka

The one thing I have read though is that there is a income tax exemption in Spain of up to 60100E for work carried out in a foreign country and which has already been taxed in that country. .
But if you are working remotely in Spain you are working in Spain, not in the UK so that doesn't apply as far as I can see.
Fred James is offline  
Old Jun 7th 2014, 4:23 am
  #9  
Just Joined
Thread Starter
 
Joined: Jun 2014
Posts: 16
catalicante is an unknown quantity at this point
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

Thank you everyone for all of your help. I think registering self employed may be the way forward.

I appreciate a all of your advice.
catalicante is offline  
Old Jun 7th 2014, 11:02 am
  #10  
Forum Regular
 
Joined: May 2014
Location: Finland
Posts: 39
hatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond reputehatecold has a reputation beyond repute
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

I don't understand why this seems to be such a big problem between UK company work and Spanish living. The systems seems to be quite simple, when I read info on our (Finland) government's sites.

I am planning to "practice" living in Spain next winter for a couple of months. During that time I will work away for my Finnish employer as usual.

If I later move there permanently, after a while Spain gets the right to tax me, but I will still declare everything on my Finnish tax return. There is no double taxation, mind. Finland deducts all the taxes paid in Spain and I only need to pay any difference. So far as I understand, Spanish income tax is lower than Finnish. (Only after at least three years of residence in Spain will Finland's tax man even consider letting me go)

Spain taxes me according to my Spanish tax return and I can pay the tax man in advance so that It will not be such a big lump sum once a year.

So when Spain gets the right to tax me, my employer can pay me gross instead of deducting at source or they can pay the tax directly to the Spanish tax account. (Which is done exactly the same way as the domestic SEPA bank payments.)

SS contributions do not necessarily follow the same schedule with taxation, but in practice are handled the same way.
hatecold is offline  
Old Jun 9th 2014, 8:17 pm
  #11  
Just Joined
 
Joined: May 2013
Posts: 12
mlka is an unknown quantity at this point
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

OK so I contacted a Tax Advisor in Barcelona on this and the official response was....

once you become tax resident in Spain you'll be obliged to file an annual income tax return here and comply with all and any Spanish laws. You'll automatically become tax resident here when you've resided more than 183 days here over a calendar year.



As regards the PAYE paid under your UK employment this will come into your Spanish return as foreign tax paid and will reduce any Spanish liability you may have.

best

David Cook

Last edited by christmasoompa; Jun 9th 2014 at 8:45 pm. Reason: Link removed
mlka is offline  
Old Jun 10th 2014, 8:38 am
  #12  
BE Enthusiast
 
Joined: Nov 2010
Posts: 377
CapnBilly has much to be proud ofCapnBilly has much to be proud ofCapnBilly has much to be proud ofCapnBilly has much to be proud ofCapnBilly has much to be proud ofCapnBilly has much to be proud ofCapnBilly has much to be proud ofCapnBilly has much to be proud ofCapnBilly has much to be proud ofCapnBilly has much to be proud ofCapnBilly has much to be proud of
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

Originally Posted by mlka
OK so I contacted a Tax Advisor in Barcelona on this and the official response was....

once you become tax resident in Spain you'll be obliged to file an annual income tax return here and comply with all and any Spanish laws. You'll automatically become tax resident here when you've resided more than 183 days here over a calendar year.



As regards the PAYE paid under your UK employment this will come into your Spanish return as foreign tax paid and will reduce any Spanish liability you may have.

best

David Cook
The first part is correct, but the second part is incorrect. Fred has already posted the correct position with regard to your situation, unless it's changed and working in the UK, but living in Spain. Unfortunately my experience of tax advisors in Spain is that they don't understand the DTA, and advise people incorrectly. It's quite clearly set out in the DTA if you read it.
CapnBilly is offline  
Old Jun 10th 2014, 9:10 am
  #13  
Just Joined
 
Joined: May 2013
Posts: 12
mlka is an unknown quantity at this point
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

Originally Posted by CapnBilly
The first part is correct, but the second part is incorrect. Fred has already posted the correct position with regard to your situation, unless it's changed and working in the UK, but living in Spain. Unfortunately my experience of tax advisors in Spain is that they don't understand the DTA, and advise people incorrectly. It's quite clearly set out in the DTA if you read it.
A British citizen tax advisor advising in Spain not knowing the treaty is a bit hard to believe....
mlka is offline  
Old Jun 10th 2014, 9:59 am
  #14  
 
Fred James's Avatar
 
Joined: Jun 2006
Location: Granada Costa
Posts: 10,920
Fred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond repute
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

Originally Posted by CapnBilly
The first part is correct, but the second part is incorrect.
What exactly is wrong with the second part?

I was under the impression that any UK tax paid could be deducted if the same income was taxed in Spain. Possibly the odd way the program works could result in a smaller deduction than you might expect but surely the principle is correct?
Fred James is offline  
Old Jun 10th 2014, 8:30 pm
  #15  
Lost in BE Cyberspace
 
Joined: Apr 2009
Posts: 7,749
cricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond reputecricketman has a reputation beyond repute
Default Re: Work remotely in Spain for a UK compnay - tax and legal advice

Originally Posted by hatecold

So when Spain gets the right to tax me, my employer can pay me gross instead of deducting at source or they can pay the tax directly to the Spanish tax account. (Which is done exactly the same way as the domestic SEPA bank payments.)

SS contributions do not necessarily follow the same schedule with taxation, but in practice are handled the same way.
Sorry but this isnt the case at all

I have spent a lot of money on employment lawyers in Spain

In order to work for just one employer then you must have an employment contract that is recognised by Spanish law - and your employer must meet the requirements held us by Spanish law. It is not just about taxes and social security payments and is why going autonomo is the easiest solution as then essentially you take on the responsibility for these obligations
cricketman is offline  

Contact Us - Manage Preferences - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.