catalicante

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

Rosemary

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

hatecold

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.

Fred James

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

cricketman

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

mlka

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.

hatecold

Here is some useful info from the horse's mouth http://www.hmrc.gov.uk/international/ni-abroad.htm

Fred James

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.

catalicante

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.

hatecold

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.

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

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.

mlka

A British citizen tax advisor advising in Spain not knowing the treaty is a bit hard to believe....

Fred James

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?

cricketman

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