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Working in Spain for British company (and being Spanish!)

Working in Spain for British company (and being Spanish!)

Old Jul 14th 2016, 7:55 pm
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Default Working in Spain for British company (and being Spanish!)

Hi there!

My case is a bit atypical I guess, as I am a Spanish expat living in the UK, but planning to move back to Spain.

I am in negotiations with my British company, who seems to be keen to let me move back to and work from Spain, so long as I can be on a payroll (a freelancer formula where I invoice them my salary every month is not an option at this stage unfortunately, for various reasons).

I am trying to find out where and how much tax/NI I would be paying, in case anyone could help - I have been looking to similar threads but it was not very clear to me what the answer is :S

Also, I never declared back in Spain that I had left the country and was living in the UK - as did not find any benefits to that -, but if that's vital I can do that now, as it will still be months until I move back to Spain.

Any thoughts are really appreciated - can exchange for some advice around Madrid if anyone interested

Thanks!

Victor
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Old Jul 14th 2016, 8:30 pm
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Default Re: Working in Spain for British company (and being Spanish!)

Hi and a warm welcome to the Spanish forum on BE. Myself and Fred James are the moderators for the Spanish forums whilst BEVS moderates Europe. Moderators are there to ensure that the site runs smoothly within the rules of BE. This is so that members gain the information that they are looking for and find their experiences on the forums to be friendly and worthwhile.

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 about 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.

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Old Jul 15th 2016, 7:43 am
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Default Re: Working in Spain for British company (and being Spanish!)

Hi Victor

The only way to do this would be for your British company to set up a sucursal (branch) in Spain

I have done it myself under advice from my lawyers

It costs around 2,000 euros to set up and then 300 euros per month to adminstrate. Plus they will need to put you on a Spanish work contract and pay your social security contributions

They also would have to leave a copy of their worldwide taxes with the Spanish authorities every year, but would not have to pay any corporation tax in Spain

How much tax you would personally pay depends on how much you earn, like in any country

As you can see, it is quite a commitment from the company. It is far easier to bill them every month as a freelancer
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Old Jul 20th 2016, 3:19 pm
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Default Re: Working in Spain for British company (and being Spanish!)

You might be able to get round this by working via an agency in Spain. I've done job interviews in the past with companies that weren't registered in Spain, but instead paid an agency and the worker was on the agency's payroll.
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Old Jul 20th 2016, 6:33 pm
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Default Re: Working in Spain for British company (and being Spanish!)

Originally Posted by parri1984
..... I am a Spanish expat living in the UK, but planning to move back to Spain.

I am in negotiations with my British company, who seems to be keen to let me move back to and work from Spain, ..... I am trying to find out where and how much tax/NI I would be paying, in case anyone could help ....
As others have advised, if you live and work in Spain you must pay Spanish income tax and social deductions.
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Old Jul 21st 2016, 12:35 pm
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Default Re: Working in Spain for British company (and being Spanish!)

Thanks everyone for your responses

I have done some further research, and apparently I can stay on my company's payroll, and pay tax and National Insurance in the UK, and just declare this in Spain - only having to pay tax on any salary above 60,000 EUR.
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Old Jul 21st 2016, 12:39 pm
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Default Re: Working in Spain for British company (and being Spanish!)

Originally Posted by parri1984
Thanks everyone for your responses

I have done some further research, and apparently I can stay on my company's payroll, and pay tax and National Insurance in the UK, and just declare this in Spain - only having to pay tax on any salary above 60,000 EUR.
Hmm, doesnt sound right to me!
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Old Jul 21st 2016, 12:42 pm
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Default Re: Working in Spain for British company (and being Spanish!)

Originally Posted by cricketman
Hmm, doesnt sound right to me!
I agree. I don't know of any country that doesn't want it's slice of the taxes and social deductions for anyone working within its borders

Last edited by Pulaski; Jul 21st 2016 at 12:53 pm.
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Old Jul 21st 2016, 12:42 pm
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Default Re: Working in Spain for British company (and being Spanish!)

apparently the reason why i can stay on a payroll and pay tax in the UK and not in Spain is because there is a double taxation agreement between the two countries
then whilst the uk is part of the eu, i can use the national insurance system in spain as every other european can
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Old Jul 21st 2016, 12:46 pm
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Default Re: Working in Spain for British company (and being Spanish!)

apparently it is how i described it, at least for the first two years:

https://www.gov.uk/guidance/paying-e...working-abroad
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Old Jul 21st 2016, 12:52 pm
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Default Re: Working in Spain for British company (and being Spanish!)

Yes, but as the article states, you still have to make a tax return in Spain.
Employees who spend most of their time abroad over a period of a year or more may be able to obtain full UK tax relief on their earnings. Ask your employee to complete form P85 and send it to HMRC who will confirm the tax code to use.

If your employee is on an overseas contract, it’s possible that the tax authorities in the overseas country will want to make tax deductions from your employee’s income. Contact the Employer Helpline and the overseas authority to make sure you’re clear about your obligations in both countries.
The article mentions an A1 form so you get reciprocal help with NI but I always thought it was an S1 form now.
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Old Jul 21st 2016, 1:42 pm
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Default Re: Working in Spain for British company (and being Spanish!)

Thanks snikpoh. So, the article says that you "may be able to obtain full UK tax relief...". Now, there is another way around, which is I don't get a tax relief in the UK, but rather pay my full tax there, and I just declare this in Spain. By Spanish law, the government will be happy with this and won't make me pay any tax in Spain so long as my earnings are lower than 60,000 eur per year.
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Old Jul 21st 2016, 1:45 pm
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Default Re: Working in Spain for British company (and being Spanish!)

Originally Posted by parri1984
apparently it is how i described it, at least for the first two years:

https://www.gov.uk/guidance/paying-e...working-abroad
Two points
1. You will have to prove that the work will last no longer than 2 years if the Spanish authorities ask

2. Within the next 2 years, the UK is unlikely to be within the EU!
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Old Jul 21st 2016, 2:09 pm
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Default Re: Working in Spain for British company (and being Spanish!)

Yes but
1. the definition is 'works is expected to last less than 2 years'. This could be a letter between my company and I indicating a mutual agreement that my work in Spain will initialy last 2 years
2. It will actually be 2.5 years - and once the UK has left the UK nobody knows what will happen, but certainly there may be a similar agreement to the current one. But that's a whole different subject to that on this forum anyway XD
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Old Jul 21st 2016, 2:44 pm
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Default Re: Working in Spain for British company (and being Spanish!)

Originally Posted by parri1984
Yes but
1. the definition is 'works is expected to last less than 2 years'. This could be a letter between my company and I indicating a mutual agreement that my work in Spain will initialy last 2 years
2. It will actually be 2.5 years - and once the UK has left the UK nobody knows what will happen, but certainly there may be a similar agreement to the current one. But that's a whole different subject to that on this forum anyway XD
The reason I am mentioning this is that the rule is meant for expats who are posted abroad to work at the local branch of the company

Since you dont have a local branch of your employer in Spain, it would be very easy for hacienda to interpret that you have misinterpreted the legislation

I went through the same process myself. I have worked for UK companies from Spain for nearly 10 years now, and employed 6 people here. So I have spent a lot of money on employment lawyers
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