GrapeEater

I currently live (non-resident) and work in South Costa Blanca Spain - just over a year now.

For better or worse on my UK accountants advice - I came to live here but work for my own Ltd UK company. So I still pay UK taxes - my clients are all UK, I get paid in pounds into a UK business account. My salary and drawings are paid and taxed in the UK.

But I work (most of the time) from my sunny villa, on a laptop - I'm 'happy as larry' thanks. BUT I still think something Spanish tax related will sting me later though. It cannot be that straight-forward - can it?

Before I moved out here I read a book on Working and Living In Spain and it put me right off setting up a Spanish Company - I think the figure quoted was about 70% of applicants/potential autonomos give up because of the horrendous red-tape and that the NI was about 250 Euros p.m. whether you earned anything or not!

OK, my accountant assures me he did extensive research about Tax & NI as I wanted to do it all legal. His brother (also an accountant) used to work in Spain and Switzerland and chipped in with advice, We completed all the Inland Revenue Forms, the IR know where I am and I get letters from them to my Spanish Address - no-one yet (official) has said I am doing anything wrong.

Does anyone know any different or can offer advice on this matter???? It would be interesting to see how you guys conduct your affairs... please discuss...

mikelincs

Surely, if you live here you ARE a resident. You are classed as such by the Spanish and UK authorities if you are here for more than 183 days in a 12 month period. If you are registered on the Padron, you ARE a resident.

Big_john

Grapeater,

There is a guy in Marbella runs a company called "The U.K. Fitted Wardrobe co" he has been doing the same as you for at least the last 10 yrs, as he did some work for me in Esteopna and then another house in Guadalmina.

And he ran U.K. registered vans here in Spain

GrapeEater

MikeLincs, the difference in domiciled, resident and non-resident in law and tax purposes, I (and many others no doubt) find very confusing. There's a whole lot of jargon on the HMRC website - "Residence is a complex subject. The terms residence and ordinary residence are not defined in the Taxes Acts. HMRC guidelines about their meanings are largely based on rulings of the courts." See - http://www.hmrc.gov.uk/cnr/residencedomicile.htm (if you dare) !!!!
Regards

EsuriJohn

Hi Grapeater,

As your clients are in UK your earnings are in £ and you bank and pay taxes in UK I don't think HMR&C can have any worries, nor do I think the Hacienda can complain overmuch if what you actually do is done online so to speak. I remember "mercedes" posting on this sometime ago and I think the conclusion was that it is OK. The British army do all their war fighting away from home but pay and taxes are just like you.

Where the problem arises is with NI you are not habitually resident in UK so I don't think you qualify and you are not in the Spanish system either so don't get sick!

Regards,

John.

GrapeEater

Hi John, interesting point is 'working online" - yes I don't sell anything Spanish either, I don't need to add any Spanish IVA - so I like your comments.

And yes the NI is a bummer, because the UK will happily let me pay into a system all my life but give me nothing in return later, because I work here - (probably a separate thread) I know many ex-pats complain about that - so far I'm not sick - can anyone recommend a good Health Insurance for Spain ?? (probably another thread)

brightonchris

I am certainly no expert, but as Mikelincs posted my understanding is that any country in which you spend more than 183 days per year is entitled to regard you as a resident for tax purposes. I would check with a Spanish lawyer who specialises in tax

Big_john

Sanitas www.sanitas.es

Mitzyboy

No doubt Fred will be along soon to lend his knowledge, but everything I have read, heard, seen etc etc points to the fact that you are a resident for tax purposes in Spain if you spend 183 days here. At that point you have no choice but where to pay your tax (legally).
I'd be interested to hear if suddenly there is an anomaly that we didn't know about, but as far as I was aware it didn't matter what line of work you did, or how you did it. Otherwise I could just say, well my pension gets paid into a UK bank account, my interest gets paid into a UK bank account, so why should I pay tax on it in Spain?

EsuriJohn

Hi Mitzyboy,

I think there is a difference here I suspect you have gone to the trouble of having your pension and dividends paid to you in Spain free of UK tax and therefor they are taxed in Spain as your income in Spain when it comes onshore. Also GrapeEater said his money was paid into a company account not his own account. Think Shell or BP they have UK based employees who work overseas and get paid into UK banks and pay UK taxes and I suspect NI but no doubt they get company health insurance as well. I think "Mercedes" has the answer to this one.

Regards,

John.
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Big_john

Mitzyboy,

I quite agree with you, but I know this guuy in Marbella with the "U.K. Fitted Wardrobe Co" does or did .

I think as has been suggested the only answer is to go to one of the specialist lawyers, like "Bocanegra in Marbella"

And once we are a resident there is no way that they will let us get away with anything

Mitzyboy

No, my payments are made in the UK, not Spain. I de registerd for tax in the UK for sure, and as a result I pay no tax at all in either countries as I cunningly fall into the non taxable bands.

I'm really not sure about what difference it is having paid into a company account .... this is going to be one I think where many people have different opinions

Big_john

It is not your money for a start

Fred James

As I understand it, the situation is pretty simple.

If you are tax resident in Spain (ie spend more than 183 days in Spain) you are - no ifs and buts - a Spanish resident for tax purposes and your world wide income is subject to tax in Spain.

It doesnt matter if you are paid in crates of bananas in Afghanistan, or carrying out a business using carrier pigeons - you pay tax in Spain.

At the UK end the dear old taxman is quite happy that you carry on paying tax in the UK - he will take it so long as you pay it to him - its up to you to get off his hook - its not up to him to cut you loose.

In fact there may be times when a person is liable, quite rightly, to pay tax in the UK and in Spain. In the UK the residency rule is 90 days - not 183.

If you do, for whatever reason, end up paying in both countries that's where the double taxation agreement kicks in. In this case you pay tax in Spain and deduct any tax paid in the UK from your Spanish tax bill. If the tax is more in the UK than in Spain (unlikely) you cant claim a rebate from Spain.

The agreement is meant to cover situations where tax has correctly been deducted in both countries. If you have paid tax in the UK incorrectly for years and the Spanish taxman sends you a huge backdated demand with fines and interest you may find that will not be able to claim that you, legitimately, paid it in the UK and offset it - beware!

Before anyone points it out, Crown pensions are taxed in the UK and not declared in Spain and are one of the exceptions to the rule but here we are talking about earned income.

The situation where an employee of a UK company is working abroad and is ordinarily resident in the UK gets a bit more complicated - details on the HMRC website.

Mitzyboy

Of course it is ....... are you saying he doesn't get paid for the work he doesl