Working for UK Company from Spain, Tax Advice!
Apr 27th 2018, 4:15 pm
#1
Just Joined
Thread Starter
Joined: Apr 2018
Posts: 1
Working for UK Company from Spain, Tax Advice!
Hi All,
I've spent hours looking around online and can't seem to find a straight answer to my situation.
Here is my situation:
1. I work as an employee for my family business which is based in the UK and I'm on PAYE in UK and pay tax in UK.
2. I run an online retail business as a sole trader in the UK.
3. I own a Limited company in the UK which is currently inactive/not trading
4. I have started living in Spain (working for family business from home) and will soon need to declare myself as a resident
5. I will need to carry out business activity for online retail business from Spain (storing and sending out goods from home, and working online)
6. I want to maintain payments from my main job (working for family business) into my UK bank account, because I have loan, overdraft and credit card payments which need to be paid monthly.
Here is the conclusion that I've come to:
1. I will need to set up as an Autonomo in Spain and invoice my online retail (sole trader) business in the UK for storage and postage costs.
2. I will need to pay UK income tax on my employment and online business, then declare it in Spain, pay tax again in Spain, then reclaim it from the UK under the dual tax agreement
This obviously isn't ideal though as it will be very bad for cash flow (paying tax twice, then waiting for a refund) and from what I've seen from online tax calculators, I will have to pay a higher rate of income tax in Spain + the Autonomo social security fees.
I had thought about invoicing my family businesses for my work through an Autonomo company - which would make things a lot simpler, but then I wouldn't be able to maintain cash payments into my UK bank for the repayment services.
Would I be able to do this? :
1. Get salary paid to UK bank, pay debts, send remainder to Spanish bank, then pay tax in Spain and reclaim UK tax
2. Instead of registering as autonomo, just use business bank card of sole trader company for postage costs/business expenses in spain and declare income from the sole trader company through UK self-assesment as usual, then declare the tax in Spain and reclaim from UK?
If I could do this then I wouldn't need to register as Autonomo, but I have doubts as to whether its compliant with UK law to carry out commercial activity for the business from abroad?
As you can see, I'm quite confused. This forum is my last hope before I give in and hire a specialist tax adviser, so any advice would be much appreciated!
Kind regards
Anon
I've spent hours looking around online and can't seem to find a straight answer to my situation.
Here is my situation:
1. I work as an employee for my family business which is based in the UK and I'm on PAYE in UK and pay tax in UK.
2. I run an online retail business as a sole trader in the UK.
3. I own a Limited company in the UK which is currently inactive/not trading
4. I have started living in Spain (working for family business from home) and will soon need to declare myself as a resident
5. I will need to carry out business activity for online retail business from Spain (storing and sending out goods from home, and working online)
6. I want to maintain payments from my main job (working for family business) into my UK bank account, because I have loan, overdraft and credit card payments which need to be paid monthly.
Here is the conclusion that I've come to:
1. I will need to set up as an Autonomo in Spain and invoice my online retail (sole trader) business in the UK for storage and postage costs.
2. I will need to pay UK income tax on my employment and online business, then declare it in Spain, pay tax again in Spain, then reclaim it from the UK under the dual tax agreement
This obviously isn't ideal though as it will be very bad for cash flow (paying tax twice, then waiting for a refund) and from what I've seen from online tax calculators, I will have to pay a higher rate of income tax in Spain + the Autonomo social security fees.
I had thought about invoicing my family businesses for my work through an Autonomo company - which would make things a lot simpler, but then I wouldn't be able to maintain cash payments into my UK bank for the repayment services.
Would I be able to do this? :
1. Get salary paid to UK bank, pay debts, send remainder to Spanish bank, then pay tax in Spain and reclaim UK tax
2. Instead of registering as autonomo, just use business bank card of sole trader company for postage costs/business expenses in spain and declare income from the sole trader company through UK self-assesment as usual, then declare the tax in Spain and reclaim from UK?
If I could do this then I wouldn't need to register as Autonomo, but I have doubts as to whether its compliant with UK law to carry out commercial activity for the business from abroad?
As you can see, I'm quite confused. This forum is my last hope before I give in and hire a specialist tax adviser, so any advice would be much appreciated!
Kind regards
Anon
Last edited by an0nymous; Apr 27th 2018 at 4:18 pm.
Apr 27th 2018, 4:43 pm
#2
MODERATOR
Joined: Mar 2007
Location: Costa Valencia
Posts: 14,800
Re: Working for UK Company from Spain, Tax Advice!
Hi and a warm welcome to the Spanish forum on BE. Myself and Fred James are the moderators for the Spanish forums whilst myself and BEVS moderate Europe. Please read the Site Rules http://britishexpats.com/site-rules/ adhere to them so that the site runs smoothly. Moderators are there to ensure that the rules of BE are maintained. 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.
Rosemary
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.
Rosemary
Apr 28th 2018, 11:21 am
#3
Forum Regular
Joined: Mar 2018
Location: Gandia
Posts: 201
Re: Working for UK Company from Spain, Tax Advice!
Hi All,
I've spent hours looking around online and can't seem to find a straight answer to my situation.
Here is my situation:
1. I work as an employee for my family business which is based in the UK and I'm on PAYE in UK and pay tax in UK.
2. I run an online retail business as a sole trader in the UK.
3. I own a Limited company in the UK which is currently inactive/not trading
4. I have started living in Spain (working for family business from home) and will soon need to declare myself as a resident
5. I will need to carry out business activity for online retail business from Spain (storing and sending out goods from home, and working online)
6. I want to maintain payments from my main job (working for family business) into my UK bank account, because I have loan, overdraft and credit card payments which need to be paid monthly.
Here is the conclusion that I've come to:
1. I will need to set up as an Autonomo in Spain and invoice my online retail (sole trader) business in the UK for storage and postage costs.
2. I will need to pay UK income tax on my employment and online business, then declare it in Spain, pay tax again in Spain, then reclaim it from the UK under the dual tax agreement
This obviously isn't ideal though as it will be very bad for cash flow (paying tax twice, then waiting for a refund) and from what I've seen from online tax calculators, I will have to pay a higher rate of income tax in Spain + the Autonomo social security fees.
Income tax is higher in Spain, mainly the average salary is lower.
You pay the tax in the UK on employment in the UK - you can´t reclaim it. You then pay the difference on the amount you would have paid if you were employed in Spain...
Since you need to registar for Autonomo for the online business you want to set up and run in Spain. You could then bill the family business for the work done and pay the tax in Spain... but you state that you need the income in the UK.
If you are only going to stay in Spain a while, you might not want to lose the NI payments in the UK.
I had thought about invoicing my family businesses for my work through an Autonomo company - which would make things a lot simpler, but then I wouldn't be able to maintain cash payments into my UK bank for the repayment services.
You could do this, since you will need to become Autonomo anyway because you state you wish to set up a business here.
Would I be able to do this? :
1. Get salary paid to UK bank, pay debts, send remainder to Spanish bank, then pay tax in Spain and reclaim UK tax
You can´t reclaim the tax.... You pay the difference in income tax between what you have paid in the UK and what you would pay on the salary if you were a Spanish employee.
2. Instead of registering as autonomo, just use business bank card of sole trader company for postage costs/business expenses in spain and declare income from the sole trader company through UK self-assesment as usual, then declare the tax in Spain and reclaim from UK?
Assuming you want a nice quiet life here in Spain. If you are running a business here you will want to register for Autonomo. The social security payment gives you healthcare and is tax deductible.
If I could do this then I wouldn't need to register as Autonomo, but I have doubts as to whether its compliant with UK law to carry out commercial activity for the business from abroad?
As you can see, I'm quite confused. This forum is my last hope before I give in and hire a specialist tax adviser, so any advice would be much appreciated!
Kind regards
Anon
I've spent hours looking around online and can't seem to find a straight answer to my situation.
Here is my situation:
1. I work as an employee for my family business which is based in the UK and I'm on PAYE in UK and pay tax in UK.
2. I run an online retail business as a sole trader in the UK.
3. I own a Limited company in the UK which is currently inactive/not trading
4. I have started living in Spain (working for family business from home) and will soon need to declare myself as a resident
5. I will need to carry out business activity for online retail business from Spain (storing and sending out goods from home, and working online)
6. I want to maintain payments from my main job (working for family business) into my UK bank account, because I have loan, overdraft and credit card payments which need to be paid monthly.
Here is the conclusion that I've come to:
1. I will need to set up as an Autonomo in Spain and invoice my online retail (sole trader) business in the UK for storage and postage costs.
2. I will need to pay UK income tax on my employment and online business, then declare it in Spain, pay tax again in Spain, then reclaim it from the UK under the dual tax agreement
This obviously isn't ideal though as it will be very bad for cash flow (paying tax twice, then waiting for a refund) and from what I've seen from online tax calculators, I will have to pay a higher rate of income tax in Spain + the Autonomo social security fees.
Income tax is higher in Spain, mainly the average salary is lower.
You pay the tax in the UK on employment in the UK - you can´t reclaim it. You then pay the difference on the amount you would have paid if you were employed in Spain...
Since you need to registar for Autonomo for the online business you want to set up and run in Spain. You could then bill the family business for the work done and pay the tax in Spain... but you state that you need the income in the UK.
If you are only going to stay in Spain a while, you might not want to lose the NI payments in the UK.
I had thought about invoicing my family businesses for my work through an Autonomo company - which would make things a lot simpler, but then I wouldn't be able to maintain cash payments into my UK bank for the repayment services.
You could do this, since you will need to become Autonomo anyway because you state you wish to set up a business here.
Would I be able to do this? :
1. Get salary paid to UK bank, pay debts, send remainder to Spanish bank, then pay tax in Spain and reclaim UK tax
You can´t reclaim the tax.... You pay the difference in income tax between what you have paid in the UK and what you would pay on the salary if you were a Spanish employee.
2. Instead of registering as autonomo, just use business bank card of sole trader company for postage costs/business expenses in spain and declare income from the sole trader company through UK self-assesment as usual, then declare the tax in Spain and reclaim from UK?
Assuming you want a nice quiet life here in Spain. If you are running a business here you will want to register for Autonomo. The social security payment gives you healthcare and is tax deductible.
If I could do this then I wouldn't need to register as Autonomo, but I have doubts as to whether its compliant with UK law to carry out commercial activity for the business from abroad?
As you can see, I'm quite confused. This forum is my last hope before I give in and hire a specialist tax adviser, so any advice would be much appreciated!
Kind regards
Anon
Your UK employment - Until the UK leaves the EU in Dec 2020... You pay the tax once in the UK. When you become a tax resident in Spain (after your completed residency application) you pay the difference in tax (the difference between what you paid in the UK and what you would pay in Spain) as tax on world wide income.
I am slightly curious as to why you would work as PAYE for a family business when you have a LTD company. I am aware of IR35, but surely it is easy to get round this when dealing with family?
Online business working from Spain - Yes once you become tax resident here. If you are going to run a business from your home, where the goods will be shipped from Spain on orders etc, you will need to become Autonomo.
The social security payments also give you healthcare cover (instantly on applying for your SIPP card) and access to a pension later in life here once you have made enough contributions etc.
Last edited by Smithy73; Apr 28th 2018 at 11:24 am.
Apr 28th 2018, 4:50 pm
#4
BE Enthusiast
Joined: Nov 2010
Posts: 377
Re: Working for UK Company from Spain, Tax Advice!
As I understand your original post, you are still working for the UK company, but from your home in Spain.
Once you are tax resident in Spain, you are required to declare the UK earnings in Spain, and pay the full amount of income tax due, without relif for any tax paid in the UK. This is because under the Double Tax Agreement (DTA) between Spain and the UK, this income is taxable only in Spain, so you should claim back any tax paid in the UK, and in fact submit P85, and request that it is paid gross. In addition. If you are making decisions on behalf of the company then you should read article 5 of the DTA. I would recommend you establish your UK tax residence situation under the Statutory Residence Test ( SRT), using the online tool.
In addition, if in respect of this employment, unless it is classed as a posting under 2 years, then if you are working at least 75% of the time in Spain, technically you should pay social security in Spain rather than NI. You should check with HMRC in this regard.
Once you are tax resident in Spain, you are required to declare the UK earnings in Spain, and pay the full amount of income tax due, without relif for any tax paid in the UK. This is because under the Double Tax Agreement (DTA) between Spain and the UK, this income is taxable only in Spain, so you should claim back any tax paid in the UK, and in fact submit P85, and request that it is paid gross. In addition. If you are making decisions on behalf of the company then you should read article 5 of the DTA. I would recommend you establish your UK tax residence situation under the Statutory Residence Test ( SRT), using the online tool.
In addition, if in respect of this employment, unless it is classed as a posting under 2 years, then if you are working at least 75% of the time in Spain, technically you should pay social security in Spain rather than NI. You should check with HMRC in this regard.
Last edited by CapnBilly; Apr 28th 2018 at 4:54 pm.
