# tax, autónomo, business UK, live/work in Spain



## snikpoh (Nov 19, 2007)

linken1647 said:


> I live in Almeria Province, in Adra. I also work from home in Spain via the internet. I am self-employed in the UK and pay tax to HMRC but work for UK Companies and am paid in sterling which then gets paid into a Spanish bank account and converted to Euros. As for the internet, I work successfully using Movistar 10mb which costs me 49.00 Euros per month inc IVA. I don't have my calls through them. I pay 15.99 per month to Talk,Talk and get my calls through them. For that I get unlimited calls with no restrictions on time of day to the UK. However to call a Spanish landline, I am charged, but as I only really call the UK, then that doesn't matter. Living is a town, we have good internete connection, but have friends who live 10km from us in a village and up a "track" who can't get a Movistar line and it would cost them an absolute fortune to have satellite connection!


Not wishing to hijack the thread but you are, I hope, also paying tax in Spain and also making autonomo payments.


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## DunWorkin (Sep 2, 2010)

linken1647 said:


> I live in Almeria Province, in Adra. I also work from home in Spain via the internet. I am self-employed in the UK and pay tax to HMRC but work for UK Companies and am paid in sterling which then gets paid into a Spanish bank account and converted to Euros. As for the internet, I work successfully using Movistar 10mb which costs me 49.00 Euros per month inc IVA. I don't have my calls through them. I pay 15.99 per month to Talk,Talk and get my calls through them. For that I get unlimited calls with no restrictions on time of day to the UK. However to call a Spanish landline, I am charged, but as I only really call the UK, then that doesn't matter. Living is a town, we have good internete connection, but have friends who live 10km from us in a village and up a "track" who can't get a Movistar line and it would cost them an absolute fortune to have satellite connection!





snikpoh said:


> Not wishing to hijack the thread but you are, I hope, also paying tax in Spain and also making autonomo payments.


Until recently my setup was the same as linken1647 describes. I did not have to pay autonomo in Spain and I did not have to pay tax here either. I continued to pay NI and tax in the UK.

Only now that I have retired and no longer do a UK tax return do I have to pay Spanish tax (assuming my income is high enough)


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## snikpoh (Nov 19, 2007)

DunWorkin said:


> Until recently my setup was the same as linken1647 describes. I did not have to pay autonomo in Spain and I did not have to pay tax here either. I continued to pay NI and tax in the UK.
> 
> Only now that I have retired and no longer do a UK tax return do I have to pay Spanish tax (assuming my income is high enough)


I think this is incorrect. 

If your centre of financial interest and also your main residence is here (and I presume it is from your photos), then you are deemed resident here so have to pay tax. 

At least, that's how I read the law. But, as usual, I am willing to be proved wrong.


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## DunWorkin (Sep 2, 2010)

snikpoh said:


> I think this is incorrect.
> 
> If your centre of financial interest and also your main residence is here (and I presume it is from your photos), then you are deemed resident here so have to pay tax.
> 
> At least, that's how I read the law. But, as usual, I am willing to be proved wrong.


I suppose it depends how you define 'centre of financial interest'

When we moved out here in 2004 I consulted a Spanish accountant and was advised that, as our company was a UK registered company and all our earnings were in the UK in sterling, I could continue paying UK tax and NI. They said if and when I stopped paying UK tax I would need to pay Spanish tax if any.

Maybe things have changed since 2004 but that was certainly the situation then.


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## linken1647 (May 31, 2013)

DunWorkin said:


> Until recently my setup was the same as linken1647 describes. I did not have to pay autonomo in Spain and I did not have to pay tax here either. I continued to pay NI and tax in the UK.
> 
> Only now that I have retired and no longer do a UK tax return do I have to pay Spanish tax (assuming my income is high enough)


HMRC said that as Spain and the UK have a double taxation agreement and my income is solely from within the UK and I do not conduct any work for Spanish Companies, I can continue paying tax in the UK and it gets sorted out through the double taxation agreement. I do not have a property nor savings so am not taxable on anything in Spain. I pay social security contributions to Spain but am not tax liable.


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## xabiaxica (Jun 23, 2009)

linken1647 said:


> HMRC said that as Spain and the UK have a double taxation agreement and my income is solely from within the UK and I do not conduct any work for Spanish Companies, I can continue paying tax in the UK and it gets sorted out through the double taxation agreement. I do not have a property nor savings so am not taxable on anything in Spain. I pay social security contributions to Spain but am not tax liable.


so you do pay autónomo??

do you actually submit a tax return here, albeit probably a 'zero' one?


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## snikpoh (Nov 19, 2007)

xabiachica said:


> so you do pay autónomo??
> 
> do you actually submit a tax return here, albeit probably a 'zero' one?



If you don't, then you should.


Dunworkin and linken1647 - if you are working in UK, paying tax and NI, then that's fine (I think) but you still have to do a Spanish tax return. You then offset any tax already paid in UK under the double taxation agreement.


With regard to NI and autonomo in Spain - if you are paying both then you could save yourself oodles of money - you only need to pay it in Spain.


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## DunWorkin (Sep 2, 2010)

snikpoh said:


> If you don't, then you should.
> 
> 
> Dunworkin and linken1647 - if you are working in UK, paying tax and NI, then that's fine (I think) but you still have to do a Spanish tax return. You then offset any tax already paid in UK under the double taxation agreement.
> ...


For us, Autonomo in Spain would have been far more expensive than NI in UK.


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## nicvan (Apr 9, 2013)

DunWorkin said:


> For us, Autonomo in Spain would have been far more expensive than NI in UK.


Very uninformed here... I know what NI is and what it covers (medical, etc), but what does autonomo cover in Spain.

For us, once we get our act together - we would be living in Spain, but all income would be from a UK registered company and earned in £, paid into a UK international account (euro and £ cards and cheque books).

Does anyone know - are you able to pay Tax to HMRC in the UK and Autonomo in Spain without the NI payments in the UK?

Costwise - what is the best option - but then i guess this will be determined by what is covered by Autonomo payments.
Thanks
N


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## snikpoh (Nov 19, 2007)

DunWorkin said:


> For us, Autonomo in Spain would have been far more expensive than NI in UK.


We've discussed this before I think.

My thoughts are that you don't get a choice. If you live here, then you have to pay your dues here. I think it may be different if you are actually an employee of a UK company.


Autonomo payments here seem to do very little. I think they go towards your pension and health provision - I don't think they do much else.

Like in UK, if you are self-employed, I don't believe that you are entitled to unemployment benefit




Perhaps we should get back on topic before we are 'told off'.


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## xabiaxica (Jun 23, 2009)

snikpoh said:


> We've discussed this before I think.
> 
> My thoughts are that you don't get a choice. If you live here, then you have to pay your dues here. I think it may be different if you are actually an employee of a UK company.
> 
> ...



sorted


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## gus-lopez (Jan 4, 2010)

nicvan said:


> Does anyone know - are you able to pay Tax to HMRC in the UK and Autonomo in Spain without the NI payments in the UK?
> 
> N


Yes , under certain circumstances. 
What people should also remember is that paying UK tax & N.I. contributions whilst living outside the Uk gives them no entitlement whatsoever to UK healthcare or an EHIC.
This is the case regardless if you still own property , pay council tax, etc ; in the UK. The only entitlement to UK healthcare, whether contributing or not except for some non-resident pensioners , is your feet standing on UK soil.
In addition if not entitled to healthcare here then you have no entitlement anywhere.


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## DunWorkin (Sep 2, 2010)

gus-lopez said:


> Yes , under certain circumstances.
> What people should also remember is that paying UK tax & N.I. contributions whilst living outside the Uk gives them no entitlement whatsoever to UK healthcare or an EHIC.
> This is the case regardless if you still own property , pay council tax, etc ; in the UK. The only entitlement to UK healthcare, whether contributing or not except for some non-resident pensioners , is your feet standing on UK soil.
> In addition if not entitled to healthcare here then you have no entitlement anywhere.


I can only confirm what our situation was when we moved here (2004). I was working for UK clients (not employed by a UK company but self employed/partner) and paid in GBP into a UK bank.

We did not have a UK property. We took Spanish residencia. DH was over 65 so we both qualified for Spanish SIP cards.

I met with a Spanish tax accountant and was told I did not have to pay autonomo or Spanish tax.

As I said before, perhaps rules have changed but in 2004/2005 that was what we were advised


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## mlka (Sep 5, 2009)

All,

I am in a similar situation.

I have just moved over to Spain but will be working remotely for my company in the UK.

Am I fine to continue paying tax in the uk or would I need to stop uk tax and pay spanish tax?

Can I stop NI contributions in the uk as I am not based in the country?

Thanks,

Martin


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## snikpoh (Nov 19, 2007)

mlka said:


> All,
> 
> I am in a similar situation.
> 
> ...



Are you a sole trader or are you actually employed by the Limited company?

I think this may have been discussed before - do a search on company tax by some one called STRAVINSKY. I seem to recall that he used to be in just that position.


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## mlka (Sep 5, 2009)

I am employed by a limited company.

Cool thanks, I have had a little search through the forum but there seemed to be different answers to this. I know the whole remote working thing is still quite a new concept In regards to payment of taxes.

I did read up a bit last night about the UK Spain tax treaty. I read that there is a exemption on up 61000E as long as the tax has been paid in the uk. Maybe this would just mean that I stop the NI payments in the uk and just pay SS payments here in Spain.

Many thanks,


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## snikpoh (Nov 19, 2007)

mlka said:


> I am employed by a limited company.
> 
> Cool thanks, I have had a little search through the forum but there seemed to be different answers to this. I know the whole remote working thing is still quite a new concept In regards to payment of taxes.
> 
> ...


Mmmm. Can't see that working as the only way that I know of to make these payments is to be employed here. That's either on contract with a Spanish company or self employed (autonomo) . Hence my original question. Had you been a sole trader then you would have had to be declared as self employed in Spain.

As a director or someone employed by a UK company, I think Stravinsky answered this previously. Yes, it is confusing. Perhaps the best route is to ask a professional.


Another thought - will you be in Spain for more than 6 months per (calendar) year? If so, then you are legally tax resident and are obliged to do a tax return. You can obviously offset any tax paid in UK though.


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## baldilocks (Mar 7, 2010)

mlka said:


> All,
> 
> I am in a similar situation.
> 
> ...


If you are employed in Spain then you can continue to pay the Class2 rate of UK NI and this counts towards your UK OAP.


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## snikpoh (Nov 19, 2007)

baldilocks said:


> If you are employed in Spain then you can continue to pay the Class2 rate of UK NI and this counts towards your UK OAP.


How do you define "employed in Spain"? 

He stated that he was employed by a UK limited company but was living in Spain.


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## baldilocks (Mar 7, 2010)

snikpoh said:


> How do you define "employed in Spain"?
> 
> He stated that he was employed by a UK limited company but was living in Spain.


Couldn't his company employ him as its Spanish representative?


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## mlka (Sep 5, 2009)

The more I read about the more it looks like I can still pay tax in the uk under the tax treaty.

It you earn under 61000 and the tax has been paid in the uk, there is a exemption in Spain.

I need to work something out with the NI contributions though


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## snikpoh (Nov 19, 2007)

mlka said:


> The more I read about the more it looks like I can still pay tax in the uk under the tax treaty.
> 
> It you earn under 61000 and the tax has been paid in the uk, there is a exemption in Spain.
> 
> I need to work something out with the NI contributions though


Could you possibly post a link to this as I've never come across this figure before and can't understand on what basis it would be true.

Thanks.


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## angil (Sep 24, 2012)

snikpoh said:


> Could you possibly post a link to this as I've never come across this figure before and can't understand on what basis it would be true.
> 
> Thanks.


Our Spanish accountant told us the same thing. Not just the UK. Any country that has a tax treaty with Spain, & you can prove you are paying income tax in that country then you can earn €61,000 tax free. He showed my hubby an official 'tax guideline book' with it in!


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## rewdan (Feb 23, 2010)

I would be interested too if anyone has a link to this 61k thing. Following my (if ever) move to Spain I also intend on keeping up my class 2 NI payments in the hope that I make it to retirement age, the OAP will always come in handy.


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## mlka (Sep 5, 2009)

The exemption is upto 60100 euros.........See link :

http://www.financespain.com/images/Expatriates_Financial_Guide_Spain.pdf

http://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-spainguide-2011.pdf

Tax Facts - Spain | Gerard Associates Ltd.Gerard Associates Ltd.


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## CapnBilly (Jun 7, 2011)

All these articles are about the exemption of salary income for work performed abroad by a Spanish tax resident. They are normally used for Spanish workers sent to work abroad (expatriates).

Under the circumstances you described, you will have to pay tax and social security in Spain.


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## DaveInSpain (Sep 21, 2013)

Hi, 

Here is my 2 pence worth. I think you should be paying Tax and social security in Spain if you live here. Below is a paragraph from a letter I received from HMRC regarding my move to Spain.


In accordance with European Community regulations, if a person only works in the country in which they are living (even if this work is carried out from home using information technology) they are subject to the legislation of that country. It does not matter where the work originates from, where the clients are based or where payment for work is made. In these circumstances Article 11.3 of EC Regulation number 883/2004 applies


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## DaveInSpain (Sep 21, 2013)

One other thing. I think when you leave the UK, you are meant to tell HMRC. There is a form for this called a P85. This should make all your UK income zero rated.


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## mlka (Sep 5, 2009)

Dave,

Thanks,

I have no problem with paying my tax in Spain I just wanted to know what the current rules are as there is obviously a double taxation treaty that exists.

I think I will complete the P85 form so that I receive a NT tax code with no deductions and then start paying here in Spain.

How do you actually pay income tax in Spain, is it a lump sum in a certain month of the year?

Many Thanks,

Martin


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## StewartL (Sep 5, 2013)

I totally agree with DaveInSpain with the view that If you are living in and physically working from Spain you should be paying tax in Spain. This is from both a moral/ethical and from what I have read legal basis.

Please find below link to a reproduction of the UK - Spain Double taxation treaty from HMRC's website.

http://www.hmrc.gov.uk/taxtreaties/in-force/spain-uk-dtc.pdf

Article 15 deals with income tax of individuals

Under Article 15 (2) if you are a tax resident of Spain (you spend 183 days or more in Spain within the given tax year (Jan1 - Dec 31 for Spain)) then even if you should and do get paid and and pay income tax in the UK you need to declare the gross income to the Spanish Authorities to calculate the amount out Spanish Income tax which is payable. To avoid double taxation you can then subtract from the Spanish tax bill the amount of tax you paid to HMRC.

That said if I am reading Article 15 (1) correctly if you are a tax resident in Spain and you carryout you contract of employment in Spain (physically working from Spanish location) then you should you be only being taxed in Spain and HMRC should have no involvement in this. There are some exemption to this like Directors (Article 16) however from what I have read of the question I doubt any of the exemption would be applicable. This is also in line with Article 11.3 of EC Regulation number 883/2004 which DaveInSpain pointed out in his post above.

I would therefore advise anyone in this position to seek independent professional tax advise in the matter as it could become a problem for both employee and employer.

For this to work in practice either 
1) the person in Spain becomes self employee and pays Spanish SS and tax.
2) the employer opens up a company / branch in Spain to pay the Spanish resident employee.

Both of these options have pros and cons for both parties and a tax professional should be able to point these out and offer professional option as to the best option.

As for the 60,100 exemption as CapnBilly correctly point out this is for income for work physically carried out and paid in a third country. (i.e as a Spanish resident you work in France for three months and are paid in France for the work paying French tax on the income) This is not the same case as described here.


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## DaveInSpain (Sep 21, 2013)

Martin,

Sorry I am not the expert on this as I am still trying to sort it out. I believe Autonomo pay 20% on account every quarter with balance with tax return. Other people treat their UK income as foreign income and pay the full tax with their tax return. You are best discussing with an accountant

Dave


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## DaveInSpain (Sep 21, 2013)

StewartL said:


> I totally agree with DaveInSpain with the view that If you are living in and physically working from Spain you should be paying tax in Spain. This is from both a moral/ethical and from what I have read legal basis.
> 
> Please find below link to a reproduction of the UK - Spain Double taxation treaty from HMRC's website.
> 
> ...



In regards to the possible options to setup in Spain as self employed or the company sets up a branch in Spain, does anyone know if a 3rd option "CIF - No Residente sin establecimiento permanente" is available. Ie is it possible for a UK company to register as a foreign entity on the Spanish Tax and social security system?


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## snikpoh (Nov 19, 2007)

DaveInSpain said:


> Martin,
> 
> Sorry I am not the expert on this as I am still trying to sort it out. I believe Autonomo pay 20% on account every quarter with balance with tax return. Other people treat their UK income as foreign income and pay the full tax with their tax return. You are best discussing with an accountant
> 
> Dave


The problem, as I see it, is that he is NOT autonomo.

He is employed by a UK company. As this is the case, he needs to declare his income in June and do a normal tax return.

What I'm not sure about is how he pays his SS (NI) in Spain as he is not employed here.


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## DaveInSpain (Sep 21, 2013)

Hi,

I never said he was autonomo, I just gave him the different possible tax payment requirements to the best of my knowledge. 

The accountant I spoke to last week about this said a lot of her UK clients based in Spain become autonomo because it is the easiest and cheapest route for the UK companies and probably the employee also. The other option seems to be that the UK company will need to setup a branch in Spain which is costly and administratively difficult if say only one employee is in Spain.

Any decision on this though obviously needs to be discussed between employer and employee.


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## mlka (Sep 5, 2009)

An interesting point to add here is that we already have another person who is working in Barcelona and the company have told us they are happy to rent a office for us here.

Would this change things?


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## StewartL (Sep 5, 2013)

mlka said:


> An interesting point to add here is that we already have another person who is working in Barcelona and the company have told us they are happy to rent a office for us here.
> 
> Would this change things?


Before the company rents an office for its Spanish based employees I would strongly advise it to obtain independent tax advise on its situation. Renting an office for its Spanish base employees could give the Spanish Authorities greater grounds to assert that it has created a Permanent Establishment within Spain and therefore has to register the company in Spain. This may or may not be cost effective for the company and a full cost benefit analysis should be carried out. If the company has to register in Spain then there will be additional administrate burdens for them as well as potential corporate tax to pay in Spain. 

An alternative may be for the company to end the contracts of employment and contract with you as a self employed sub-contractor. If it is more effective for you to work in an office with others then you could rent an office yourself (having being compensated in the sum you obtain from your customer (ex employer)) and the cost would be deductible within your tax return. 

I know that in the UK there are guidelines from HMRC to determine whether someone is in fact self-employed or employed. HM Revenue & Customs: Employment status This is to prevent employers evading employer NI contributions by saying that they do not have employees just hire self employed people. I do not know whether this option would be in breach of them rules as you are based in Spain or whether Spain has an equivalent rule. 

An independent tax adviser should be able to review the full actual situation and provide pros and cons for each alternative.


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## CapnBilly (Jun 7, 2011)

StewartL said:


> Before the company rents an office for its Spanish based employees I would strongly advise it to obtain independent tax advise on its situation. Renting an office for its Spanish base employees could give the Spanish Authorities greater grounds to assert that it has created a Permanent Establishment within Spain and therefore has to register the company in Spain. This may or may not be cost effective for the company and a full cost benefit analysis should be carried out. If the company has to register in Spain then there will be additional administrate burdens for them as well as potential corporate tax to pay in Spain.
> 
> An alternative may be for the company to end the contracts of employment and contract with you as a self employed sub-contractor. If it is more effective for you to work in an office with others then you could rent an office yourself (having being compensated in the sum you obtain from your customer (ex employer)) and the cost would be deductible within your tax return.
> 
> ...


Although I agree with you about the permanent establishment, to a certain extent renting an office may not be much better. Depending upon what work is carried out, if you contract on behalf of the comany in that office, then the taxman may consider it a permanent establishment anyway.

With regard to social security, the company just need to register with the Spanish Social Security. Its a pretty straightforward form IIRC. This is all covered by the EU.


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