# A couple of tax questions and a residency one, Barcelona



## WilliamS2013 (Apr 1, 2013)

Hey guys this is my first post. I have a couple of questions about income tax, very sorry if they have already been mentioned in the forum (I did use the search feature but it didnt come up with anything). 

Firstly I moved to Barcelona 2 months ago with my girlfriend (both UK passports) and I have a permanent work contract (which started roughly 6 weeks ago) and NIE (which I obtained with the help of my employer). One question that I am struggling to find an answer to is: does this constitute me as a tax resident for the entire fiscal year already? or am I still a non fiscal resident? 

I have read that if you have your main financial interests to spain then you become a tax resident. However, I don't understand how this can be the case if you could subsequently move abroad and work abroad for over 6 months in another EU country (in the same fiscal year). 

To note as well, I am currently paying a higher rate of tax than a spanish resident would be (apparently I can claim this back later on). My employer said that this was because I was still on an foreign worker tax code or something along those lines- making me think that I am not a fiscal resident here yet...

My second question is does anyone have experience with/know a reputable income tax advisor in Barcelona who understands UK income tax law as well? I need advice more than anything else to start with so I need a firm that offers these services rather than just filling in tax returns. 

Finally, I moved here with my gf (3 year relationship but the only real way to prove it is the fact that we have a shared UK bank account which is over 1 year old) who has not managed to find a job yet. Is there any way of her getting a residency card (NIE) if she still hasn't managed to get employment by the 3 month mark? Part of the reason she hasn't found anything yet is because we have plenty of savings (£15kish + my 20k euro salary), so she wasn't that concerned about finding a job she didn't really want to do. However now that I have gone through the process of getting the NIE I realised that they seem quite strict and would be more than happy to find a reason to turn you down. I have also read that you have to demonstrate you have the economic means to support yourself and medical insurance, and was wondering exactly what this meant? Anyone have experience? Would the sums I have mentioned be enough? Finally does anyone know how much she should pay for health insurance/how to sort it out? (can she even get health insurance without NIE? - its amazing how many chicken and egg situations there seem to be in the Spanish tax system!). 

Thanks for any help, much appreciated!


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## snikpoh (Nov 19, 2007)

WilliamS2013 said:


> Hey guys this is my first post. I have a couple of questions about income tax, very sorry if they have already been mentioned in the forum (I did use the search feature but it didnt come up with anything).
> 
> Firstly I moved to Barcelona 2 months ago with my girlfriend (both UK passports) and I have a permanent work contract (which started roughly 6 weeks ago) and NIE (which I obtained with the help of my employer). One question that I am struggling to find an answer to is: does this constitute me as a tax resident for the entire fiscal year already? or am I still a non fiscal resident?
> 
> ...


Firstly, I don't live in Barcelona but will try to answer some of your questions.

Don't be confused between the residency certificate and NIE. If you are both planning to be here for more than 90 days, then you both need to get a 'resdencia'. For you, that's not a problem as you have a contract of employment. For your girlfriend, she will have to prove that she can fund herself in Spain and has her own private health insurance. I assume that you haven't got one yet as all you mention is your NIE?

Presumably you have a social security number? I can't understand why they are considering you a foreign worker if you have a Spanish contract of employment - you should try and get this sorted pronto.

Why would any tax adviser need to know about UK tax law? You shouldn't be paying tax in UK if you are employed in Spain (or is there more to the story?).

If your girlfriend had a Spanish bank account with sufficient funds (5kish), and if she had private health care, then she should be able to get her 'residencia' fairly easily.

If you google one of the many SPANISH health care companies, they can give her a quote straight away - it's a lot cheaper than in UK (if you use a Spanish company). There have been many threads on private health care so take a gander.

Best of luck.


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## WilliamS2013 (Apr 1, 2013)

Thanks for the reply snik.

Yes I think I got confused with having the NIE and residencia. I will have to look into that! With respect to my girlfriend, and proving she has sufficient savings- Would they accept proof that she has that amount in a UK account rather than a Spanish one?- would save a lot of hassle and probably expense as I have noticed Spanish banks charge for most services. Would it make any difference at all if I went with her and informed them that I have employment + savings as well?. Does anyone have experience in this situation at all? 

I do have a spanish social security number, but I noticed on my payslip that I am paying 24.75% base tax (which i believe is the non resident tax band?) + 4.7% 'cotizacion cont. comu' + 1.6% cotizacion desempleo (side question- is that normal?)

The questions I am most interested in really are: 
a) Whether or not I am already a 'tax resident' here in Spain or not? What would happen if I worked here for say 5 months - as a resident- and then moved back to the UK and spent 7 months there? How does the 183 rule apply exactly? Say I go on holiday abroad for X days, does that count as part of my 183 days if I am still employed here? The reason I am asking these kinds of questions is because I am slightly regretting my move to Spain but I am locked into a 6 month housing contract. Of course things can change- and they probably will but I wanted to check my options. I think I would save money paying UK taxes on my yearly earnings - I would also find work in the UK for the rest of this calendar year. But then we move into another issue...differing tax calendars? According to the UK tax calendar I have spent over 1/2 of this UK tax year in the UK. So shouldnt I be paying my tax up until Apirl 6th to the UK government? Now you see why my second question is: 

b) If anyone had experience with a decent (good quality, good price) tax advisor in Barcelona who has some knowledge of the UK income tax laws? Or do people just use online firms? 

Thanks again for any help!


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## WilliamS2013 (Apr 1, 2013)

I just realised that what I thought was my NIE card is actually my 'certificado de registro de cuidadano' I guess that is what people mean by a residency certificate?


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## xabiaxica (Jun 23, 2009)

WilliamS2013 said:


> I just realised that what I thought was my NIE card is actually my 'certificado de registro de cuidadano' I guess that is what people mean by a residency certificate?


yes, that's your resident cert.


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## zenkarma (Feb 15, 2013)

WilliamS2013 said:


> I do have a spanish social security number, but I noticed on my payslip that I am paying 24.75% base tax (which i believe is the non resident tax band?)


Sorry to tell you this but 24.75% is the base tax rate all people pay up to €17,070, when it changes to 30%. It's nothing to with being a non resident. You should get a €5151 personal allowance before any tax is paid and other personal allowances which you'd have to look into.



WilliamS2013 said:


> a) Whether or not I am already a 'tax resident' here in Spain or not? What would happen if I worked here for say 5 months - as a resident- and then moved back to the UK and spent 7 months there? How does the 183 rule apply exactly?


If you are resident in Spain for more than 183 days in any year, they don't have to be consecutive, you are a fiscal tax resident and you have to declare and pay taxes on your worldwide income.

If your family or business interests are based in Spain, ie you work there, you are considered a tax resident. Good luck with trying to get PAYE taxes back from the Hacienda if you try and argue you're not a tax resident because you haven't been resident there for more than 183 days. 



WilliamS2013 said:


> Say I go on holiday abroad for X days, does that count as part of my 183 days if I am still employed here?


The 183 days are cumulative in any one calendar year, they don't have to be consecutive. 



WilliamS2013 said:


> I think I would save money paying UK taxes on my yearly earnings - I would also find work in the UK for the rest of this calendar year.


Unfortunately I don't think you have any choice whether to pay UK taxes or Spanish ones if you're contractually employed in Spain and paying PAYE. Because they'll argue the 183 day rule doesn't apply as your main business interest in in Spain. But I'm not sure about that.



WilliamS2013 said:


> But then we move into another issue...differing tax calendars? According to the UK tax calendar I have spent over 1/2 of this UK tax year in the UK. So shouldnt I be paying my tax up until Apirl 6th to the UK government?


The Hacienda don't care. If you're considered a tax resident in Spain you will pay Spanish taxes from January to December, regardless of where that money was earnt as you pay it on your worldwide income as well as UK taxes. There is a tax treaty in place between the UK and Spain so you only pay the difference. 

Eg if you earn't 20k and your UK taxes came to 5k and your Spanish ones came to 6k you pay 5k to the UK HMRC and 1k to the Spanish Hacienda.

You will still need to get confirmed your tax status in Spain if you don't spend more than 183 days there but work on contract as PAYE.

With respect, you really should of investigated all this before you went there!


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## WilliamS2013 (Apr 1, 2013)

Thank you very much for those answers, very informative. Out of interest, would the Hacienda have any claim on my income post-living in Spain if its in this calendar year? Say I earn 10k euros working in Spain for 5 months and then earnt 30k over the second half of the year in the UK. Who do I pay the tax to? Like you said Spain are receiving my PAYE tax at the moment, and I suppose if I worked in the UK, the UK government would receive the PAYE tax in the second half of the year. I would almost certainly have to submit my UK tax returns to include the money I earnt whilst in Spain wouldnt I?


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## zenkarma (Feb 15, 2013)

WilliamS2013 said:


> Out of interest, would the Hacienda have any claim on my income post-living in Spain if its in this calendar year?


It depends on whether they've nailed you as being a tax resident or not and as I mentioned in my previous post - it's not clear.

If they have, you would be liable for Spanish taxes for the whole year, regardless of where they're earnt as you pay taxes in Spain on your worldwide income for the whole year.

The big problem with Hacienda is they make things up as they go along and if you've already paid them taxes, getting any back would be a nightmare.

I recently read on another forum where someone bought a flat the price of which had fallen from peak and discounted to the price of €175k. The person who bought it received a letter from the Hacienda 6 weeks later demanding €25k in back taxes based on _their _valuation of €350k. As I said, they just make things up as they go along. They're a nightmare to deal with.



WilliamS2013 said:


> I would almost certainly have to submit my UK tax returns to include the money I earnt whilst in Spain wouldnt I?


You'd probably have to file tax returns to both the Hacienda and HMRC and end up with very little!

You need to get the question answered as to whether you do indeed become a tax resident if you're not resident in Spain for more than 183 days in a calendar year but are in contractual employment paying PAYE for less than that time.

Try having a look on here Advoco : Free Advice Centre and see if the answer is there.


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## WilliamS2013 (Apr 1, 2013)

Yes it basically all depends on whether or not I am counted as a tax resident as things stand. Is anyone here able to shed some light on the matter? I got in contact with a couple of Tax advisors in Barcelona today, (Spectrum IFA group and GM tax consultancy - if anyone has experience with either I would love to hear about it!). Or if anyone knows about any other tax advisors who they have good things to say about? I just don't want to get charged an arm and a leg for what could be a simple solution/answer. Obviously if my situation requires more work I would be happy to pay reasonable rates. 

I will shed some light on the matter incase anyone has any more advice. I basically play poker tournaments every now and then. In the UK poker winnings and losses are tax free as they are treated as gambling winnings and you do not pay income tax on gambling winnings (they are taxed in many other ways don't you worry!). However in Spain 'gambling winnings' are taxed. I basically want to know how much Liability I am going to have on any winnings over the year as it will affect my decision to play tournaments. I had a few trips planned but if I have to pay tax in spain (which is 25% on gambling profits as I understand) then it may not be worth my while.

I am assuming that if I am a tax resident here I would have to pay tax on any gambling winnings (from Spain or abroad) over the year regardless of how much time I spent here compared to other countries. I dont suppose anyone can make my day and tell me that I am wrong on this:fingerscrossed: and that I don't ?

I am so annoyed at myself for not really thinking things through before moving here... young and reckless as they say!


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## WilliamS2013 (Apr 1, 2013)

I just read this which may be my saving grace- 'A tax rule for expatriates in Spain who are employed by a Spanish company or by a foreign company with a permanent establishment in Spain has been in force since 1 January 2004. These expatriates may choose to be subject to tax either at progressive rates with deduction of certain expenses and allowances, or as non-resident taxpayers at a flat tax rate of 24% with no deduction of expenses or allowances.' the firm I work for is Spanish and is based in Barcelona...


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## CapnBilly (Jun 7, 2011)

WilliamS2013 said:


> I just read this which may be my saving grace- 'A tax rule for expatriates in Spain who are employed by a Spanish company or by a foreign company with a permanent establishment in Spain has been in force since 1 January 2004. These expatriates may choose to be subject to tax either at progressive rates with deduction of certain expenses and allowances, or as non-resident taxpayers at a flat tax rate of 24% with no deduction of expenses or allowances.' the firm I work for is Spanish and is based in Barcelona...


This is Beckham's law. There's a good article about it here http://www.advoco.es/advice/8-personal-tax/70-beckhams-law.html


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## WilliamS2013 (Apr 1, 2013)

This could be exactly what I needed. Thank you kind sir. Has anyone on this forum applied for Beckham's law? How does it work exactly? 

From what I have read the only issue I may have is that I arrived in Spain before receiving my final job offer (I came here for a final interview and was then offered the job... and then decided to move here permanently). 

:fingerscrossed:


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