# Tax in Spain



## nina874 (Mar 13, 2010)

I am trying to get a definitive answer on this and I was wondering if any of you knew the answer.

Am I right in thinking that if you are a Spanish resident you are taxed at a flat rate of 21% on dividends over 6000 euros that you recieve from companies in the Uk if you own over 10% of the shares? If that is the case, is it right that the UK cannot tax you on top?

Sorry its a bit technical but I am wary of trusting the advice of a UK based tax firm when it comes to Spanish taxation!

It makes a big impact on the affordability of the move for us as the tax saving if that is the case will be going towards the dreaded school fees!!

Thanks in advance!


----------



## NickZ (Jun 26, 2009)

You should try and find the double taxation treaty but in general.

If it's an UK company paying the dividends that the UK gets first crack. The treaty will set out how much. The amount taken by the UK government should then be offset from your Spanish tax.


----------



## nina874 (Mar 13, 2010)

NickZ said:


> You should try and find the double taxation treaty but in general.
> 
> If it's an UK company paying the dividends that the UK gets first crack. The treaty will set out how much. The amount taken by the UK government should then be offset from your Spanish tax.[/QU
> 
> I looked at the treaty and it seemed to imply that Spainish taxation is applied, and the UK can, in certain circumstances, skim about 10% off the top, it would be most unfortunate if your assumption is correct as the increased tax burden is partly to blame for the decision to up sticks, oh poo!


----------



## NickZ (Jun 26, 2009)

The UK 10% should be offset by Spain. You shouldn't end up paying an additional 10% . What happens is the UK will get it's 10% then some how Spain ends up crediting you with that tax already paid.


----------



## nina874 (Mar 13, 2010)

NickZ said:


> The UK 10% should be offset by Spain. You shouldn't end up paying an additional 10% . What happens is the UK will get it's 10% then some how Spain ends up crediting you with that tax already paid.


How come if I am a Spanish resident the UK gets the first crack at dividend income? It read to me that when I go non resident in the UK then Spanish taxation applies as I will be resident there. Arrrrgh this is making my head hurt! I thought that was one of the points of going non resident?


----------



## jojo (Sep 20, 2007)

The person who would know all the answers to thid is my co-mod Stravinski, unforutnately he's unwell at the mo and isnt able to post!! I'm hopeless on the tax issue. All I know is that if you pay tax in the country that you live in for more than 183 days!!!! 

Have you looked at the DWPinSpain website??? I'll see if I can find a link, it may help???????!!

Jo xxx


----------



## jojo (Sep 20, 2007)

...... have a rummage thru this. Living in Spain

there maybe some advise. Failing that do a search on the forum for tax info??? Sorry I cant be of more help

Jo xxx


----------



## NickZ (Jun 26, 2009)

nina874 said:


> How come if I am a Spanish resident the UK gets the first crack at dividend income? It read to me that when I go non resident in the UK then Spanish taxation applies as I will be resident there. Arrrrgh this is making my head hurt! I thought that was one of the points of going non resident?


The company is an UK company. The taxes are linked to the location that the income is earned.

Unless the Spanish tax is lower then the UK with holding (Which I doubt) it's not a big problem. Just a bit more paperwork.

It's not hard to end up with a portfolio of stocks from around the world and be paying to taxes to countries I can barely spell the names of. 

In the old days this used to be a bigger issue. But the various tax treaties have made it much easier.

BTW if you go the other way Spain will take more then 10% on dividends paid by Spanish companies to non Spainish residents.


----------



## jojo (Sep 20, 2007)

NickZ said:


> The company is an UK company. The taxes are linked to the location that the income is earned.
> 
> Unless the Spanish tax is lower then the UK with holding (Which I doubt) it's not a big problem. Just a bit more paperwork.
> 
> ...



I'm sure you're right, but as I've always understood it, you pay tax in the country where you reside in for more than 183 days a year Or am I misunderstanding?? I know for a fact that should my husband ever spend more than 183 days in Spain then his tax would have to be paid here! Hence he deliberately makes sure that he stays in the UK for the 183 days. He runs a business in the UK



Jo xx


----------



## NickZ (Jun 26, 2009)

Different issue. Or at least a different version of the same issue.

First rule is where is the income earned.


If you run a business in one country that country will claim taxes on the income.

If you're then tax resident in a second country that country may have it's own claim on the money.

But most things are taxed in the location the money is earned. 

Think of it this way. Some one flies into the UK for a week. Works a couple of days and is paid. That person will pay taxes in the UK for those days.


----------



## jojo (Sep 20, 2007)

NickZ said:


> Different issue. Or at least a different version of the same issue.
> 
> First rule is where is the income earned.
> 
> ...


B
HHHHmmmm, I'm dumb about it, but I'm pretty sure that my husbands accountant who set up his taxes said the exact opposite, but I tend to glaze over when tax is talked about. But I do know that if my husband spends more time in Spain than the UK he HAS TO pay his taxes here, regardless of where the money is earned, I know that for definate. Thats why he has to keep all his flight receipts and dates !!!!!But Spain and the UK have a reciprocal arrangement anyway dont they??? It works for us tho. It means because OH pays his tax and NI in the UK we are entitled to free health care in Spain and my husband (not me, but he) can claim child allowance

Jo xxx


----------



## nina874 (Mar 13, 2010)

jojo said:


> B
> HHHHmmmm, I'm dumb about it, but I'm pretty sure that my husbands accountant who set up his taxes said the exact opposite, but I tend to glaze over when tax is talked about. But I do know that if my husband spends more time in Spain than the UK he HAS TO pay his taxes here, regardless of where the money is earned, I know that for definate. Thats why he has to keep all his flight receipts and dates !!!!!But Spain and the UK have a reciprocal arrangement anyway dont they??? It works for us tho. It means because OH pays his tax and NI in the UK we are entitled to free health care in Spain and my husband (not me, but he) can claim child allowance
> 
> Jo xxx


Right I have spoken to Price Water house Coopers! They wouldnt tell me the full picture without me retaining them (gulp) which I am about to do, but they did tell me that there are a number of possibilities and all of them mean that I pay less tax than I do at the moment  What I need to find out now is how much less!

It is slightly different for me jojo cos I pay myself in dividends rather than a salary to avoid too much NI, and i will be in Spain all the time if we move.

Once I get the full picture I will post the solutions that they give me 

Its looking more possible!

I have got 4 agents coming to the house to give me its rental value, but it wont be a lot cos we live in Cornwall and salaries down here are dire, so there is a really low upper limit on what people can pay, but everything helps doesnt it!

I hadnt thought about the child benefit, plop, I will lose that wont I?


----------



## NickZ (Jun 26, 2009)

jojo said:


> B
> HHHHmmmm, I'm dumb about it, but I'm pretty sure that my husbands accountant who set up his taxes said the exact opposite, but I tend to glaze over when tax is talked about. But I do know that if my husband spends more time in Spain than the UK he HAS TO pay his taxes here, regardless of where the money is earned, I know that for definate. Thats why he has to keep all his flight receipts and dates !!!!!But Spain and the UK have a reciprocal arrangement anyway dont they??? It works for us tho. It means because OH pays his tax and NI in the UK we are entitled to free health care in Spain and my husband (not me, but he) can claim child allowance
> 
> Jo xxx




Almost all countries have treaties. The treaties are basically the same with small differences in things like the rates.

If he was to be deemed a Spanish tax resident (say by staying too long) he'd have to file spanish taxes. But the money earned in the UK would be taxed there first and then he'd have to deal with Spain. 

Most countries use a more complicated rule on the balance of life instead of just the simple 183 rule of thumb. But we really don't want to open that can of worms


----------



## mayotom (Nov 8, 2008)

if you want to disscuss with Spanish acountants PM me and I'll send you some numbers and emails..

at least then you will know for sure


----------



## nina874 (Mar 13, 2010)

NickZ said:


> The company is an UK company. The taxes are linked to the location that the income is earned.
> 
> Unless the Spanish tax is lower then the UK with holding (Which I doubt) it's not a big problem. Just a bit more paperwork.
> 
> ...


I am just waiting for PWC to ring me back but at the moment what they are saying is that the UK is entitled to the corperation tax, as the company is based there, which is fine, but my personal income from dividends comes into a different category under the DTT.

They will be entitled to up to and no more than 15% of the dividend income but there is every possibility that will be offset against the 21% ( which is significantly less than the 50% that has juist been brought in!!!) that Spain charge as it is covered by the DTT, thus ensuring that I dont pay tax on the same money twice. There is even the possibility that the tax credits that I receive for the corperation tax paid by my company will be able to be further offset against the 15% which all sounds good to me!


----------



## NickZ (Jun 26, 2009)

nina874 said:


> They will be entitled to up to and no more than 15% of the dividend income but there is every possibility that will be offset against the 21% ( which is significantly less than the 50% that has juist been brought in!!!) that Spain charge as it is covered by the DTT, thus ensuring that I dont pay tax on the same money twice.


That's what I said


----------



## nina874 (Mar 13, 2010)

NickZ said:


> That's what I said


God this has given me such headaches! I just need to find out now if the tax credit can be offset too and it will all be looking rosy!

* takes a deep breath* now all I need to do is work out when me and DH can get over to sort everything out!!


----------

