# Tax in first year in Spain when income already from UK



## AndyH63 (Jan 9, 2016)

Newbie question - couldn't find an answer to this when searching... 

If I take up residency in Spain in March (for instance) and have earnings in the UK during Jan/Feb, do I pay tax on all earnings before arriving in Spain in the UK still and only start paying tax on all future income from March onwards in Spain, or will the Spanish authorities want to tax me for earnings before I arrived (as it falls in their calendar tax year)?

Equally, does the situation differ if I don't arrive until Q3 and so am in country for less than 183 days - is it then only the income earned worldwide from date of arrival?

Or does it not matter what date you arrive - as soon as you want to take up residency and get a job in Spain then you start paying tax from that point only, with all prior income that year earned before your arrival being taxed in your previous country, i.e. the UK for me?

The answer to this question is rather critical as it may decide how soon I can come to Spain as I'm about it receive a tax free redundancy payment in the UK, and the last thing I want to do is pay tax on that in Spain by moving here a month or so too soon, if indeed it makes any difference. If they expect to tax all prior income before your arrival in the tax year you take residency then I would have to not move here then until 2017 in that case, which seems ridiculous. 

I also don't want to live here "under the radar" as many do as I am happy to contribute but not be penalised unfairly by the Spanish tax system for earnings made before my arrival. 

If anyone has had to go through this situation in the last 12 months then any sound advice would be welcomed.


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## snikpoh (Nov 19, 2007)

OK. If you arrive in Spain and stay for more than 6 months this year, then you must pay tax in Spain on all your worldwide income for this year - but you pay it next year!

You will also have to pay tax in UK on the Jan/Feb income but this can be offset on your Spanish declaration. 

Put simply, Spain taxes for the entire year whilst UK can do part year taxation.

If you don't arrive 'till Q3, then you won't be tax resident until 2017 and so your first declaration will be in 2018.

Does that help?


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## AndyH63 (Jan 9, 2016)

It does help although it's very disappointing news as it means I can't move here now until Q3. I can't understand what my income before arriving here has anything to do with the Spanish - no wonder so many are living under the radar. 

You say that if I come in Q3 and start earning then I don't become resident until 2017 but I would expect to pay income tax on earnings in Q3/4, no?


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## AndyH63 (Jan 9, 2016)

The bit about offsetting is the more interesting and debatable part I suppose. By offsetting does that mean what you've paid to the UK reduces your bill in Spain? And more importantly if I have a big lump sum tax free redundancy payment that the UK allow me, as there was no tax paid on that, do Spain tot up your total income for the year, decide what tax would have been due on all that income in Spain and then just deduct the exact amount of tax I already paid in the UK, in which case I would get hammered for tax on my redundancy payment?


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## xabiaxica (Jun 23, 2009)

AndyH63 said:


> It does help although it's very disappointing news as it means I can't move here now until Q3. I can't understand what my income before arriving here ha anything to do with the Spanish - no wonder so many are living under the radar.
> 
> You say that if I come in Q3 and start earning then I don't become resident until 2017 but I would expect to pay income tax on earnings in Q3/4, no?


When you arrive doesn't make any difference in the long run, because any income tax you've paid in the UK will be offset against - in other words deducted from - your income tax liability here.

Well not much difference, anyway. If the allowances are higher in the UK, you would pay a little more here, if when you move the allowances are higher in spain, then you'd get a rebate....


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## snikpoh (Nov 19, 2007)

AndyH63 said:


> It does help although it's very disappointing news as it means I can't move here now until Q3. I can't understand what my income before arriving here ha anything to do with the Spanish - no wonder so many are living under the radar.
> 
> You say that if I come in Q3 and start earning then I don't become resident until 2017 but I would expect to pay income tax on earnings in Q3/4, no?


I'm not sure why you have made that leap - ignoring redundancy pay for the moment, any tax paid in UK cannot be taxed again in Spain. You simply declare it and offset any tax already paid in UK.

I'm not sure how redundancy pay is treated - is it earned income? If so, then yes, that's a problem given that it will be taxed in Spain but not in UK.

Everywhere is different and Spain has a calendar tax year and doesn't do partial tax years - that's just one of those facts that you have to consider when moving to another country. It's certainly no reason to 'live under the radar' - which is illegal and also morally wrong!!

About not paying tax 'till 2018 (tax resident in 2017), that's simply how it is.


What job will you have whilst living in Spain? It may be that you have to go self-employed (autonomo) which has it's own issues.


Having said all this, you really need to ask professional advice.


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## AndyH63 (Jan 9, 2016)

Hi xabiachica. I think you're missing my main point of concern. If the UK haven't taxed my redundancy settlement then the Spanish probably will I guess. If they just ignored all prior earnings before arriving then fine, but if the work out your tax bill on all earnings including my tax free lump sum in the UK they will hit me with a big tax bill and so it's just not worth coming over while that's a possibility.


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## Rabbitcat (Aug 31, 2014)

Best don't move until after early July


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## AndyH63 (Jan 9, 2016)

I'm looking to get a TEFL teaching job here, or anything that pays the bills in the meantime


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## AndyH63 (Jan 9, 2016)

Have an appointment with a tax lawyer on Thursday and go home on Saturday so it kinda kills my home search while I'm in limbo finding out how my tax free payment would be treated. If it does mean I can't come until Q3 I may aswell stop looking for a house this week and will have to come back later in the year instead I guess and try again.


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## xabiaxica (Jun 23, 2009)

AndyH63 said:


> Hi xabiachica. I think you're missing my main point of concern. If the UK haven't taxed my redundancy settlement then the Spanish probably will I guess. If they just ignored all prior earnings before arriving then fine, but if the work out your tax bill on all earnings including my tax free lump sum in the UK they will hit me with a big tax bill and so it's just not worth coming over while that's a possibility.


I missed the bit about the redundancy payment - yes that makes a difference


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## Lynn R (Feb 21, 2014)

AndyH63 said:


> Hi xabiachica. I think you're missing my main point of concern. If the UK haven't taxed my redundancy settlement then the Spanish probably will I guess. If they just ignored all prior earnings before arriving then fine, but if the work out your tax bill on all earnings including my tax free lump sum in the UK they will hit me with a big tax bill and so it's just not worth coming over while that's a possibility.


If you receive your redundancy payment on or before 30 June 2016 and move to Spain on or after 1 July, then you will not be tax resident in Spain until the following year (2017). Therefore, you would have no tax to pay in Spain on your previous earnings in the UK nor your redundancy payment.

However, if you intend to get a job and your employer would be deducting tax from your salary, then that might well complicate things.

Definitely talk to a tax specialist, although it can be difficult to find one who understands both the UK and Spanish systems.

The cast iron way to avoid any problems would be to put off moving to Spain until the beginning of 2017.

I have been living here for over 9 years and received a pension lump sum last year which I will have to pay a 5 figure tax bill on this year, although I wouldn't have been taxed on it in the UK. I can't complain about that, though, I knew what the Spanish system was when I moved here and as others have said, if you move to another country you have to accept their rules, it is no good just seeing them as unfair.


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## AndyH63 (Jan 9, 2016)

Thanks Lynn. That's all very good advice. I think we will postpone till Q3 and then not take work until next year. An extended holiday sounds good to me at the end of the year. 

Thanks for the advice everyone.


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## CapnBilly (Jun 7, 2011)

AndyH63 said:


> Thanks Lynn. That's all very good advice. I think we will postpone till Q3 and then not take work until next year. An extended holiday sounds good to me at the end of the year.


The rules on taxation of compensation for loss of employment are quite generous. It used to be very complicated, and related to the number of days compensation in relation to the statutory minimum which were very generous. However, the law changed in 2014, and it now relates solely to the amount received. 

There are some rules with regard to how the redundancy occurred, but these are similar to the UK, so providing it's a bonafide redundancy you should be okay, as the limit is €180,000 which is significantly more than the UK, which has been £30,000 for many years.


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## AndyH63 (Jan 9, 2016)

Hmm. That's an interesting turn of events then. That may allow us to move sooner in that case. Let's hope the tax lawyer can confirm all that for me on Thursday


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