# Self-employed in UK, get paid in UK, where do I stand tax wise ?



## SunnySpain (Jul 30, 2008)

Hi everyone,

Please help if you can, I will try and be concise.


I am self-employed in the UK, but am exempt from paying NI in the UK,
in fact I only have to pay Corporation Tax on profits in the UK

If I was to become a resident in Spain, does this mean:

I need to pay Corporation tax in Spain, even though the company is in the UK

or

Can I simply continue to pay Corporation Tax in the UK ?

Also, how do I get medical cover in Spain if I do not pay into the system,
is this possible ?

Thank you, Dave


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## chris(madrid) (Mar 23, 2008)

Medical cover - long term you'll need to register as a resident.

Register as self employed and €238/month will get you and your dependants full cover. Afaik -no way out.

The tax bit - ask a tax accountant - seriously! - If the company was here - depending on how it's registered as a business affects taxation - and which you choose depends on what you do. Overseas Co's I've NO IDEA.


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## Stravinsky (Aug 12, 2007)

Agreed, further to the pm I sent you, you need to speak to a good tax gestoria / accountant to find the best way around it for you.


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## Barry Davys (Aug 2, 2008)

Hi Sunny Spain,

Here are a few points you need to know. 

You need to know where you are resident. This is the 183/90 day rule.

You need to know if you are self employed in the UK or do you have a ltd company.

If you are self employed you will pay income tax.

If you are a Ltd company then the COMPANY will pay Corporation Tax and then when you take a salary or dividends from the company YOU may have to pay income tax.

Knowing if you are self employed or a Ltd co will help to determine what method you will have to use here in Spain.

Yes, you should do things properly. Spain is not a bad place for tax now. AND there is a double taxation agreement between Spain and Britain so you will not pay twice.

Barry

3 ws Expatfinancialadvicespain dot com


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## SunnySpain (Jul 30, 2008)

Yes, its a Limited company, so Corporation Tax is the main form of taxation

In the UK = 21% for small / medium companies

In Spain = 25%


It would therefore seem as though I would be better off financially if I paid tax in the UK and not Spain. But my question is whether or not that is correct if my country residence becomes Spain ?


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## Barry Davys (Aug 2, 2008)

Hi Sunny,

Quite right about Corporation Tax rates. Your company however is registered in the UK and will still be deemed to be a UK company. No choice about Corporation Tax therefore. 

With regard to your personal income (ie the money you take from your company) there can be a difference between taking a dividend and taking a salary. There is a lot more info needed before giving advice and if your turnover is greater than £250,000 you may be better looking at a Malta company, for example.

Which part of Spain do you live in? We may be able to point you in the direction of a good accountant.

Saludos

Barry


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## SunnySpain (Jul 30, 2008)

Hi there,

I am still trying to locate the right information myself.

An expat told me at the weekend I can simply chosse where to pay tax,
but I doubt its as simple as that to be honest and therefore doubt his
comments were based on truth, especially as he has been a resident in
Spain for over 25 years and never registered for residencia.

Anyone else that knows anything on the subject, please advise ........


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## SunnySpain (Jul 30, 2008)

veomar said:


> Hello 'Sunny', and all
> 
> Yes I would love to know a.s.a.p. - the dividends received in the UK already have the 'one-ninth' tax credit don't they, as a marker that they have already been subjected to UK basic rate tax. It would seem so unfair if they were then subjected to Spanish income tax at the marginal rate. Seems to be a grey area even if you read that HMRC DT17609 page.
> 
> ...



The way I see it, your Corporation tax is deductable in the UK (only), but as for dividends and income tax on directors remuneration, taxable in Spain or the UK, there was an IFA on here called Barry, but he seems to have done a bunk, possibly on holiday or avoiding tax - lol 

Either way, you cannot and will not be taxed in both countries - thats the whole point of the double tax treaty - so don't fret too much ok


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## Barry Davys (Aug 2, 2008)

veomar said:


> Hello 'Sunny', and all
> 
> Yes I would love to know a.s.a.p. - the dividends received in the UK already have the 'one-ninth' tax credit don't they, as a marker that they have already been subjected to UK basic rate tax. It would seem so unfair if they were then subjected to Spanish income tax at the marginal rate. Seems to be a grey area even if you read that HMRC DT17609 page.
> 
> ...


Hi Veomar,

Would you like to send me a private message and we can discuss. Probably best that we don't put all your personal details on a forum.

Hi Sunny and others,

I think your friend is referring to the double taxation treaty. IF rates were the same in both countries the actual tax paid would be the same. Unfortunately, it is not so there is a difference.

The issue of residencia and resident for tax purposes is also REALLY important. You do not need ANY piece of paper to become tax resident. If you are here for 180 days in any year you become tax resident. BUT if you come to Spain with the intention of making it your permanent place that you live you become tax resident from the day AFTER you arrive. No paperwork, nothing.

Is this important? It is and becoming increasingly so. The Her Majesty's Revenue and Customs (HMRC or Inland Revenue to most of us) now have an office IN MALAGA. There are involved with the Hacienda in an opertion regarding property that is going from Gib to the French med border all the way along the coast. It is understood they are also training the Hacienda in tax collection.

Many people will get caught out through ignorance and many more through an expectation that they have to "beat" the system. 

Spain is NOT a bad place for tax and the time has now come to do things properly.


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## SunnySpain (Jul 30, 2008)

Barry Davys said:


> Hi Veomar,
> 
> Would you like to send me a private message and we can discuss. Probably best that we don't put all your personal details on a forum.
> 
> ...


Hi Barry,

Veomar cannot send you a pm, as he is a newbie - needs to make 6 posts before any private messages can be sent, although I have sent you a pm on the same subject, regards, Dave


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## SunnySpain (Jul 30, 2008)

Hiya,

An IFA (independent financial advisor) informs me that Corporation Tax is due 
form payment in the UK if the company is both Limited and is registered in the UK

Thus, no company tax (as its known in Spain) are due for payment in Spain

Can anyone confirm this is correct ?

Also, the same IFA informs me that an employee of a UK based company, who resides in Spain is therefore eligible to pay income tax on his / her earnings from
the UK based company - in Spain.

Can anyone confirm if this applies to income only or dividends + income ?

Finally, I have notices that there are several allowances relating to income tax in Spain. For example, there are allowances 1) personal 2) spouse and 3) child

My question is can the individual claim all 3 allowances against tax 
if the individual has both a spouse and child (all residing in Spain) ?

As in, would the individual be able to earn the total sum of the 3 allowances before tax is payable ?


I look forward to your replies, Dave


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## Barry Davys (Aug 2, 2008)

SunnySpain said:


> Hiya,
> 
> An IFA (independent financial advisor) informs me that Corporation Tax is due
> form payment in the UK if the company is both Limited and is registered in the UK
> ...


It is perhaps worthwhile adding to the question if the employee is a controlling shareholder of the limited company.


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## SunnySpain (Jul 30, 2008)

Barry Davys said:


> It is perhaps worthwhile adding to the question if the employee is a controlling shareholder of the limited company.


Hi Barry,

Can you please explain the situation if the employee was indeed the controlling shareholder of the limited company - please lol


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