# spanish tax or british?



## andreachud (May 25, 2011)

Hi all,

Can I please have some advice on whether if residing in Spain, is it better for my husbands business to be registered in Spain or Britain for tax purposes, what are the pros and cons? He will be runing the business from Spain but the work will be happening in the uk, once every few weeks he will be needed to fly back to the uk. He will also be doing a small amount of work in Spain. I am sure there are lots of people with experience/knowledge of this and any help would be greatly appreciated.
Also can anyone recommend some private healthcare companies for when/if we do need it.
thanks


----------



## samthemainman (Aug 15, 2012)

My advice is get proper tax advice. You'll need to do a P85 first to explain leaving and forecast details to HMRC. Tax rules are complicated. I can't talk about owning my own business but I live in Spain and have to travel to the UK twice a month for meetings etc - I am only allowed 10 'incidental' days after which I am then taxed in the UK as well as Spanish because I am ordinarily resident here. The tax year is different in Spain (Jan-Dec) and there is a dual taxation agreement in place which means you shouldn't be taxed on the same income twice - but in practice it can mean tax flow issues with proving to the IR/Hacienda that you've paid... Anyway your circumstances may be different - but good advice from an accountant in Spain with UK knowledge (and who caters for the expat market) could be a good idea.


----------



## andreachud (May 25, 2011)

I am said Husband who will be working back in UK. My initial thoughts were to open a branch of the business in Spain and earn a small amount from that that enables me to be taxed in Spain. The core of my business will be UK based, for which I am able to earn a tax free dividend from, which I do not want to forego. I will continue to be taxed in UK as that element of the business is non transferable to Spain, it is Govt contracts, which I cant see being offered to a Spanish company.

Sounds like I need to find a good Spanish accountant!


----------



## Rostra (Jan 23, 2013)

If he can, and it depends on where he is resident, he probably would be better working from the UK because of the VAT rules, but this depends on how his business is run and what his turnover is. He needs REALLY good advice. Find an accountant specialising in this.

I am in the Canaries, am technically tax resident in the UK and run my business from there (most of my clients are in the UK) but out VAT rules are different from the mainland. Here there is no exemption from VAT at any level of turnover - in the UK it is more than £70k 

On a personal level there isn't a huge difference between tax allowances in the UK and in Spain. They are however calculated completely differently so it is difficult to compare without doing mock tax returns for each country.


----------



## Rostra (Jan 23, 2013)

andreachud said:


> Sounds like I need to find a good Spanish accountant!


No - you need to find a GOOD Uk acountant who understands Spanish tax rules - they are few and far between, ad probably horrendously expensive, but I am sure they exist!


----------



## xabiaxica (Jun 23, 2009)

andreachud said:


> Hi all,
> 
> Can I please have some advice on whether if residing in Spain, is it better for my husbands business to be registered in Spain or Britain for tax purposes, what are the pros and cons? He will be runing the business from Spain but the work will be happening in the uk, once every few weeks he will be needed to fly back to the uk. He will also be doing a small amount of work in Spain. I am sure there are lots of people with experience/knowledge of this and any help would be greatly appreciated.
> Also can anyone recommend some private healthcare companies for when/if we do need it.
> thanks


it's very simple - if he is living in Spain he would have to do a tax declaration here anyway, so I can't see what difference it makes in the long run - if Spain figured he needed to pay more/less tax he'd have to pay it or they'd give some back

I think if his company was registered in the UK & he was _an employee_ of it there's some difference - but he needs an asesor really


----------



## andreachud (May 25, 2011)

cheers all


----------



## Stravinsky (Aug 12, 2007)

If you are a Ltd Company then leave the company registered in the UK where your business is taking place.

Then you are a director / employee, and the income from the company will be declared in the country of residence, i.e. Spain in this case

It is totally pointless de registering the company in the UK and then starting a company in Spain to look after UK business income.

If you are a sole trader, then again ... just declare the income in Spain as income for tax. You dont get a choice. You get taxed in your country of residence.

And this is from someone who runs a UK Ltd Company but resides in Spain. It is recommended to get a decent gestor to do it, and unfortunately you will (as a Ltd Co) have to employ an accountant in the UK for your accounts .... or if a small company you can do it yourself on line now. I just did mine


----------



## xabiaxica (Jun 23, 2009)

Stravinsky said:


> If you are a Ltd Company then leave the company registered in the UK where your business is taking place.
> 
> Then you are a director / employee, and the income from the company will be declared in the country of residence, i.e. Spain in this case
> 
> ...



I knew you'd know - I think there are a couple of other regular posters in the same position


----------



## Stravinsky (Aug 12, 2007)

xabiachica said:


> I knew you'd know - I think there are a couple of other regular posters in the same position



The only slightly difficult thing is this new reporting thing. Because as a director of a Ltd Company, the funds in there are not actually yours. They could be, but they aren't until you actually take them. Sometimes also, you arent the only director / shareholder. So do you report it? Do you not report it? Who knows!!!!


----------



## andreachud (May 25, 2011)

Stravinsky said:


> If you are a Ltd Company then leave the company registered in the UK where your business is taking place.
> 
> Then you are a director / employee, and the income from the company will be declared in the country of residence, i.e. Spain in this case
> 
> ...


Many thanks it is a limited company and i am employed by the company. Currently I do not pay income tax as the dividend covers all my income from the company. Not looking to de register in UK. that seems easy enough, though. If I travel back to UK more than the 10 days somebody else mentioned I start to become liable for tax in UK. How does that work if Spain want to tax my earnings too?


----------



## xabiaxica (Jun 23, 2009)

andreachud said:


> Many thanks it is a limited company and i am employed by the company. Currently I do not pay income tax as the dividend covers all my income from the company. Not looking to de register in UK. that seems easy enough, though. If I travel back to UK more than the 10 days somebody else mentioned I start to become liable for tax in UK. How does that work if Spain want to tax my earnings too?


I don't know exactly how they work it out, but there is a reciprocal tax agreement to ensure that you don't pay tax twice on the same income


----------



## Stravinsky (Aug 12, 2007)

andreachud said:


> Many thanks it is a limited company and i am employed by the company. Currently I do not pay income tax as the dividend covers all my income from the company. Not looking to de register in UK. that seems easy enough, though. If I travel back to UK more than the 10 days somebody else mentioned I start to become liable for tax in UK. How does that work if Spain want to tax my earnings too?



Ten days in the UK doesnt make you liable for UK tax 

You have to be clear on this. A dividend, a salary, a draw down ... can all be considered income in Spain and will be taxed. When you move to Spain you normally de register for tax in the UK

Yes, there is a reciprocal tax agreement between UK and Spain so in theory if you end up paying a tax amount in the UK you can deduct it from the Spanish payment

Speak to Pablo Faus Banules, offices near the train station in Gandia


----------



## NickZ (Jun 26, 2009)

xabiachica said:


> I don't know exactly how they work it out, but there is a reciprocal tax agreement to ensure that you don't pay tax twice on the same income


Not exactly the way to think about it.

The Spanish/UK treaty requires the UK to treat Spanish residents no worse then it treats UK residents. 

OTOH it doesn't stop the Spanish from treating a Spanish residents badly 

There are things the UK can tax first and then the Spanish can tax. You're supposed to get relief for the UK taxes paid but unless the UK tax exceeds or is equal to the Spanish you'll be paying some money to the Spanish government.

Not sure that's any clearer


----------



## Rostra (Jan 23, 2013)

andreachud said:


> Many thanks it is a limited company and i am employed by the company. Currently I do not pay income tax as the dividend covers all my income from the company. Not looking to de register in UK. that seems easy enough, though. If I travel back to UK more than the 10 days somebody else mentioned I start to become liable for tax in UK. How does that work if Spain want to tax my earnings too?


It's not a problem You redeclare the income in Spain and deduct the amount of tax already paid in the UK - that's what double taxation agreements are for. You won't get a refund of any UK paid tax, if Spain thinks you should have paid less!


----------

