# Living in Spain with UK-based business



## sadlybroke (Jun 19, 2012)

I read a lot about living in Spain with income from a UK registered business. I have not come accross the most cost effective and hassle free solution though.

I am not an accountant and don't know a lot about taxes and employment law but I had this idea: 

I would work as a contractor from Spain for my UK business through a Spanish umbrella company. I would effectively be employed by the umbrella company in Spain and they would take care of my taxes and health insurance. My UK company would pay the Spanish umbrella company.

Is anyone doing this? I am not sure how much umbrella companies charge - it is quite possible setting myself as autonomo using an accountant who would take care of all the paperwork might be a cheaper option?


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## Stravinsky (Aug 12, 2007)

sadlybroke said:


> I read a lot about living in Spain with income from a UK registered business. I have not come accross the most cost effective and hassle free solution though.
> 
> I am not an accountant and don't know a lot about taxes and employment law but I had this idea:
> 
> ...


Yes .... and by starting the company in Spain you will be self employed and have to pay the "NI" here that lets you health care and a pension for upwards of €230 a month. Your income, when it arrives here, will be taxed in Spain at Spanish tax rates. 

As a UK company owner living in Spain .... I have to ask ... whats the point? You will in essence be paying tax in Spain by your method in exactly the same way you would without the Spanish company wouldnt you, and you would be paying two sets of accountants


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## sadlybroke (Jun 19, 2012)

Stravinsky said:


> As a UK company owner living in Spain .... I have to ask ... whats the point? You will in essence be paying tax in Spain by your method in exactly the same way you would without the Spanish company wouldnt you, and you would be paying two sets of accountants


I'm not sure I understand. Do you mean I do not have to set myself up as autonomo to receive my UK salary and tax it in Spain? I do not speak Spanish and don't know much about accounting so I would have to pay a Spanish accountant anyway.

Another option - we have some savings that would cover our expenses in Spain for a year. If we came to live in Spain with 40k in our personal bank account, would we be able to buy a car, get health insurance, rent a house, etc.? That's just for the first year - if we like it we'll completely move to Spain and transfer the business there; if not, we'll return back to the UK.


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## snikpoh (Nov 19, 2007)

sadlybroke said:


> I'm not sure I understand. Do you mean I do not have to set myself up as autonomo to receive my UK salary and tax it in Spain? I do not speak Spanish and don't know much about accounting so I would have to pay a Spanish accountant anyway.
> 
> Another option - we have some savings that would cover our expenses in Spain for a year. If we came to live in Spain with 40k in our personal bank account, would we be able to buy a car, get health insurance, rent a house, etc.? That's just for the first year - if we like it we'll completely move to Spain and transfer the business there; if not, we'll return back to the UK.


I think what they were trying to say was that as a Spanish resident (after 183 days in the country in any one year), you have to pay Spanish tax! You would also have to be autonomo and so would also have to pay the 260euros/month.


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## Stravinsky (Aug 12, 2007)

sadlybroke said:


> I'm not sure I understand. Do you mean I do not have to set myself up as autonomo to receive my UK salary and tax it in Spain? I do not speak Spanish and don't know much about accounting so I would have to pay a Spanish accountant anyway.
> 
> Another option - we have some savings that would cover our expenses in Spain for a year. If we came to live in Spain with 40k in our personal bank account, would we be able to buy a car, get health insurance, rent a house, etc.? That's just for the first year - if we like it we'll completely move to Spain and transfer the business there; if not, we'll return back to the UK.


Hi again

Firstly, I am the director of a UK company. I am NOT an autonomo here in Spain, because all my "business" is done in the UK ... noting relates to Spain at all. Corporation tax on the business is paid in the UK, to the UK taxman. If I were to take an income from that company, then the income would be taxable in Spain as an individual, and therefore I would declare it on my annual tax return. For that I use a gestor in Spain, not an accountant, and I pay him €50 for doing that.

In the UK I have a UK accountant who compiles my accounts, and does my returns.

So ...... if you are a similar situation then you can see the simplest way of approaching the situation. This is based on the fact that you reside in Spain as mentioned by Snikpoh, and are therefore a Spanish tax resident.

So you see, if you become autonomo here in Spain under the above circumstances it would almost be a poinless exercise.

I dont know your business details, but there is really no need to transfer your business to Spain (unless your business makes it necessary). You can run it in the UK from Spain, as a Spanish resident.

As regards your £40k in the bank, you can use it for whatever you want to. Health care is relatively cheap here, it was around €1150 for two in their mid fifties when we took it out. Cars are expensive unfortunately compared to the UK.

Transfers from the UK to Spain can be done with companies like Currencies Direct. With a monthly direct debit there are no charges for the transfer, and good rates of exchange. Pick the right bank in Spain and you wont get charged for receiving the monies into your Spanish account either.


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## sadlybroke (Jun 19, 2012)

Thank you Stravinsky, it is very helpful.

Are you covered by Spanish health system or did you have to take the private health insurance to be covered? Or is your private health insurance on top of the basic care you are entitled to as a Spanish resident?


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## Abyss-Rover (Mar 17, 2012)

Maybe worth a read www.hmrc.gov.uk

EEA nationals: going to work in another EEA country or Switzerland for a period not expected to exceed 24 months

There are special rules for workers who go to another EEA country or Switzerland to work there for a maximum of 24 months. These rules are mainly contained in European Community Regulations 883/2004, 987/2009 and Decision No A2 of the Administrative Commission of the European Communities on Social Security for Migrant Workers. These rules operate from 1 May 2010 but if you will still be away after 1 May 2010 you can apply now.

Under these rules a person who is normally self-employed in the UK, who pursues a similar activity in another Member State continues to be subject to UK contributions legislation only, for up to 24 months, providing the work abroad is not expected to last more than 24 months at the outset...................


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## Stravinsky (Aug 12, 2007)

sadlybroke said:


> Thank you Stravinsky, it is very helpful.
> 
> Are you covered by Spanish health system or did you have to take the private health insurance to be covered? Or is your private health insurance on top of the basic care you are entitled to as a Spanish resident?


I took out private health care originally, but being a toy boy I am now covered under my wifes cover as a dependent, as she is at pensionable age now.

@abyss .... my posts are made for someone who becomes a permanent resident in Spain and therefore becomes a tax resident. I pick up that sadlybrokk may well become a permanent resident - lets face it, if you can run a UK company from the sun here then who wouldnt


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## Abyss-Rover (Mar 17, 2012)

Stravinsky said:


> I took out private health care originally, but being a toy boy I am now covered under my wifes cover as a dependent, as she is at pensionable age now.
> 
> @abyss .... my posts are made for someone who becomes a permanent resident in Spain and therefore becomes a tax resident. I pick up that sadlybrokk may well become a permanent resident - lets face it, if you can run a UK company from the sun here then who wouldnt


Point noted but I was replying to the following post



sadlybroke said:


> I'm not sure I understand. Do you mean I do not have to set myself up as autonomo to receive my UK salary and tax it in Spain? I do not speak Spanish and don't know much about accounting so I would have to pay a Spanish accountant anyway.
> 
> Another option - we have some savings that would cover our expenses in Spain for a year. If we came to live in Spain with 40k in our personal bank account, would we be able to buy a car, get health insurance, rent a house, etc.? That's just for the first year - if we like it we'll completely move to Spain and transfer the business there; if not, we'll return back to the UK.


Specifically this part "That's just for the first year"


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## sadlybroke (Jun 19, 2012)

Stravinsky said:


> Firstly, I am the director of a UK company. I am NOT an autonomo here in Spain, because all my "business" is done in the UK ... noting relates to Spain at all. Corporation tax on the business is paid in the UK, to the UK taxman. If I were to take an income from that company, then the income would be taxable in Spain as an individual, and therefore I would declare it on my annual tax return. For that I use a gestor in Spain, not an accountant, and I pay him €50 for doing that.


Just talked to HMRC about this situation. If you are employed by a UK based company (or a director of a UK Ltd co.) and live in an EEA country, you do not pay NIC in the UK but have to register for its equivalent in the country of your residence. Apparently it is not important where the company is based but where you as an individual live.

I was given an advice to fill in the ca8454 form to apply for the S1 form for myself and my wife (who is employed by my Ltd company) which will confirm this. The S1 form can be used to register in the Spanish social contributions system.


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## sadlybroke (Jun 19, 2012)

Abyss-Rover said:


> Maybe worth a read www.hmrc.gov.uk
> 
> EEA nationals: going to work in another EEA country or Switzerland for a period not expected to exceed 24 months
> 
> ...


Sadly this does not apply to employees and company directors, just self-employed people.


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## Stravinsky (Aug 12, 2007)

sadlybroke said:


> Just talked to HMRC about this situation. If you are employed by a UK based company (or a director of a UK Ltd co.) and live in an EEA country, you do not pay NIC in the UK but have to register for its equivalent in the country of your residence. Apparently it is not important where the company is based but where you as an individual live.
> 
> I was given an advice to fill in the ca8454 form to apply for the S1 form for myself and my wife (who is employed by my Ltd company) which will confirm this. The S1 form can be used to register in the Spanish social contributions system.


Well, thats different information from different people I guess, mine coming from HMRC and accountants in the UK and Spain. . As I said, I have no necessity to register as autonomo in Spain as I am not self employed and carry out no business here or related to here. I am a director of a company offering a service to UK individuals only and the company is liable to pay corporation tax in the UK. I do however need to declare for taxes if the need arises, but I don't need to pay into the system to get health or pension benefits in Spain

Health is a different matter ... I already have that as a dependent


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## sadlybroke (Jun 19, 2012)

Stravinsky said:


> Well, thats different information from different people I guess, mine coming from HMRC and accountants in the UK and Spain. .


I was a bit cheeky, I called HMRC twice and explained the situation to two different people. Both gave the same advice as I mentioned earlier. My UK accountant is not familiar with the Spanish tax and social system so he couldn't advise on what to do in this matter.



Stravinsky said:


> As I said, I have no necessity to register as autonomo in Spain as I am not self employed and carry out no business here or related to here.


I agree.



Stravinsky said:


> I am a director of a company offering a service to UK individuals only and the company is liable to pay corporation tax in the UK.


Absolutely.



Stravinsky said:


> I do however need to declare for taxes if the need arises,


Yes, that's what I understand now, too.



Stravinsky said:


> but I don't need to pay into the system to get health or pension benefits in Spain


Well, I have different information about this. I was told by HMRC twice today that as a person living in Spain and working for a UK company I will have to contribute in Spain to get the health/social benefits. It is not important who you work for but where you live.



Stravinsky said:


> Health is a different matter ... I already have that as a dependent


Good for you. My situation is different though so I will have to sort this out... somehow.


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## Solwriter (Jan 10, 2012)

sadlybroke said:


> Well, I have different information about this. I was told by HMRC twice today that as a person living in Spain and working for a UK company I will have to contribute in Spain to get the health/social benefits. It is not important who you work for but where you live.


The difference, as far as I can see it, is that you and your wife will not be covered for health care in Spain unless you contribute to the Spanish SS system.
Whereas Stravinsky went private at first because he was not covered either, and then, when his wife was of pension age, became her dependent to receive Spanish state health care.

I'm in a similar (but different...) situation here, I'm autonomo because I run a business from my Spanish address, but my husband is now a pensioner so I could, in theory, stop being autonomo and get health care as his dependent.
But, as that would mean a great deal of fiddling about with taxes - as the business is online and not that easy just to take down - I haven't considered doing it yet.

That's actually why I'm following this thread.


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## sadlybroke (Jun 19, 2012)

Solwriter said:


> The difference, as far as I can see it, is that you and your wife will not be covered for health care in Spain unless you contribute to the Spanish SS system.
> Whereas Stravinsky went private at first because he was not covered either, and then, when his wife was of pension age, became her dependent to receive Spanish state health care.
> 
> I'm in a similar (but different...) situation here, I'm autonomo because I run a business from my Spanish address, but my husband is now a pensioner so I could, in theory, stop being autonomo and get health care as his dependent.
> ...


Yes, it all makes sense.

I will need to find out how to contribute to the Spanish SS and how much it costs
comparing to private health insurance for the whole family.


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## jojo (Sep 20, 2007)

My husband paid continuously into the UK national insurance system thru working in the UK. He made sure that he spent less than 182 days in spain. Therefore we (his family in spain) filled out the S1 form, which meant that we received the reciprocal healthcare as agreed by the two countries

Jo xxx


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## Solwriter (Jan 10, 2012)

sadlybroke said:


> Yes, it all makes sense.
> 
> I will need to find out how to contribute to the Spanish SS and how much it costs
> comparing to private health insurance for the whole family.


Exactly.
In most cases it probably works out cheaper not to go autonmo if you don't need to, but in your case, having a family who will all need health coverage, it might be worth considering.


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## Solwriter (Jan 10, 2012)

jojo said:


> My husband paid continuously into the UK national insurance system thru working in the UK. He made sure that he spent less than 182 days in spain. Therefore we (his family in spain) filled out the S1 form, which meant that we received the reciprocal healthcare as agreed by the two countries
> 
> Jo xxx


That seems to be the easiest way to go, but I think Sadlybroke is planning on living here full time.


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## Stravinsky (Aug 12, 2007)

sadlybroke said:


> I was a bit cheeky, I called HMRC twice and explained the situation to two different people. Both gave the same advice as I mentioned earlier. My UK accountant is not familiar with the Spanish tax and social system so he couldn't advise on what to do in this matter.
> 
> 
> I agree.
> ...


No, I think we have the same information but are applying it to different situations 
I dont need to access health this way, so I dont have to register with anyone
You have clearly been told that you HAVE to register as autonomo in Spain because you run a UK Ltd company. Thats not strictly correct, as you have no business here in Spain. However to get health care that is (apart from private health) your only option.

However, people have been pulled up in Spain in the past as registering as autonomo just to get health care, when they have no real business. I guess you just have to bear that in mind when you figure the way through your finances

For instance ....... if health is your worry, then you may fiund its cheaper to pay €1100 a year in Spain for private health than to pay €250 a month plus all the associated charges to be autonomo.

But I do repeat, for purely ordinary tax purposes it is NOT incumbent on you to register as an autonomo for running a strictly UK based Ltd Co ....... Honest Guv!


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