# Tax in Spain



## lostinspain (May 15, 2009)

Boys and girls, I´ve a serious pickle.
I work in Spain for a company registered in German.
My company will not hire me so have me as a "Free lancer" on paper.
Thus they pay into a spanish bank account and issue me an invoice, for an address I used to hold in Ireland.
If i declare as self employed I´m going to be working to next to nothing, and my boss keeps telling me i´m a small fish, and not to worry.
On top of this I travel a lot so am constantly taking money out of the wall in other counties via my spanish bank account.
I´ve been doing this for some years now and am not getting younger, so less ballsy about the whole thing.
Any advice? am i worrying over nothing or...?
Lostinspain


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## jojo (Sep 20, 2007)

hello, yes, well being blonde I really cant help you lol! however, we do have people who come on here who I´m certain will be able to. So hang on in there and they'll be along shortly!!!

Jo xxx


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## lostinspain (May 15, 2009)

jojo said:


> hello, yes, well being blonde I really cant help you lol! however, we do have people who come on here who I´m certain will be able to. So hang on in there and they'll be along shortly!!!
> 
> Jo xxx


Cheers Jojo!


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## Tallulah (Feb 16, 2009)

lostinspain said:


> Boys and girls, I´ve a serious pickle.
> I work in Spain for a company registered in German.
> My company will not hire me so have me as a "Free lancer" on paper.
> Thus they pay into a spanish bank account and issue me an invoice, for an address I used to hold in Ireland.
> ...


Firstly you need to clarify some points :

a) you say they issue you an invoice. Surely you issue them an invoice upon which you are paid.

b) Does that invoice include VAT? If so, at which rate?

c) Are the invoices numbered and do you keep records? 

d) Not clear from your post whether they pay into your Irish bank account or your Spanish bank account. 

whatever the answers to the above, one thing is for sure - not declaring as a foreign earning to "Hacienda" is breaking the law and could in fact be a mistake given that if you did complete your tax return, you might well find you would have to pay next to zero from what you imply as being a "small fish, not to worry". That would be a shame, as you could be legal with Hacienda and still not pay much if any tax.

So far as autonomo is concerned, there are many schools of thought and regardless what "Seguridad Social" say, the Supreme Court has already ruled on some issues where somebody earning 1 euro does NOT have to contribute to SS to give the extreme example of contrary to what they say. 

I think you know the answers to the questions - but if you want to swerve safer, you need to be a bit more specific and even pay a few euros to a gestoria to review your case as it might not be as bad as you think in any case.

Please bear in mind from what I've written above, Hacienda and SS are two different bodies when it comes to "Should I this....or should I that...."

Regards,
Tallulah.


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## lostinspain (May 15, 2009)

Tallulah said:


> Firstly you need to clarify some points :
> 
> a) you say they issue you an invoice. Surely you issue them an invoice upon which you are paid.
> 
> ...


Hi Tallulah,
Thank you very much for your detailed reply.
To answer the above questions.
A) Nope, they issue me the an invoice detailing what i got paid for. (which is bogus as they see/threat me like a full time employee)

B)the invoice doesnt include VAT on my side, only the company is paying VAT on what they are paying me.

C) the invoices are numbered, but I dont really keep a decent record of them as i just see them a monthly pay checks.

D)the money is paid into a spanish account that the company set up for me.

I earn just over 25k a year, which i know is good for spain, however I do live in a major city here, so its not amazing anymore.
Now I am concerned I could wind up in trouble.
I´m really not very good with anything numbers/tax


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## SteveHall (Oct 17, 2008)

YES! Clearly you could get into serious trouble as could the company. I'd get to a gestor asap to try to sort this.


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## lostinspain (May 15, 2009)

SteveHall said:


> YES! Clearly you could get into serious trouble as could the company. I'd get to a gestor asap to try to sort this.


Hi Steve,
Cheers for your reply.
The company pays taxes here however have me registered as a "free lance" employee and see my tax issues as something I need to sort myself, however I work 40 hours a week in the office and have to take my orders e.t.c., so not really what I´d deem a freelancer.
If I visit the gestor now, is it possible they can dob me in, or might I have to pay for the last 3.5 years of doing this?
Yikes, getting scared now.


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## Tallulah (Feb 16, 2009)

lostinspain said:


> Hi Tallulah,
> Thank you very much for your detailed reply.
> To answer the above questions.
> A) Nope, they issue me the an invoice detailing what i got paid for. (which is bogus as they see/threat me like a full time employee)
> ...


OK, Lost one, let's go through your points.

Do they show any withholdings for tax on these notices of payment? It can't be an invoice, as an invoice is a request for payment from the party that provided the service. 

If they have no invoice from you showing the VAT element, it's extremely worrying that they're withholding VAT as there is nothing for them to balance against in their accounts. I hate to say this, but if they do this with a lot of people they are simply getting a lot of VAT rebate from the German authorities illegally.

This is how it works : 

You go to the shop and pay 1,16 euro. The 1 euro is for the shop, and the 16cts is for Hacienda in the VAT return. When the shop pays its supplier, 16cts of its VAT paid to the supplier will write off the 16cts you've paid them, therefore they have nothing to pay Hacienda. The trouble in your case is that they do not pay you (their supplier) the 16cts and simply hold it. I see that as simply pocketing it.

If you were based in Germany, they would be in deep trouble. However, as you are based here, and earning well above the minimum required for enforced declaration via tax return, they have in effect transferred the problem to you. 

The good news is that their illegal VAT practices in Germany will be their headache - the bad news is that you definitely should be autonomo, pay your 250-ish euros a month, and declare a 3-monthly and yearly return. A gestoria would not charge you very much at all for this simplest of business with 1 client/1 supplier. You'd probably find it would be 30-50 euros a quarter, though obviously prices vary and so some shopping around is required.

The other good news is that cross border trading usually has no VAT applied as one country's industry does not pay into another's VAT system via its workforce. And now the other bad news : it would have to be determined what your actual position is. This is to do with what type of service/from whom/to whom within the EU as some type of services are exempt from VAT and if you're deemed to be working in Germany, albeit with your bum in Spain, etc etc. This has to be done by a Gestor as it can get complicated and decisions can be wrong, but will be damaging potentially if incorrect.

In summary (finally - phew!) 100% certain that you need to get advice NOW, preferably before the declaration closures in June as your income may not seem a lot, but it is very much so for tax purposes in Spain.

Regards,
Tallulah.


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## jojo (Sep 20, 2007)

Tallulah said:


> OK, Lost one, let's go through your points.
> 
> Do they show any withholdings for tax on these notices of payment? It can't be an invoice, as an invoice is a request for payment from the party that provided the service.
> 
> ...


:jaw::jaw::jaw:

jo


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## Tallulah (Feb 16, 2009)

lostinspain said:


> Hi Steve,
> Cheers for your reply.
> The company pays taxes here however have me registered as a "free lance" employee and see my tax issues as something I need to sort myself, however I work 40 hours a week in the office and have to take my orders e.t.c., so not really what I´d deem a freelancer.
> If I visit the gestor now, is it possible they can dob me in, or might I have to pay for the last 3.5 years of doing this?
> Yikes, getting scared now.


If the company are registered here and "pay taxes for you" - then at some point there may well be a balancing act where Hacienda ask you for your half of the "paid" slip. They do this on certain sums and also at random to check that what companies say is happening and visa versa with a subcontractor/autonomo. I'm surprised that this check hasn't happened yet but as it's less than 3,000 for any one "Invoice" I guess it'll be the random one that could be the problem.

I really don't think that they are paying tax for you here, but they may well have you down as a supplier of theirs based here... in which case, even more urgent for you to get a Gestor, quickly!!


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## lostinspain (May 15, 2009)

Tallulah said:


> OK, Lost one, let's go through your points.
> 
> Do they show any withholdings for tax on these notices of payment? It can't be an invoice, as an invoice is a request for payment from the party that provided the service.
> 
> ...


Wow, thank you very much for taking the time to write this to me, I really appreciate it.
These pay cheques are get are basically printed sheets, with invoice numbers and a VAT number (spanish one) as the company seems to pay tax in Spain also.
They dont sohw any with holdings for tax on my pay sheets.

All I get off my boss when I ask for proper employment, is that is costs to much and the face the pay slips are address to ireland, means I shouldnt worry, as the company has its own nose clean.

I´ve heard that Autonomo tax is 40%, thats a lot.

Also is it legal for the spanish tax man to look into my account or how do they track people down excactly?


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## lostinspain (May 15, 2009)

Tallulah said:


> If the company are registered here and "pay taxes for you" - then at some point there may well be a balancing act where Hacienda ask you for your half of the "paid" slip. They do this on certain sums and also at random to check that what companies say is happening and visa versa with a subcontractor/autonomo. I'm surprised that this check hasn't happened yet but as it's less than 3,000 for any one "Invoice" I guess it'll be the random one that could be the problem.
> 
> I really don't think that they are paying tax for you here, but they may well have you down as a supplier of theirs based here... in which case, even more urgent for you to get a Gestor, quickly!!


I think they bounce me off their tax as a expense.


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## SteveHall (Oct 17, 2008)

I am with Taliban. The whole thing does not "smell" right and I really think that you need to get professional help asap. (I also sense that you know that) 

I was in a similar situation a few years ago with a UK based company and I had a full tax audit - fortunately my gestor had tidied everything and we had accounted for everything (I even got a rebate!) I am not sure about the German VAT rate but there was an issue on where the IVA was claimed that actually worked in my favour. Still hairy days!


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## Tallulah (Feb 16, 2009)

lostinspain said:


> Wow, thank you very much for taking the time to write this to me, I really appreciate it.
> These pay cheques are get are basically printed sheets, with invoice numbers and a VAT number (spanish one) as the company seems to pay tax in Spain also.
> They dont sohw any with holdings for tax on my pay sheets.
> 
> ...


OK. Everyone has earning limits, whether they're autonomos or employees. Let's forget about options with monies earned as self employed (autonomos), such as dividends, etc and keep it simple, by simply stating that you earn as salary 25k euros. You as autonomo would have your fees deducted from that. Gestoria, SS, and any others you can claim. Let's say you're left with 20k after that - tax would be applied as if you were an employee earning 20k. Simple as that. 

Quite frankly your boss is in la-la land. Addressing a pay slip to China or Outer Mongolia means nothing. 25k arriving in your account every year from the company means a great deal and this will be your problem and I suspect an even bigger problem for them. 

The "tracking down" is a no-brainer. If you go to your Spanish bank during this period in the year of tax returns, and ask them for a "informacion fiscal de individuo" for you, you will get a copy of exactly what they have sent to Hacienda. As you can see there is no "tracking down" to do. All it will take is for someone in Hacienda to look at your paper return from the bank and say, "hmmm...let's have a look at this one".

Tallulah.

ps - I may be out of line here, but I think your worse case scenario could be 3.5 years of SS back payments which is 10.5k euros roughly plus backdated taxes and a hopefully not too big a "sancion" (fine). Whichever way you look at it, make the appointment with a Gestor and hope that you going to them will make the pain less than them coming to you.


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## SteveHall (Oct 17, 2008)

Yes, of course, the Spanish authorities have EVERY right to look into your accounts. The fact that your boss admits to why he is evading paying tax would NOT look good to them ......or me as a tax-payer here in Spain! 

Let's be SIMPLE: either he should be paying taxes for you (and there should be deductions from your gross figure) OR very clearly YOU should be paying as an autónomo.


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## Tallulah (Feb 16, 2009)

SteveHall said:


> Yes, of course, the Spanish authorities have EVERY right to look into your accounts. The fact that your boss admits to why he is evading paying tax would NOT look good to them ......or me as a tax-payer here in Spain!
> 
> Let's be SIMPLE: either he should be paying taxes for you (and there should be deductions from your gross figure) OR very clearly YOU should be paying as an autónomo.


Let's hope this has been some help to you Lost. Please tidy up the situation for your sake asap with a Gestor.


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## SteveHall (Oct 17, 2008)

Tallulah said:


> "hmmm...let's have a look at this one".
> 
> Tallulah.
> 
> ps - I may be out of line here, but I think your worse case scenario could be 3.5 years of SS back payments which is 10.5k euros roughly plus backdated taxes and a hopefully not too big a "sancion" (fine). Whichever way you look at it, make the appointment with a Gestor and hope that you going to them will make the pain less than them coming to you.


**I am not sure I agree (or even understand the whole story now!) 
I personally do not believe taxes have been paid and I think that Hacienda would take a similar view. 

I feel the authorities will go for getting taxes where they can most easily (viz Spain rather than Germany) and they will make the OP responsible. Then the battle will be a private one between OP and the company in Germany - the Hacienda and SS in Spain will absolutely not care. 

I am NOT a professional and I take no responsibility for any of these comments
but I think we all agree that you need advice ......and fast!


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## Tallulah (Feb 16, 2009)

SteveHall said:


> **I am not sure I agree (or even understand the whole story now!)
> I personally do not believe taxes have been paid and I think that Hacienda would take a similar view.
> 
> I feel the authorities will go for getting taxes where they can most easily (viz Spain rather than Germany) and they will make the OP responsible. Then the battle will be a private one between OP and the company in Germany - the Hacienda and SS in Spain will absolutely not care.
> ...


Yes, as Steve says and as I said ,10.5k to SS for autonomo back payments plus unpaid taxes to Hacienda plus any sanctions. I, like Steve, do not believe any taxes have been paid, simply becuase the company has already made it clear that you are self-employed and thus YOU are responsible for your taxes and anything else. 

I'm not a professional either and can only offer my advice from personal experience, but one thing in this scenario is clear - the company are not withholding for tax purposes and you are not declaring. Therefore this is clearly wrong and given the length of time it's been, requires it to be addressed professionally and quickly.

Tallulah.


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