# Spanish Tax on UK Employment Income



## Ellan_Vannin (May 26, 2008)

Hello,

I am thinking of moving to Spain later in the year and want to make sure I am clear about my tax liabilities.
I will be working on an oil platform on the UK Continental shelf for a company based in the UK so will be liable for UK income tax and NICS on my income from this employment.
I will be tax resident in Spain and understand that any income from employment outside of Spain through a non Spanish company is exempt from Spanish tax upto a certain level providing tax has already been paid on this income but I can not find any information anywhere as to what this level is.
I understand it was in excess of 60000 Euros in 2005.

Regards
EV


----------



## Stravinsky (Aug 12, 2007)

Ellan_Vannin said:


> Hello,
> 
> I am thinking of moving to Spain later in the year and want to make sure I am clear about my tax liabilities.
> I will be working on an oil platform on the UK Continental shelf for a company based in the UK so will be liable for UK income tax and NICS on my income from this employment.
> ...


Hiya

I have to admit I know nothing about what you are quoting .... if you are resident in Spain for more than 183 days then you are a tax resident normally and you would normally apply for tax zero rating in the UK and be liable for Spanish tax on your income. If something especially applies to you as an Oil worker then I'm not usre


----------



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

Sorry I don't know any limit - BUT certainly tax paid in one EEC country is tax acredited if you declare tax (and you will be from all accounts) in another. I pay some taxes (things like interest paid net) still in the UK and they are not re-taxed here.

It was the case (maybe still is) that countries in adjoining borders could pass tax from one to t'other (i.e live holland - work germany and you could choose where you paid) but the UK had the simple issue that it shares borders basically only with EIRE and to the best of my recollection it was a Euro only deal too. 

Spain will simply claim their dues from UK.

If I were you I'd find a good advisor/accountant. Surely an oil company MUST have folk on board who know this. But I have a visit with our advisor on Thursday - will see if there is any easy info to be had.

Take into account that capital is STILL (though is set to go next year) TAXED in Spain. So capital you have outside Spain LEGALLY should be declared. 

As soon as you set the mailing address on a UK bank to you Spanish address - Spain will know! - European Savings Directive.


----------



## Ellan_Vannin (May 26, 2008)

Hi,

Thanks for the responses.
The references I have are as follows:

From the book "Living in Spain" written by Blevins Franks which was published in 2005 it states that the limit for exemption from Spanish Income Tax is up to 60,101.21 Euros per year.

Also from here "www(dot)financialadviceinspain(dot)com/dl/Spain%20Tax%20guide.pdf"
"Income generated from employment overseas (i.e. outside of Spain) are tax exempt up to a certain limit provided that the work is
undertaken for a company non-resident in Spain or for a permanent establishment located outside of Spain and provided that a tax
similar to the Spanish Personal Income Tax is applied in the territory where the work is undertaken. In addition the territory must
not be considered a ‘tax haven’ by the Spanish tax authorities."

I think that this is the section of the Spain - UK Tax treaty that the above refers to Spain: double taxation agreement, Article 15 Employments on the HMRC site.

I am indeed going to get professional tax advice as I think my situation could become quite complicated but I want to make sure I have a good handle on my options before I do so.

If you could find out what the current limit is from your advisor it would be much appreciated

Regards
EV


----------



## crookesey (May 22, 2008)

Stravinsky said:


> Hiya
> 
> I have to admit I know nothing about what you are quoting .... if you are resident in Spain for more than 183 days then you are a tax resident normally and you would normally apply for tax zero rating in the UK and be liable for Spanish tax on your income. If something especially applies to you as an Oil worker then I'm not usre


OK but what would happen in respect of the following.

You buy your Spanish property either in your name or in that of a UK Ltd company. You don't open a Spanish bank account, instead you open something like a Nationwide FlexAccount where you charge the card up in the UK by telephone or internet instructions and use Spanish ATM's to withdraw money and use your card to make purchases, pay bills etc; free of any bank charges.

How would the Spanish Authorites have any idea if you had spent more than 183 days in the country? Passports are no longer date stamped and other than you telling the authorities why would they ask? This is particulally relevant to people who do no paid work in Spain, such as the over 65's living on UK pensions and UK savings and wanting to fully utilise their UK tax allowances of £9030 each.


----------



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

More and more UK banks are forced to declare clients in other EEC countries. As long as you retain a UK address for all mail - you might get away with it. 

THE MINUTE you ask for statements etc to be sent to Spain (new accounts anyway) - Spanish inland revenue is advised. You'ld have to run a UK registered car - and make sure it's taxed/mot'd insured etc. Need a doctor? after you've had a couple of "holiday" visits to your local Spanish GP - they'll know.

Loopholes are being shut very fast at the mo' - mostly to deal with other illegal immigrants. But being resident here and not registerred as such - makes you just that - illegal. Once it's all electronically centralised (and that's soon btw) - my guess is that loads will get caught.

I've lived around banks most of my life - changing currencies ALWAYS costs money - but they're good at making it less visible now.


----------



## crookesey (May 22, 2008)

chris(madrid) said:


> More and more UK banks are forced to declare clients in other EEC countries. As long as you retain a UK address for all mail - you might get away with it.
> 
> THE MINUTE you ask for statements etc to be sent to Spain (new accounts anyway) - Spanish inland revenue is advised. You'ld have to run a UK registered car - and make sure it's taxed/mot'd insured etc. Need a doctor? after you've had a couple of "holiday" visits to your local Spanish GP - they'll know.
> 
> ...


Are you saying that only residents can buy and run Spanish registered cars? I thought that all that was required was a Spanish ID card, Spanish insurance and a full UK driving licence.


----------



## Stravinsky (Aug 12, 2007)

crookesey said:


> Are you saying that only residents can buy and run Spanish registered cars? I thought that all that was required was a Spanish ID card, Spanish insurance and a full UK driving licence.


Well in theory a Spanish resident cannot drive a UK plated car, because as a Spanish resident you should be matriculating it.

To register our Spanish car in our name we had to produce (this was 12 months ago) our Padron, NIE, passport, and now I have been told people are often being asked for your residence certificate also.

As time goes on, more and more things will require you to produce your resident certificate, and that hopefully will go a long way to flushing out the illegals here.


----------



## covfan71 (Apr 10, 2008)

I thought you had to have a spanish bank account and NIE number in order to pay bills etc.


----------



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

crookesey said:


> Are you saying that only residents can buy and run Spanish registered cars? I thought that all that was required was a Spanish ID card, Spanish insurance and a full UK driving licence.


And just how do you expect to get a valid SPANISH ID CARD if you're not 
1) Spanish Citizen
2) Resident in Spain.
?

To get the old NIE ID you had to be empadronado in order to show a SPANISH residence!

btw anybody who thinks the Spanish plod dont know where to look for a UK tax disc - the ones put on traffic duty do!


----------



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

covfan71 said:


> I thought you had to have a spanish bank account and NIE number in order to pay bills etc.


You only need the account if you wish to pay by DD. 

Many small town halls go one futher - and road tax is a LOCAL TAX. They insist on a bank in the same town. 

The bill will be sent to your SPANISH address (so they'll know where you are!) and just about EVERY SPANISH DATABASE is indexed on DNI/NIE as it's UNIQUE

You can escape the bank bit by paying cash naturally - but woe betide you if you're late paying.


----------



## crookesey (May 22, 2008)

Stravinsky said:


> Well in theory a Spanish resident cannot drive a UK plated car, because as a Spanish resident you should be matriculating it.
> 
> To register our Spanish car in our name we had to produce (this was 12 months ago) our Padron, NIE, passport, and now I have been told people are often being asked for your residence certificate also.
> 
> As time goes on, more and more things will require you to produce your resident certificate, and that hopefully will go a long way to flushing out the illegals here.


You have hit the nail firmly on the head as some members of this forum are making me feel like a potential 'illegal'.

I am very familiar with the UK taxation system and am happy to remain within its perimeters, I am not some kind of 'Jack The Lad' who wants to come over and abuse the Spanish taxation system. In the UK I am able to move investment income between my wife and myself in order to utilise all of our tax allowances. I am also familiar with the taxation rules applicable to both on shore and off shore bonds.

One poster intimated that Barclays had been ordered to supply the UK Revenue with details of their clients off shore investments. If this were so there would be no off shore investment houses, Gordon Brown attempted such a move in respect of Isle of Man accounts back in 1997 but was told to go forth and multiply. However all withdrawals that are brought back on shore with the exception of 5% of capital withdrawals per annum in respect of bonds are liable to taxation.

There is also much ambiguity between forum members on the simple matter of car ownership. Are all the car store companies scattered around Spanish airports housing illegally owned Spanish registered vehicles? I think not.

So why would the Spanish authorities not want us in their country? We would pay taxes on the purchase of a property and everything associated with it. We would pay rates, VAT on everything that we purchase and most probably employ Spanish people to maintain our home and service and repair our car etc; etc. I wager that we will bring more into the Spanish economy than some so called legals.

If we have to leave Spain every 182 days to prove that we are not residents then so be it. We will simply book into a hotel in Gibraltar or Portugal for the prescribed period of absence and retain our bill as proof of us leaving Spain.

We are not Colombian drug runners, just a couple of UK pensioners wishing to get out of this over governed hell hole and live out the remaining years of our lives in an area of Spain that we are comfortable with.


----------



## felix (Mar 24, 2008)

Hi Ellan
There is no change for the time being so the level is still 60.100 euros

Section 7.p of 35/2006 of General Income Tax Act IRPF and Section 6 of the Regulations of the Personal Income Tax Real Decreto 439/2007 provide rules about this exemption


----------



## Stravinsky (Aug 12, 2007)

crookesey said:


> There is also much ambiguity between forum members on the simple matter of car ownership. Are all the car store companies scattered around Spanish airports housing illegally owned Spanish registered vehicles? I think not.
> 
> If we have to leave Spain every 182 days to prove that we are not residents then so be it. We will simply book into a hotel in Gibraltar or Portugal for the prescribed period of absence and retain our bill as proof of us leaving Spain.
> 
> We are not Colombian drug runners, just a couple of UK pensioners wishing to get out of this over governed hell hole and live out the remaining years of our lives in an area of Spain that we are comfortable with.


I just tell you the laws as we have discovered them on the gound here Crookesey, from my solicitor, from people who have gone through the system, and from my gestoria.

As I said to someone on another forum, people can either choose to adhere to the laws of the land they reside in, or they can choose to live outside those laws. Its their choice, as long as it doesn't effect me. Car laws effect me, and thats why I am vocal about it

I say it again .... forget 183 days. Thats fiscal residency talk. If you come to Spain to reside then you are required to register as a resident within either 30 or 60 days, depending on which version you prefer of it 

The Spanish Police are not stupid. The days of running over the border for a fuel receipt are long gone.


----------



## Ellan_Vannin (May 26, 2008)

felix said:


> Hi Ellan
> There is no change for the time being so the level is still 60.100 euros
> 
> Section 7.p of 35/2006 of General Income Tax Act IRPF and Section 6 of the Regulations of the Personal Income Tax Real Decreto 439/2007 provide rules about this exemption


Hi Felix,

Thanks very much for your reply and the info, I was beginning to think that this thread had been hijacked!


----------



## Big Pete (Aug 7, 2007)

crookesey said:


> You have hit the nail firmly on the head as some members of this forum are making me feel like a potential 'illegal'.
> 
> I am very familiar with the UK taxation system and am happy to remain within its perimeters, I am not some kind of 'Jack The Lad' who wants to come over and abuse the Spanish taxation system. In the UK I am able to move investment income between my wife and myself in order to utilise all of our tax allowances. I am also familiar with the taxation rules applicable to both on shore and off shore bonds.
> 
> ...


Good on you , well put 

he he hell hole


----------



## Ellan_Vannin (May 26, 2008)

crookesey said:


> If we have to leave Spain every 182 days to prove that we are not residents then so be it. We will simply book into a hotel in Gibraltar or Portugal for the prescribed period of absence and retain our bill as proof of us leaving Spain.


The 183 day rule is for a calandar year i.e 1 January to 31st of December and doesn't have to be consecutive days. Temporary days absences from Spain can be ignored unless it can be proved that the individual has an habitual residence in another country for more than 183 days of the year.

EV


----------



## felix (Mar 24, 2008)

Individuals are deemed to be residents in Spain when they are under any of the following circumstances:
• They remain in Spain for more than 183 days during a complete tax year (i.e. 1 January to 31 December). In order to determine the period of stay, sporadic absences are taken in the count, except those where the tax residence in another country is proved. In the case of countries or territories considered as tax havens, the Tax Administration can demand proof of stay in that 'tax haven' over a period of 183 days in a calendar year.
• Their main base or centre of activities or economic interests is, directly or indirectly, in Spain. Also, it is presumed, except if proved otherwise, that a taxpayer has his tax residence in Spain when, using the above criteria, his spouse -not legally separated- and underage dependent children are permanent residents in Spain.
An individual will be considered either as resident or nonresident for the whole calendar year, because a change of residency does not
interrupt the taxable period.
Accreditation of fiscal residence
Tax residence is proved by a certificate issued by the competent Tax Authority of the country concerned. The period of validity of
these certificates is one year. A person may have a residence permit or administrative residence in a State and not be considered a resident therein for tax purposes.


----------



## covfan71 (Apr 10, 2008)

Can someone answer me this then I plan to move to Spain next year and declare as a resident. I may well have to go back to UK once a month to work as it's a better wage back home. As i understand it my wage will be taxed in UK but What taxes will i have to pay in Spain?


----------



## Stravinsky (Aug 12, 2007)

covfan71 said:


> Can someone answer me this then I plan to move to Spain next year and declare as a resident. I may well have to go back to UK once a month to work as it's a better wage back home. As i understand it my wage will be taxed in UK but What taxes will i have to pay in Spain?


What do you mean by "once a month" (a couple of days, a month?) and when you mean work do you mean building, teaching, i.e. self employed or contracted


----------



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

crookesey said:


> One poster intimated that Barclays had been ordered to supply the UK Revenue with details of their clients off shore investments. If this were so there would be no off shore investment houses, Gordon Brown attempted such a move in respect of Isle of Man accounts back in 1997 but was told to go forth and multiply. However all withdrawals that are brought back on shore with the exception of 5% of capital withdrawals per annum in respect of bonds are liable to taxation.


Not INTIMATE - PURE FACT. If you attemt to opn a NEW account now in the UK and quote the address as Spain, you WILL BE ASKED FOR DOCUMENTATION (incl your NIE) - the Spainish revenue service WILL be informed. It also applies to certain offshore banking areas.

BUT THIS FROM A GIB' OFSHORE BANKING SITE

NB: The EU's Savings Tax Directive, which came into force on 1st July, 2005, means that for all citizens of EU member states there is an exchange of information between the Gibraltar authorities and the individuals' home tax authorities in regard to payments of interest and other returns on savings. The Directive does not however apply to payments to corporate bodies. 

AFAIK, NO EU BASED/ALLIED OFFSHORE BANKING HAVEN IS EXEMPT - MADIERA WAS - I've a friend who DOES use places like the Bahamas due to this.

At the moment the inland revenues across Europe are exchanging info. The current fly in the ointment is the UK - My contact believes it is mostly due to do with the UKs financial year not matching the Caledar year (as in most countries). She has also heard of accounts being frozen. Your call.


----------



## crookesey (May 22, 2008)

chris(madrid) said:


> Not INTIMATE - PURE FACT. If you attemt to opn a NEW account now in the UK and quote the address as Spain, you WILL BE ASKED FOR DOCUMENTATION (incl your NIE) - the Spainish revenue service WILL be informed. It also applies to certain offshore banking areas.
> 
> BUT THIS FROM A GIB' OFSHORE BANKING SITE
> 
> ...


Offshore doesn't mean Gibraltar, the Isle of Man is totally secure, if it wasn't why the hell would people use it? Contacts are strange bedfellows, I have only been in the investment industry since Adam was a lad, so what would I know?


----------



## covfan71 (Apr 10, 2008)

i mean going home for a week once a month to work on the railways


----------



## Ellan_Vannin (May 26, 2008)

If you have an offshore bank account on the Isle of Man and are an individual resident in an EU State you can elect to have your details (i.e. residency,interest received etc.) disclosed to the Manx tax authorities who will in turn disclose these to the tax authorities of your residence. In this case interest will be received tax free in the Isle of Man, however you can elect to not have your details disclosed by the bank in which case there will be a witholding tax of 15% rising to 20% from 1 July 2008 and then 35% from 1 July 2011.

EV


----------



## Stravinsky (Aug 12, 2007)

crookesey said:


> Offshore doesn't mean Gibraltar, the Isle of Man is totally secure, if it wasn't why the hell would people use it? Contacts are strange bedfellows, I have only been in the investment industry since Adam was a lad, so what would I know?



Well I'm with Chris on this one. 

We live here. We've experienced what happens, we've been to the tax offices, tax consultants who are expert in *Spanish* Tax laws, and also I consulted with an international tax consultant before I came here. Maybe they're all wrong, who knows


----------



## Stravinsky (Aug 12, 2007)

covfan71 said:


> i mean going home for a week once a month to work on the railways


You will however be a Spanish resident. My "income" comes from the UK. I go back fairly regularly, but my main place of residence is Spain. And as such I am de registered for tax in the UK and I pay it here.

Although, as we have said here many many times, you wont pay tax twice because of reciprocal arrangements, tax is normally paid in your main place of residence, where indeed you will become a fiscal resident here anyway after 183 days


----------



## crookesey (May 22, 2008)

Stravinsky said:


> Well I'm with Chris on this one.
> 
> We live here. We've experienced what happens, we've been to the tax offices, tax consultants who are expert in *Spanish* Tax laws, and also I consulted with an international tax consultant before I came here. Maybe they're all wrong, who knows


Ok you win, as soon as you transact any business in the Isle of Man they immediately inform every tax authority in the world. 

The revenue require resonable cause to pry into anyones private and personal affairs, this is not yet the Soviet Union (Mr Brown is working on it though).


----------



## Stravinsky (Aug 12, 2007)

crookesey said:


> Ok you win, as soon as you transact any business in the Isle of Man they immediately inform every tax authority in the world.
> 
> The revenue require resonable cause to pry into anyones private and personal affairs, this is not yet the Soviet Union (Mr Brown is working on it though).


Crooksey, I'm not any expert on what the IOM do and dont do, all I'm telling you is what you _should_ be declaring here. The offshore investment will form part of your wealth tax portfolio. Wealth tax is payable on your worldwide assets and investments.

Now if you choose to _not_ declare that then it is up to you, but all I can tell you is that there are big fines.

Also it is absolutely true that there was a court case with Barclays Bank that finalised in them being made to disclose all their offshore account / investors records (presumably as they felt they were not being declared). One presumes therefore that _all_ banks have now fallen into line with this and offshore accounts are now the common knowledge of HMRC .... and will be in turn eventally common knowledge of the Spanish Tax authorities when they sort out the non residents.


----------



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

Stravinsky said:


> The offshore investment will form part of your wealth tax portfolio. Wealth tax is payable on your worldwide assets and investments.


I'm informed that NEXT year you will NOT have to declare "Patrimonio" btw.  - Interest accrued overseas - YES.


----------



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

crookesey said:


> Ok you win, as soon as you transact any business in the Isle of Man they immediately inform every tax authority in the world.


ONLY the EU afiak. Whilst I'm sure it's irksome to IOM banks that despite having certain advantages they are bound as being part of the EU - losing their IBAN/BACS/SWIFT status would KILL THEM STONE DEAD. 

Many US (and yes - Russian/Chinese etc) banks suffer that that are unable to obtain such. And as a result have to PAY another bank to do their international transactions. First hand experience. Somebody ends up paying this fee & it's NEVER the banks themselves!

There used to be (for example) an easy way to "hide" cash. Put it into a UK building Society WITHOUT international status. I believe there are still one or two. But getting at the contents mean visiting in person or going via another UK bank etc and so it's visible all of a sudden.

Has nowt to do with Brown - it's been on its' way for a LONG time.


----------



## crookesey (May 22, 2008)

Stravinsky said:


> Crooksey, I'm not any expert on what the IOM do and dont do, all I'm telling you is what you _should_ be declaring here. The offshore investment will form part of your wealth tax portfolio. Wealth tax is payable on your worldwide assets and investments.
> 
> Now if you choose to _not_ declare that then it is up to you, but all I can tell you is that there are big fines.
> 
> Also it is absolutely true that there was a court case with Barclays Bank that finalised in them being made to disclose all their offshore account / investors records (presumably as they felt they were not being declared). One presumes therefore that _all_ banks have now fallen into line with this and offshore accounts are now the common knowledge of HMRC .... and will be in turn eventally common knowledge of the Spanish Tax authorities when they sort out the non residents.


I will try once more, 90% of Isle of Man investment goes into Capital Investment bonds that are classed for Revenue purposes as Single Premium Life Assurance Contracts and are not declarable in your worldwide wealth declaration. Only on encashment of anything over 5% of the initial investment in any one tax year would trigger a cargeable event. I would not argue that this 5% is not declarable. 

After 20 encashments of 5% of the initial capital would the balance could be left within the bond so is still none declarable. Only on encashment would it form part of your world wide wealth. This is why they were devised by people on far better pay cheques than us.

Don't just dismiss everything out of hand, check it out.


----------



## Stravinsky (Aug 12, 2007)

crookesey said:


> .
> Don't just dismiss everything out of hand, check it out.


OK, will do


----------

