# Residency/Taxation Telecommuting



## Muenchkin (May 31, 2013)

Hola!

I have some questions about obtaining residency and paying taxes in Spain (or Italy or France).

First, I'm an American citizen who's been working in Germany for 6 years. If my firm agrees, I'm considering moving to Spain (or Italy or France).and keeping my German job by telecommuting.

I assume that obtaining Spanish residency would not be too difficult as long I have a steady income, but if anyone thinks there would be any problems, please let me know.

The main questions are about taxation. If I were to keep my German job, would I still pay income tax to Germany instead of Italy? Also, would I be able to keep my German health insurance and pension payments, or would I have to switch everything over to Italy and pay there instead? My firm has no presence in Italy.

I should note that, as far as I'm concerned, keeping all taxation (income/health/pension) as the status quo in Germany is my preference, mainly because it would be easier to convince my firm to cooperate if it didn't complicate their accounting and paperwork. Or has anyone done this and found that the accounting/paperwork is not a problem?

Muchas gracias!

David


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## xabiaxica (Jun 23, 2009)

Muenchkin said:


> Hola!
> 
> I have some questions about obtaining residency and paying taxes in Spain (or Italy or France).
> 
> ...


as an EU citizen you'd need to show a steady income

as a US citizen it's not quite that simple - you'd need to get a resident / work visa - probably easiest would be for your company to apply for you, assuming they have a presence in Spain

they'd have to prove that no EU citizen was capable of doing the job though......

if you did manage to achieve this - the tax situation would be complex - but at the very least you'd be tax resident here & have to submit a tax return each year - although if there are dual tax treaties in place you wouldn't have to pay twice

as far as healthcare is concerned - I think there's a reciprocal agreement with Germany, which would mean you could access state healthcare here


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## Muenchkin (May 31, 2013)

xabiachica said:


> as an EU citizen you'd need to show a steady income
> 
> as a US citizen it's not quite that simple - you'd need to get a resident / work visa - probably easiest would be for your company to apply for you, assuming they have a presence in Spain
> 
> ...


xabiachica,

Thanks for your reply.

I know that an non-EU citizen needs the appropriate residency/work visas; however, it seems that for US citizens, this is pretty easy in most EU countries. If nothing else, I can take the German test for my B1 certificate and obtain permanent EU residency, which would allow me the right to live and work in most countries in the EU (I assume Spain is not an exception).

When it comes to the tax issues, I don't care if I have to file a Spanish tax return. What matters most to me is that my firm would not have to deal with complicated tax issues. I were able to pay income/healthcare/pension taxes to Germany, nothing would change for my firm, and I would be happy to hire an accountant in Spain to do my Spanish return, assuming I would not owe anything due to the ES/DE tax treaty.

If, however, my firm's accounting department has to deal with the Spanish authorities and paperwork in Spanish, they are less likely to allow something so complicated for them.

So, I guess, what I'm asking is, do you know which country actually takes these payroll/health/pension tax deductions monthly if I telecommute in Spain for a German company?

My company has no presence in Spain, so I would not be taking a job from a Spanish employee - without me to fill it in Spain, the job only exists in Germany.

Thanks again!
David


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## xabiaxica (Jun 23, 2009)

Muenchkin said:


> xabiachica,
> 
> Thanks for your reply.
> 
> ...


it really* isn't* easy for the majority of US citizens to get resident/work visas in Spain - however, since you've already been in Germany for 6 years, if you qualified for the 'EU permanent residency route' that's a different issue - if you don't, then it's extremely unlikely that you'd manage to get that visa

you really need to speak to a tax expert about the tax/NI/healthcare issue though - because it IS complicated


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## NickZ (Jun 26, 2009)

A few thoughts.

Countries are starting to crack down on the sort of thing you're suggesting. Ryanair was/is claiming it's flight staff were Irish residents. In spite of the fact they never got within 1000km of Ireland.

You then have the contract versus actual employee. If you're an employee your company would have a presence in the country. You. If you're considered self employed then that means you're covered by those rules.

I can't imagine you could get away without paying local taxes in the country you're working in. You might get away with the social contributions (Pension etc) but you'll have to check the various treaties.


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## Muenchkin (May 31, 2013)

NickZ said:


> A few thoughts.
> 
> Countries are starting to crack down on the sort of thing you're suggesting. Ryanair was/is claiming it's flight staff were Irish residents. In spite of the fact they never got within 1000km of Ireland.
> 
> ...


Thanks, Nick.

As I've said, I don't particularly care who get my tax contribution; I'm more concerned about how complicated it would be for my firm. I could go self employed to make it easier, provided I don't get hit by crippling VAT taxes that I can't ask my "employer" to pay. 

Portugal now has a scheme to attract income into the country. It seems that for 10 years a foreign national with a foreign source of income can live in Portugal and pay taxes only in the country from which the income is paid. If additional income is earned from a Portuguese source, there is flat rate on the that tax. It's actually quite a smart stimulus measure - money flows into the country and is spent there without any Portuguese citizen losing a potential job.

It's a shame that otherwise highly-developed countries throughout the Western world will probably take years (decades?!) to keep up with technology that allows for a far more fluid workforce. The tax/residency laws in nearly every country are still living in the pre-1990's era.

Imagine the benefits all around. An economically strong country like Germany will (generally) enjoy low unemployment but suffer from inflation, particularly in housing costs, as the citizens of less economically strong stream over the border. Meanwhile, countries with high unemployment suffer from the brain drain. Not only would countries like Germany benefit from the lower overhead of having employees work through technology that's been around for two decades, countries who need the stimulus would benefit from the influx in disposable income. All they (all) need to do is simplify the taxation and residency requirements to make it not only possible, but easier.

Thanks again for the reply.
David


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## WorkFromHome (Jun 7, 2015)

Muenchkin said:


> Thanks, Nick.
> 
> As I've said, I don't particularly care who get my tax contribution; I'm more concerned about how complicated it would be for my firm. I could go self employed to make it easier, provided I don't get hit by crippling VAT taxes that I can't ask my "employer" to pay.
> 
> ...



David, I am curious how you wound up dealing with this situation? I also was looking at Portugal if I get a hard time dealing w/ my tax issue here in Spain
thx


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