# Complicated Tax Situation



## casiocalc (Apr 16, 2016)

Hello everyone,

I'm hoping I can get some help or direction here in relation to a complicated tax situation.

I am an Irish citizen and work in the Middle East earning a tax free salary. My wife is Spanish and lives in Spain with our kids. Whenever I get vacations I go to Spain to be with the family but I spend only a few weeks a year there.

I think under Spanish tax law that I may be liable for tax in Spain. I have found a few companies online that deal with tax issues for foreigner's who work/live in Spain and I have contacted approximately 4 or 5 of these companies and explained my situation, unfortunately, they have either failed to respond or responded telling me that I need specialist who is familiar with Spanish/Middle East tax law and that they were unable to help.

I don't speak much Spanish so I need someone who I can deal with in English.

This is worrying me quite a bit as I don't want to find out I am living and working in the desert trying to save money for the family only to find out that I may be hit with a bit tax bill when I finally join my family in Spain.

Any advice or guidance would be greatly appreciated.

Regards,

Casio


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## davexf (Jan 26, 2009)

Hola 

The simplest answer is try Blevins Franks - I have no connection with the company but know the do specialise in reducing ex-pats tax 

Davexf


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## snikpoh (Nov 19, 2007)

casiocalc said:


> Hello everyone,
> 
> I'm hoping I can get some help or direction here in relation to a complicated tax situation.
> 
> ...


I can't really help you much other than to point out the law.

*If* you are in Spain for more than 183 days per calendar year *or* your centre of economic interests are in Spain, then you should pay tax in Spain.

By centre of 'economic interests' I think they mean that you either have your main residence in Spain and/or your family live in Spain.

So, as I understand your situation, you meet both those criteria so should be paying tax in Spain.


Have you tried contacting Blevins Franks in Spain? They should be able to advise.


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## AllHeart (Nov 22, 2013)

When you say your earnings in the Middle East are tax free, do you mean you're not paying taxes on your income in the Middle East or in Ireland?


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## snikpoh (Nov 19, 2007)

AllHeart said:


> When you say your earnings in the Middle East are tax free, do you mean you're not paying taxes on your income in the Middle East or in Ireland?


Ireland's got nothing to do with it - the OP was just born there. Any tax due is either here in Spain or in the Middle East.


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## xabiaxica (Jun 23, 2009)

snikpoh said:


> Ireland's got nothing to do with it - the OP was just born there. Any tax due is either here in Spain or in the Middle East.


If it's tax free in the Middle East & he can somehow prove that _*his*_ residency is there, then he won't be paying tax anywhere

As you say though, as far as the tax office in Spain is concerned, he's almost certainly tax resident here


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## CapnBilly (Jun 7, 2011)

Spanish tax legislation is quite clear in that if you have a spouse and children, who are resident in Spain and dependant on you, then you are also assumed to be tax resident, unless you can prove to the contrary that you are tax resident somewhere else. This would normally be a certificate of fiscal residence. The key point here is that it's upto you to resolve the situation, because otherwise you are already considered tax resident in Spain.

You also need to be aware of any double tax agreement between Spain and the country where you work. There are a number of agreements between Spain and countries in the Middle East. If you are condidered resident by both countries, then this will be the determiner. The standard clauses are normall firstly where you have a permanent home, and if you have homes in both, then the base of your personal and economic interests are based.

The statue of limitations in Spain is essentially 4.5 years from the end of a year, so it's in your interests to resolve the situation. You should seek professional advice as soon as possible.


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## AllHeart (Nov 22, 2013)

I'm just wondering how anyone can have a tax-free income  Unless the income is so low that taxes aren't due? :confused2:


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## xabiaxica (Jun 23, 2009)

AllHeart said:


> I'm just wondering how anyone can have a tax-free income  Unless the income is so low that taxes aren't due? :confused2:


There is no income tax (generally) in the UAE https://en.wikipedia.org/wiki/Taxation_in_the_United_Arab_Emirates

I don't think incomes are low either .....


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## AllHeart (Nov 22, 2013)

xabiachica said:


> There is no income tax (generally) in the UAE https://en.wikipedia.org/wiki/Taxation_in_the_United_Arab_Emirates
> 
> I don't think incomes are low either .....


Interesting! I didn't know that. Thank you.


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## casiocalc (Apr 16, 2016)

Thanks folks.

I think all of the Gulf Cooperation Council (GCC) countries such as UAE, Qatar, Saudi Arabia and Kuwait etc. are all the same and do not have any income tax, so you pay zero tax regardless of income level. As regards getting some sort of tax fiscal certificate here that's probably impossible considering there is no tax office here.

I can prove my residence in the country I am currently in (lets say UAE) as I have a residence permit and wouldn't be allowed to work here otherwise so that's not an issue. 

Would the Beckham Rule come into play though?

I will try again to get professional advice asap because if I have to pay upto approx 50% tax on what I am earning now then its time for me to hand in my notice and get on the first plane out of here.


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## Lynn R (Feb 21, 2014)

casiocalc said:


> I will try again to get professional advice asap because if I have to pay upto approx 50% tax on what I am earning now then its time for me to hand in my notice and get on the first plane out of here.


I think most European countries have similar rules on establishing where your centre of economic interest is to determine your tax residence. Probably the only way to ensure your income really is tax free would be for your family to join you where you are working.


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## casiocalc (Apr 16, 2016)

Lynn R said:


> I think most European countries have similar rules on establishing where your centre of economic interest is to determine your tax residence. Probably the only way to ensure your income really is tax free would be for your family to join you where you are working.


Not so easy I'm afraid. I live in a construction camp in the desert with about 5,000 other men and no ladies allowed.


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## xabiaxica (Jun 23, 2009)

casiocalc said:


> Thanks folks.
> 
> I think all of the Gulf Cooperation Council (GCC) countries such as UAE, Qatar, Saudi Arabia and Kuwait etc. are all the same and do not have any income tax, so you pay zero tax regardless of income level. As regards getting some sort of tax fiscal certificate here that's probably impossible considering there is no tax office here.
> 
> ...


I've known families leave Spain once they discover that the parent working tax free outside Spain, will have to pay tax here.


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## Lynn R (Feb 21, 2014)

casiocalc said:


> Not so easy I'm afraid. I live in a construction camp in the desert with about 5,000 other men and no ladies allowed.


But presumably accommodation for your family could be rented in another more salubrious location in the same country? My sister's sister-in-law spent several years in Dubai when her husband was working there, during which time she had 3 children (with live in servants to help) and even got a job as an occupational health nurse with the Emirates airline.

I am sorry if this sounds harsh, but there is no reason, really, why your wife and children should avail themselves of the safety, amenities and public services which Spain provides, if the family is not contributing taxes to help pay for it all. Yes, I know you pay for accommodation here and spend money in the shops, etc., but so do all the other families who live and work here AS WELL AS paying income tax, not instead of.


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## casiocalc (Apr 16, 2016)

Lynn R said:


> But presumably accommodation for your family could be rented in another more salubrious location in the same country? My sister's sister-in-law spent several years in Dubai when her husband was working there, during which time she had 3 children (with live in servants to help) and even got a job as an occupational health nurse with the Emirates airline.
> 
> I am sorry if this sounds harsh, but there is no reason, really, why your wife and children should avail themselves of the safety, amenities and public services which Spain provides, if the family is not contributing taxes to help pay for it all. Yes, I know you pay for accommodation here and spend money in the shops, etc., but so do all the other families who live and work here AS WELL AS paying income tax, not instead of.


My position here is not permanent. This construction project will end and I will have to find another position who knows where. I appreciate your comment about not contributing to Spanish taxes but at the same time if I opted to stay in Spain with the family and be unemployed I wouldn't be contributing either. I work from 6am to 6pm 6 days a week, live in a shoe box in the desert, eat prison food, have no western work colleagues and get to see the family for 12 days every 4 months. I'm doing this to try and provide a better life for my kids. If it turns out that the I have to pay half of what I earn to the Spanish tax authorities then all this hardship just isn't worth it and its time to go back to Spain and look for plan B.


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## Overandout (Nov 10, 2012)

Lynn R said:


> I am sorry if this sounds harsh, but there is no reason, really, why your wife and children should avail themselves of the safety, amenities and public services which Spain provides, if the family is not contributing taxes to help pay for it all. Yes, I know you pay for accommodation here and spend money in the shops, etc., but so do all the other families who live and work here AS WELL AS paying income tax, not instead of.


I realise that you have started your post with a disclaimer, but I think it sounds more than harsh.

Who are you, (or who are we collectively as expats in Spain) to say that a Spanish woman and her children should not be living in Spain and take advantage of its services?

Yes, there is a chance that the OP will have a tax burden in Spain, and he is trying to regulate this and has come to the forum for help. But to suggest that his Spanish wife should not be living in Spain because of the tax situation of her husband is beyond my comprehension. Many Spanish people do not contribute (or contribute less than they should and are not trying to regulate their situations), yet gain from tax subsidised services.


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## Lynn R (Feb 21, 2014)

Overandout said:


> I realise that you have started your post with a disclaimer, but I think it sounds more than harsh.
> 
> Who are you, (or who are we collectively as expats in Spain) to say that a Spanish woman and her children should not be living in Spain and take advantage of its services?
> 
> Yes, there is a chance that the OP will have a tax burden in Spain, and he is trying to regulate this and has come to the forum for help. But to suggest that his Spanish wife should not be living in Spain because of the tax situation of her husband is beyond my comprehension. Many Spanish people do not contribute (or contribute less than they should and are not trying to regulate their situations), yet gain from tax subsidised services.


I am saying that if a family has a sizeable income (as presumably one where the main or only earner is earning a tax free income in the UAE does) then it is reasonable to expect that they will contribute to the services of the country they live in. Many Spanish people don't contribute because they don't have any income to contribute, being unemployed, and I certainly don't condone the activities of any Spanish (or non Spanish) person who lives here and contributes less than they should.

Rather than regulating his situation, I understand from the OP's comments that he is not prepared to pay Spanish tax on his income, full stop. He would not be taxed at 50% on his total income anyway, as I am sure he knows the tax is applied in bands and the top rate of tax is now 49%.

And by the way, I didn't suggest that his Spanish wife shouldn't be living in Spain. What I said was that if his wife and children were to live in the country where he works, that would probably be the only way he could be sure of keeping his income totally free of tax. You say he wants to regulate his situation - well, that's one way he could do it, and I've yet to hear of another which would be completely legal.


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## casiocalc (Apr 16, 2016)

CapnBilly said:


> The statue of limitations in Spain is essentially 4.5 years from the end of a year, so it's in your interests to resolve the situation.


Sorry, what do you mean by the statue of limitations being 4.5yrs?


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## AllHeart (Nov 22, 2013)

casiocalc said:


> Would the Beckham Rule come into play though?


I think you have to live in Spain for this. But not sure. Here it is:

Beckham's Law survives


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## CapnBilly (Jun 7, 2011)

casiocalc said:


> Sorry, what do you mean by the statue of limitations being 4.5yrs?


Under the tax legislation the Hacienda have 4 years from the day following voluntary submission of a tax return to charge you any tax that is due. The last day is normally the end of Juneish. So if they decide you are tax resident they can go back to the years which fall within this period, and charge you tax for your income during those years.

So, if it was today, they could seek submission of returns and any tax from 2011 onwards, or the year you became resident, if this was later. In addition to any fines there would be interest payable on any tax due of 5% per quarter for the first year, plus a further 5% for every further year.


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## casiocalc (Apr 16, 2016)

I've been trying to get more clarification on my issue. I received the below response today from a Spanish specialist firm based in Spain. Based on this response as I can clearly prove my residence in UAE I have no liability in Spain.


There is a presumption, under the Spanish Law, that when an individual has his wife 
and children under 18 years old living in Spain he would be deemed as Spanish Resident. This presumption can be rebutted if you prove that you are effectively living more than 183 days in UAE. 

The UAE Administration doesn't issue any Tax Residence certificate, however the following documents can be used as a proof that you are UAE Resident:

- Any document proving your departures and arrivals from/to Spain and UAE.

- Any document proving that you started and kept during 2015 a job in UAE, i.e. labor contract, a company’s certificate, a database with your arrival and leaving hours at work (time clock record).

- Any document proving that you own or rent a house in UAE and during the whole year you pay enough electricity, water, community expenses…to keep track that you are living there more than 183 days per year.

Do not hesitate to contact us if you need any further information.


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## AllHeart (Nov 22, 2013)

Wonderful news! Congratulations! arty::whoo:


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