Living in Spain with UK-based business

[sadlybroke]

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?

[Stravinsky]

Originally Posted by sadlybroke

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?

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

[sadlybroke]

Originally Posted by Stravinsky

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.

[snikpoh]

Originally Posted by sadlybroke

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.

[Stravinsky]

Originally Posted by sadlybroke

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.

[sadlybroke]

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?

[Abyss-Rover]

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...................

[Stravinsky]

Originally Posted by sadlybroke

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

[Abyss-Rover]

Originally Posted by Stravinsky

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

Originally Posted by sadlybroke

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"

[sadlybroke]

Originally Posted by Stravinsky

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.