Living and working in Spain with UK Ltd company

[Goldberg]

A lady on the move channel I think was looking for a story about someone looking to set up a business in spain, they were going to put it on tv, could be a good move. Go and have a look.

[hayleymorgan]

Great thanks for that, but sorry for my ignorance, whats the move channel? is it a forum or is it a tv channel?

:-)

Hayley

[hayleymorgan]

I found it - did a search. Thanks so much for this. Hayley

[Stravinsky]

Originally Posted by hayleymorgan

THIS WAS POSTED SOMEWHERE ELSE BUT MAYBE OF INTEREST.

I am new to this forum and found it very interesting, specially this thread.
We are planning to move to Spain in 2007. I have been having discussions with my employer to allow me to work remotely from Spain as I am home based in the UK and all I need is a broadband connection. I just came back from Spain and researched the issue thoroughly with my Spanish solicitor. If you work for a UK company, you will, be paying UK taxes. You will not be a Spanish resident even if you leave there more than 6 months in a year. You will not need to fill any tax returns because the taxation agreement between the Inland Revenue and the Hacienda. There is no need to pay Seguridad Social (NI) in Spain because you are paying in the UK. Providing you have the new European Health Card, you will be covered if you fall ill.
I am not sure how all this will apply if your employer does not know that you are base in Spain. I would be careful if I was you as leaving the country and working from abroad may constitute a bridge of your employment contract and you might end up in Spain without a job!

It might be of interest but it aint true on so many levels

[elgestor]

Hello I'm new to this forum and as a gestor I would like to make a contribution to this thread.

If you work for a foreign company in Spain then the company must register it's business activities in Spain. The company does not have to register as new company in Spain instead it can choose to open a branch. This would require it to apply for Spanish IVA (VAT) registration and registration with the social security.

Income is considered to be earned in the country in which you carry out your activity.

According to the Seguridad Social - Reglamentos Comunitarios which is the system under which workers working for a foreign company in Spain fall under:

Workers contracted by foreign businesses to work in Spain.

“Workers contracted by a foreign business with the aim of carrying on their activity in Spain will be subject to Spanish legislation regarding the Social Security contributions before they are contracted to work. These workers are not considered displaced workers under the social security act, and are subject to the legislation of the country in which they carry out their activity.

The foreign business must apply to the corresponding Tesoreria General or Administration for a social security contribution account number to register the business with the Spanish social security and hence subsequently register the worker with the Spanish social security.”

There are really 2 issues:

1. As an employed person you want to be covered by the social security system of the country in which you are carrying out your activity.

2. To be covered comprehensively in the country in which you carry out your activity you need to contribute to that countries social security system.

In order to be able to contribute there has to be a mechanism for you to be able to contribute and for your employer to be able to pay their share of employers contribution into the social security system of the country in which you are working. This is the same for any EU country.

The way that employees social security contributions are collected in the UK are through the employer. Employees in the UK do not personally pay their social security contributions instead they are deducted at source by the employer who in turns pays into the UK social security system.

It’s no different in Spain, regardless of whether you work for a Spanish or foreign employer in Spain, social security contributions are deducted at source and then paid by the employer to the Spanish social security system. In the UK employers have an employers reference number to which employees currently working for that employer are registered to. The same in Spain each employer has a number to which employees are registered to and deductions are made and contributed under that number.

The social security make no charge for a foreign business to register as an employer or to register their employees with the social security. We have registered several foreign employers with the Spanish social security and tax system, and process their tax and social security obligations without any problems whatsoever.

So there is no need to worry about working illegally or not being able to contribute in the country in which you are working, your employer just needs to register as an employer and subsequently register you as an employee.

Hope this helps.

David

[Philip]

Hello. I am trying to convince my company (I work for a multinational based in UK) to let me work from Spain on a permanent basis. The proposal is for me to work in Spain on my existing UK contract, paying Spanish tax and social security as per the explanation by David "el gestor" above, all of which seems fine. However, the company is blocking it on the grounds that I would fall between two jurisdictions in terms of employment law.

One of the company's examples was what would happen if I had an accident at work (i.e. in the flat I own in Spain). Whose health and safety law would apply - UK or Spanish?

I suspect the "falling between two jurisdictions" for employment law argument is not correct: can anyone confirm that and also help with the health and safety point? I would like to be able to discuss it further with the company armed with some more knowledge.

In these days of supposed free movement around an integrated Europe, it can't surely be too difficult for a UK worker to work remotely from Spain?

[Bevdeforges]

I'm not familiar with Spanish employment law, but have had some experience with other EU countries (i.e. France and Germany).

I think one factor here is that you may have to work for your company's Spanish entity in order to facilitate the paperwork (i.e. taxes and social security), and in order to clarify the jurisdictional issues, such as the example you give.

I know that when I worked for an international company in Germany, we had to establish a French SARL to account for a couple employees we had working there. The books were kept in Germany, but the legal entity had to meet all the requirements for establishing and maintaining the French SARL (which included filing corporate taxes as a separate entity).

If your employer already has a Spanish subsidiary up and running, it shouldn't be too bad (though there will be disputes over "who reports to who" - normal in house power struggles). If they don't have a Spanish legal entity of some sort already set up, that could be why they are stalling.

[Goldberg]

Why?

Because when you compare costs of setting up a uk company at 100 pounds a year including accounts to the costs of setting up an SL company 3006 euros plus set up costs, you can see the cost differences in uk, versus spanish formation. 5000 euros versus about 50 euros

The key is you are taxable and the employer must pay the spanish tax authority. Does all income then go to uk HQ and it gets a little complex with tax issues. The money goes to the HQ, and then it is resubmitted to Spain, if money is taxed in the uk, then there is a double taxation treaty.

or
Set up in UK
a branch in Spain
As an employee of the branch.
Where does the money go to. The UK or the branch in Spain?

eg. A spanish company pays your UK HQ, then it trickles down to the branch and then the person. Need to research more.

[Goldberg]

TRY Spanish Company Formation .Com IS A GOOD SITE, IS QUITE CLEAR.