Simple tax question

[mariuspa]

Hello,

I have a very simple question with a complicated answer I guess. This because I wasn't able to find an answer reading different websites.
I am working as an off-site developer for a US based IT company, and I plan to move to Spain during summer 2008. I want to know what percent of my income must I pay as income tax. Thank you in advance!

Best regards,
Marius

[Stravinsky]

Originally Posted by mariuspa

Hello,

I have a very simple question with a complicated answer I guess. This because I wasn't able to find an answer reading different websites.
I am working as an off-site developer for a US based IT company, and I plan to move to Spain during summer 2008. I want to know what percent of my income must I pay as income tax. Thank you in advance!

Best regards,
Marius

Nah, its not so complicated These are rough figures on the 2006 year, so they may vary a bit by now.
Assuming that you will become a Spanish resident and are single with no children the following will apply. As you're in IT I guess you will be earning a small fortune so I wont go into minimums.

Single persons allowance €3400.00

Tax rates vary from 15% up to 45%
depending on the salary.

This may help
Notes on Spanish income tax. Spain income tax. Income tax returns Spain. Spanish income tax returns. Income tax Spain.

[Bevdeforges]

Well, it's not really such a simple question.

When you say your are working as an "off-site developer" for a US based company (the IT part is irrelevant), are you an employee or are you treated as a contractor where you are now? (I'm assuming you're in the US and you are a US citizen - if not, all bets are off. )

In any event, when you move to Spain, you will change your tax residence and you'll be subject to Spanish taxes. But the employee vs. contractor issue still remains. If you're an employee, your employer will have to do something about putting you on their Spanish payroll and getting you registered with the Spanish tax officials.

If you're a contractor, you may have to establish your "business" in Spain and then meet their requirements for a business or self-employed worker.

But, you'll also still have to file US taxes, declaring your "world-wide" income and (after you qualify for US tax purposes) exempting out your "overseas earned income" according to the rules.

Yes, it's a complicated answer... With a little more detail, maybe some of the folks already living in Spain can give you a little better answer, and I can fill in the details on the US side of things.
Cheers,
Bev

[mariuspa]

Thanks everybody for your answers!

My yearly income will be in the low 20s.

Actually i am a Romanian citizen, and I am a contractor with the US based company.

Maybe this can help you in helping me further clarify my problem.

Also I was wondering if tax is payed at the whole amount or are there any deductions, like rent for example?

Thanks again guys, I am looking forward to your answer! And of course to moving to Spain

Best regards,
Marius

[Bevdeforges]

OK, as long as you don't have a Green Card, you're off the hook as far as the US taxes are concerned. But you may need to register in Spain as a business or self-employed. Besides "taxes" strictly speaking, you'll also be responsible for your social insurances (health, pension, etc.), which are usually based on your income, too.
Cheers,
Bev

[Stravinsky]

Originally Posted by mariuspa

Thanks everybody for your answers!

My yearly income will be in the low 20s.

Actually i am a Romanian citizen, and I am a contractor with the US based company.

Maybe this can help you in helping me further clarify my problem.

Also I was wondering if tax is payed at the whole amount or are there any deductions, like rent for example?

Thanks again guys, I am looking forward to your answer! And of course to moving to Spain

Best regards,
Marius

Well I've already been told off for "keeping it simple", but here goes

Firstly, let me get this clear. You will be self employed, or an employee of the US company? I only ask because as an emplyee to deduct tax etc here they would have to have a registered company in Spain.

To be self-employed in Spain requires registration with the following official bodies.

Registering for IVA (VAT).
Registration with local tax office.
Registration as self employed with the Social Security.
Registration of any workers you may have with the Social Security.
Preparation of Licencia de Apertura (only if you have premises).

In Spain you are required to be registered for IVA (VAT) from the beginning and you will also need to pay your monthly contribution to the Seguridad Social every month, even if you haven't earned anything in a particular month.

The amount of social security contribution for autonomo (self employed) for 2007 is 29.8% or, 26.5% of the amount you choose to declare depending on whether you select temporary incapacity protection or not.

The maximum and minimum contribution levels for workers 50 or under are set between 801.30€ and 2996.10€.

Therefore a worker under 50 years old declaring €801.30 would pay 29.8% or 238.78€ per month. This figure is variable depending on your personal circumstances and allowances

If you are an employee then this from 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."



That complicated enough for you