Live in Spain, work for UK Ltd. company - need tax advice

[ajohnston99]

Hi

I currently live in Cadiz and work freelance doing web design for a Ltd. company based in the UK.

The main question being how on earth does this all work? I am getting conflicting advice from my Spanish Gestor, UK employer and the Tax office in Sevilla.

Sevilla advised that I do not need an International tax code as my service is electronic and on my invoices I should not include IVA. UK company deduct the VAT using 'Reverse Charge' rule.

UK say I do need an International tax code as the 'Reverse Charge' rule does not apply to my sector.

Thoroughly confused, any pointers welcomed!
Thanks in advance

[ajohnston99]

Originally Posted by ajohnston99

Hi

I currently live in Cadiz and work freelance doing web design for a Ltd. company based in the UK.

The main question being how on earth does this all work? I am getting conflicting advice from my Spanish Gestor, UK employer and the Tax office in Sevilla.

Sevilla advised that I do not need an International tax code as my service is electronic and on my invoices I should not include IVA. UK company deduct the VAT using 'Reverse Charge' rule.

UK say I do need an International tax code as the 'Reverse Charge' rule does not apply to my sector.

Thoroughly confused, any pointers welcomed!
Thanks in advance

Further fuel for the fire

I apparently do qualifiy as an 'Electronic Service' and as such the UK company can use the 'Reverse Charge' ruling.

The question now is:
Will the HRMC recognise my NIE number as a proper legal VAT number as it is thought to be a Spanish number for internal purposes?

When I invoice the UK company do I leave off the IVA? If this is the case what happens at the quarterly tax submission in here?

Just when I think I am getting somewhere I discover new befuddlement

[supatrainer]

Hello,

I'm also planning on moving to Cadiz later this year, I'm a French citizen working freelance as well, I create training videos for a U.S. web site. Can I ask you how you set up as a freelancer in Spain, did you register as Autonomo ? I hear there is a lot of red tape and costs involved, is that correct ? You probably also have to pay the mandatory 250euros + for social security ...

To work around this, I was thinking of creating a UK LLC and invoicing through it whilst living in Spain, but I'm not sure that would be allowed since my services will actually be produced in Spain (my own work that is, just like you)...

Any insight on this would be fantastic !
thanks

Bruno
contact (at) techfox (dot) net

Originally Posted by ajohnston99

Hi

I currently live in Cadiz and work freelance doing web design for a Ltd. company based in the UK.

The main question being how on earth does this all work? I am getting conflicting advice from my Spanish Gestor, UK employer and the Tax office in Sevilla.

Sevilla advised that I do not need an International tax code as my service is electronic and on my invoices I should not include IVA. UK company deduct the VAT using 'Reverse Charge' rule.

UK say I do need an International tax code as the 'Reverse Charge' rule does not apply to my sector.

Thoroughly confused, any pointers welcomed!
Thanks in advance

[gus-lopez]

ajohnston99, to my knowledge when you already have an NIE number & apply for a Spanish IVA number it is exactly the same but has some additional letters on the front. possibly ES for España. a few people that I know who have reg. for IVA, have all had the Iva number come back like that.

supatrainer, if you set up a UK ltd. co. & were receiving wages ( as an employee ) from it & paying tax & N.I. to the UK authorities then there would be no need to register as autonomo here as the reciprocal agreement would entitle you to full Spanish healthcare , claimed for by form E 109 which has to be renewed yearly. The fact that you are French does not matter if you are paying tax & NI in the UK. Whether or not the fact that you are living & producing your videos here in Spain is rather a grey area. How are they going to know if you don't tell them ? Just my dos centimos.

[supatrainer]

hi Gus,

Thanks much for your reply. In this case, given that I'm starting from scratch (and not specifically coming from the UK), do you see any advantage in setting up in the UK as opposed to in Spain ? I hadn't even thought about receiving wages, I was thinking more in terms of dividends, but that sounds like an interesting option to consider. Does paying social security in the UK cost less that in Spain ?

Don't you think they might argue that since I live in Spain, the videos have to be produced in Spain (since I'm the one producing them) ?



supatrainer, if you set up a UK ltd. co. & were receiving wages ( as an employee ) from it & paying tax & N.I. to the UK authorities then there would be no need to register as autonomo here as the reciprocal agreement would entitle you to full Spanish healthcare , claimed for by form E 109 which has to be renewed yearly. The fact that you are French does not matter if you are paying tax & NI in the UK. Whether or not the fact that you are living & producing your videos here in Spain is rather a grey area. How are they going to know if you don't tell them ? Just my dos centimos.[/QUOTE]

[gus-lopez]

Hi supatrainer, Setting up in the Uk , as far as I'm concerned , would be cheaper. If you set up as a ltd. co. & took wages your NI contributions would be 11% of income per week between 110 & 844 pounds, but your ltd co. would have to pay NI conts. for you as well. I am not sure of the %. Would it not be possible to just set up as a self- employed video maker, then your NI cont. would be 2 pounds &50p a week ( class 2 ) plus 8% of your year end profit from 5,715 up to 43,875, called class 4 cont.( after all deductions ) This way is far cheaper. The Class 2 can be set up over the phone, as can obtaining a VAt number. You can do all your own accounts as well this way or pay an accountant. Depending on the amount of work a rough guess would be approx. 700 pounds. If you have a ltd. co. in the UK your accountant would have to be a chartered accountant & would obviously cost a lot more. As the tax year in the UK runs from April 6th. to April the 5th if you set up in say May then your accounts would not be done until May the following year & any tax payable, would not be due until about October of the following year. Any UK accountant will advise you of the best way.
The only problem with taking dividends is that ,as far as I know, you wouldn't be able to claim for reciprocal h/ care here & therefore would either have to pay again for private H/ care or duplicate the business by registering here.
The last time I was s/ employed in the UK, I set up the class 2 contributions payment , by direct debit , over the phone & also obtained a VAT number the same way.
Th Personal allowance in the UK is higher @ 6,475 & tax is @20% up to 37,400, then 40% up to 150,000 & 50% over that.

If you set up as 'autonomo' in Spain straight away you have to pay 250€ a mth. NI cont. +20% tax every 3 mths Plus a monthly accountancy charge. If you set up an S.L. ( ltd. co. ) to my knowledge, you need to deposiy at least 60,000€ in the company account. A cheaper Version is an S.L.L ( still a ltd. co. but a cheaper version, but requires @ least 3 partners, 2 of which must be paying NI, the 3rd. 'sleeping'. ) which requires an account opening balance of 3001 € of which the gestoria will take about 1500 € in set up fees. For either of these you will still be paying 250 € a mth. NI + 240€ +iva for the gestoria ( accountants monthly fee ).
There are ,or were , grants available from the gov. here for people setting up an S.L.L. You really need to speak to both an UK & Spanish accountant. Hope this helps.

[supatrainer]

Hi Gus, wow this is precise information, thanks for taking from your time for this ! Sounds like the U.K. option is definitely more attractive, flexible and less costly. I just need to make sure that it wouldn't put me in an illegal position with regards to Spanish tax authorities. Is this the way U.K. self-employed people coming to live in Spain usually do it ?

I'll try to find a trustworthy accountant in Spain to find out more. Thanks a bunch again for your help !

Jesse

Originally Posted by gus-lopez

Hi supatrainer, Setting up in the Uk , as far as I'm concerned , would be cheaper. If you set up as a ltd. co. & took wages your NI contributions would be 11% of income per week between 110 & 844 pounds, but your ltd co. would have to pay NI conts. for you as well. I am not sure of the %. Would it not be possible to just set up as a self- employed video maker, then your NI cont. would be 2 pounds &50p a week ( class 2 ) plus 8% of your year end profit from 5,715 up to 43,875, called class 4 cont.( after all deductions ) This way is far cheaper. The Class 2 can be set up over the phone, as can obtaining a VAt number. You can do all your own accounts as well this way or pay an accountant. Depending on the amount of work a rough guess would be approx. 700 pounds. If you have a ltd. co. in the UK your accountant would have to be a chartered accountant & would obviously cost a lot more. As the tax year in the UK runs from April 6th. to April the 5th if you set up in say May then your accounts would not be done until May the following year & any tax payable, would not be due until about October of the following year. Any UK accountant will advise you of the best way.
The only problem with taking dividends is that ,as far as I know, you wouldn't be able to claim for reciprocal h/ care here & therefore would either have to pay again for private H/ care or duplicate the business by registering here.
The last time I was s/ employed in the UK, I set up the class 2 contributions payment , by direct debit , over the phone & also obtained a VAT number the same way.
Th Personal allowance in the UK is higher @ 6,475 & tax is @20% up to 37,400, then 40% up to 150,000 & 50% over that.

If you set up as 'autonomo' in Spain straight away you have to pay 250€ a mth. NI cont. +20% tax every 3 mths Plus a monthly accountancy charge. If you set up an S.L. ( ltd. co. ) to my knowledge, you need to deposiy at least 60,000€ in the company account. A cheaper Version is an S.L.L ( still a ltd. co. but a cheaper version, but requires @ least 3 partners, 2 of which must be paying NI, the 3rd. 'sleeping'. ) which requires an account opening balance of 3001 € of which the gestoria will take about 1500 € in set up fees. For either of these you will still be paying 250 € a mth. NI + 240€ +iva for the gestoria ( accountants monthly fee ).
There are ,or were , grants available from the gov. here for people setting up an S.L.L. You really need to speak to both an UK & Spanish accountant. Hope this helps.

[gus-lopez]

Just taking a shower I realised that I hadn't pointed out that you would still have to make a tax declaration here in Spain . If under the double taxation treaty you had paid more in the UK than you would have in Spain, that's hard luck. If , on the other hand you would have paid more here than the UK, then you have to pay the difference.

[supatrainer]

ouch so that means any effort to optimize will be anihilated ? By any chance, would you happen to know a reliable tax consultant / accountant I can consult with, perhaps a U.K. person based in Spain ? por si acaso, I'm relocating to Andalucia.

Originally Posted by gus-lopez

Just taking a shower I realised that I hadn't pointed out that you would still have to make a tax declaration here in Spain . If under the double taxation treaty you had paid more in the UK than you would have in Spain, that's hard luck. If , on the other hand you would have paid more here than the UK, then you have to pay the difference.

[gus-lopez]

Originally Posted by supatrainer

ouch so that means any effort to optimize will be anihilated ? By any chance, would you happen to know a reliable tax consultant / accountant I can consult with, perhaps a U.K. person based in Spain ? por si acaso, I'm relocating to Andalucia.

There's a chap on here down that way, Bakeja, I think he's called. Perhaps he'll be about soon.
Here it is Advoco Law & Accountancy
http://www.advoco.es/home/22-latest/...ax-advice.html