Tax Advice

[SunnySpain]

Hi Sharon,

We are looking at a possible move to Asturias

Any advice would be much appreciated

[Stravinsky]

Originally Posted by SunnySpain

We are looking at a possible move to Asturias

You may have to change your screen name then

[Barry Davys]

Originally Posted by TinaP

We are moving to Spain hopefully end of September. I'm due to speak to my MD in the next few weeks to discuss this move and see if he agrees!

At the moment I work remotely at home in the UK so will continue doing the same job but based from the villa in Spain.

Can anyone advise me how to work out the tax difference on my annual salary between being resident in Spain and resident in the UK? If it works out that the UK is better then we may look at staying less than the 183 days in Spain to retain uk residency.

What are the tax allowances for income tax in Spain? Also how does my employer pay my salary - normal UK bank account in sterling or spanish bank account?

If I become tax exempt in Spain does my employer just pay me my gross monthly salary and I pay tax at the end of the spanish tax year.?

Confused??!! Sorry but this is why I never went into accounts and did recruitment instead lol!

Any advice or referral to websites would be fantastic. PM me if you need salary details/tax codes etc

Hi Tina,

You will love it out here I am sure and one of the secrets of success for many people is to live here but gain their income from elsewhere.

The tax for you is quite simple. You will be taxed in the UK if your income is paid to you on a PAYE basis from the company you work for in recruitment. It is likely that you will stay a tax resident in the UK because one if the tests that applies is "where is your centre of interests?". It is not just the 183 days/average 90 days for the UK that determines residency. If you still have interests such as property in the UK OR you get your income from the UK it is likely that you will be a UK resident, even if you spend more than 183 days in Spain.

Residency is often determined on a case by case basis however, Spain and Britain have a Double Taxation agreement. The idea of this agreement is that you will not pay tax twice on the same income. The treaty is also used in situations like yours to determine which country has "control".

A good IFA is a very good idea ( I would say that wouldn't I ) . You might also need a UK accountant if you have other income apart from employment.

Kind regards

Barry

[Stravinsky]

Barry I'm really suprised (but not necessarily disbelieving) in what you say because it flies in the face of what I have been told by an international tax consultant, a UK accountant, and a Spanish tax gestoria plus my abogado. Also what most people on the forums I speak to every day have been told by their tax consultants

Do you know something they dont?

Originally Posted by Barry Davys

Hi Tina,
If you still have interests such as property in the UK OR you get your income from the UK it is likely that you will be a UK resident, even if you spend more than 183 days in Spain.

[rjnpenang]

I read some months ago an Englishman who had lived abroad for over 20 years wasl judged as a British resident because he still had his golf club membership in the UK!. Rob

[Barry Davys]

Originally Posted by Stravinsky

Barry I'm really suprised (but not necessarily disbelieving) in what you say because it flies in the face of what I have been told by an international tax consultant, a UK accountant, and a Spanish tax gestoria plus my abogado. Also what most people on the forums I speak to every day have been told by their tax consultants

Do you know something they dont?

Stravinsky,

Not as surprised as people who are caught out by this.

I quote from the HMRC "The terms "residence" and "oridarily resident" are not defined in the Taxes acts". In other words, what many take as gospel is in fact just a starting point. It is true that the 183 days and 90 days average are significant. HOWEVER, the no of days are only the starting point for the assessment. You will also note that the position is complicated by resident and ordinarily resident. It is possible for someone to be non resident but ordinarily resident.

The 183 day/ 90 day rules have no statutory force. They are for guidance only. Whilst important it is not a definite answer to the question "am I resident?" Case history also relevant such as Shepard and Gaines-Cooper.

What tends to often happen with tax advice is someone asks a specific question. If the question is about the number of days so will be the answer.

These are becoming increasingly important issues. QROPS are only effective if a client is non resident for 5 years. With massive amounts of money now heamorrhaging from the UK pension system via QROPS the HMRC will try to prove that clients are, in fact, resident. This will lead to more case law for them to rely upon.

Tax planning around people moving to Spain has in the past been non specific. "Lets see if we can get away with this" has been put in black and white. This is no longer the case. The Hacienda is becoming more professional and proactive. "El crisis" will make this situation worse as Spain struggles to raise revenue in this difficult economic environment.

You should also be aware that the HMRC now has an office in Spain.

Spain is not a bad place to be taxed. BUT for all those of us who have UK income, even if we are non UK resident and Spanish resident, we will be taxed in the UK on our earned UK income. True, we will have to account for it here but the double taxation agreement will mean that we do not have to pay it twice. In a simple example, if we have UK tax deducted at source of 100 € and our Spanish tax on that income is 100€ there will be no more to pay. If our Spanish tax bill is 101€ we will pay just 1€ tax in Spain, the rest being a credit from the UK.

Hope this helps a bit but EACH case will be looked at individually and if you own a Ltd company in the UK there is a slightly different situation to the one on this thread.

Kind regards

Barry

[Barry Davys]

Originally Posted by rjnpenang

I read some months ago an Englishman who had lived abroad for over 20 years wasl judged as a British resident because he still had his golf club membership in the UK!. Rob

Hi Rob,

Excatly the point. It is these sorts of issues that the HMRC will try to exploit and they will do it on a case by case basis.

Then there is the issue of Domicile. Does anyone want me to give brief explanation of domicile and how this affects UK Inheritance Tax??

Barry

[SunnySpain]

Does anyone want me to give brief explanation of domicile and how this affects UK Inheritance Tax?

Yes please, would be much appreciated - lol

[rjnpenang]

Originally Posted by Barry Davys

Hi Rob,

Excatly the point. It is these sorts of issues that the HMRC will try to exploit and they will do it on a case by case basis.

Then there is the issue of Domicile. Does anyone want me to give brief explanation of domicile and how this affects UK Inheritance Tax??

Barry

Barry, I believe if you were born in the UK and wish to be considered non domicile in the UK you have to abandon ALL links, correct?, even if you stay in the same bedroom of your daughters house every time you visit the UK you will be considered a UK resident, however, I think if you buy a burial plot in your new country HM MIGHT believe you!.
BTW, not many people know this but the UK is considered a tax haven (if born outside the UK), correct??. Regards Rob.

[Stravinsky]

Originally Posted by Barry Davys

Stravinsky,

Not as surprised as people who are caught out by this.

I quote from the HMRC "The terms "residence" and "oridarily resident" are not defined in the Taxes acts". In other words, what many take as gospel is in fact just a starting point. It is true that the 183 days and 90 days average are significant. HOWEVER, the no of days are only the starting point for the assessment. You will also note that the position is complicated by resident and ordinarily resident. It is possible for someone to be non resident but ordinarily resident.

The 183 day/ 90 day rules have no statutory force. They are for guidance only. Whilst important it is not a definite answer to the question "am I resident?" Case history also relevant such as Shepard and Gaines-Cooper.

What tends to often happen with tax advice is someone asks a specific question. If the question is about the number of days so will be the answer.

These are becoming increasingly important issues. QROPS are only effective if a client is non resident for 5 years. With massive amounts of money now heamorrhaging from the UK pension system via QROPS the HMRC will try to prove that clients are, in fact, resident. This will lead to more case law for them to rely upon.

Tax planning around people moving to Spain has in the past been non specific. "Lets see if we can get away with this" has been put in black and white. This is no longer the case. The Hacienda is becoming more professional and proactive. "El crisis" will make this situation worse as Spain struggles to raise revenue in this difficult economic environment.

You should also be aware that the HMRC now has an office in Spain.

Spain is not a bad place to be taxed. BUT for all those of us who have UK income, even if we are non UK resident and Spanish resident, we will be taxed in the UK on our earned UK income. True, we will have to account for it here but the double taxation agreement will mean that we do not have to pay it twice. In a simple example, if we have UK tax deducted at source of 100 € and our Spanish tax on that income is 100€ there will be no more to pay. If our Spanish tax bill is 101€ we will pay just 1€ tax in Spain, the rest being a credit from the UK.

Hope this helps a bit but EACH case will be looked at individually and if you own a Ltd company in the UK there is a slightly different situation to the one on this thread.

Kind regards

Barry

I know you're quoting HMRC rules, but the tax man in Spain doesn't really care about HMRC does he! He wants what is his.
I "earn" in the UK, but pay tax here .... I didn't have a choice. I'm aware the HMRC have offices here

But again, I'm still confused because as I said, working on advice from many different sources for many different people that says that you have to pay tax here if you live here, why is your advice different