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Hi all,

I moved to Madrid from Ireland at the beginning of this year and will need to start contributing tax to the Spanish system in a couple of months time. I am a software engineer who is working with an Irish company and have continued to do so remotely from my home in Spain. My company is not interested in registering with the Spanish tax system and so the advice I have received is to register as Autónomo "self-employed economically dependent". This would mean that I deal with a single customer only.

So here's the problem. If my company was to register with the Spanish tax system they would be paying roughly 30% social security and I would then be paying an additional 6%. The remaining money would then be taxed with income tax. If I register as Autonomo however I would only pay €264 per month in social security in total. Income tax again would be as normal.

Could this be seen as avoidance of tax on either my side or my companies as the social security payments are significantly lower with autonomo? In Ireland they are very strict with this sort of thing. If I was registered as a sole trader (autonomo) and worked with the same company for an extended period the tax officials could reclassify me as an employee and any tax not paid from the beginning of my employment would need to be paid. The company in this case is fully liable and for a small company it could be catastrophic. What I really want to know is if this is treated the same way in Spain? Or is it a completely legitimate way of doing business? Keep in mind that I will be invoicing the company who was my previous employer.

If anyone has any knowledge of this it would be much appreciated. Of course I will get legal advice on the matter but I would like to get a feel on which way it is likely to go.

I appreciate any input that you may have.

Thanks,
Anthony
 

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Given that you are working remotely for an international company, I don't think it would be illegal like it would be if your single client were Spanish.

The problem is, I don't think you could register as an autonomo "TRADE" (economically dependent) because the other party isn't Spanish. I am a TRADE autonomo and this figure was invented to give some sort of protection to the many, many "fake autonomos" working in Spain.

I am on my mobile right now so I can't link you to the article, but google autónomo TRADE on infoautonomos and they can tell you more.

Good luck
 

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Thank you for the quick reply. I think that if there is a doubt that it may be considered illegal then my company won't go for it, as they shouldn't. So if it's less illegal than if they were a Spanish company I'm guessing they would say no.

Regarding your comment about not being possible to register as an autonomo "TRADE", I have been advised that this is possible as it's within the EU but I will read further on this with the information you have provided.

Thank you again for the information. I'll post any updates that I have here as I'm sure it will be useful to someone else in the future.

Of course if anyone else has further information please post it :)

Thanks,
Anthony
 

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Thank you for the quick reply. I think that if there is a doubt that it may be considered illegal then my company won't go for it, as they shouldn't. So if it's less illegal than if they were a Spanish company I'm guessing they would say no.

Regarding your comment about not being possible to register as an autonomo "TRADE", I have been advised that this is possible as it's within the EU but I will read further on this with the information you have provided.

Thank you again for the information. I'll post any updates that I have here as I'm sure it will be useful to someone else in the future.

Of course if anyone else has further information please post it :)

Thanks,
Anthony
Hi there,

I am in almost the exact same situation to what you described. Do you have any update as to how you got on? I'm not finding it easy to figure out what my best option is when moving to Spain regarding work. I am working as a software developer and hoping to go on a contract with the company I am working with in Ireland, with whom I am currently an employee.

If you have any further information regarding how you got set up, would love to hear, even though this is a few years later :) !

Thanks
J
 

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Hi there,

I am in almost the exact same situation to what you described. Do you have any update as to how you got on? I'm not finding it easy to figure out what my best option is when moving to Spain regarding work. I am working as a software developer and hoping to go on a contract with the company I am working with in Ireland, with whom I am currently an employee.

If you have any further information regarding how you got set up, would love to hear, even though this is a few years later :) !

Thanks
J
I am in the same situation - seems a little crazy that Spain doesn't have a simple solution for remote workers as the demand (and numbers who do so below the radar) is high.

I've been here since last year - I went to see a specialist and he advised me to register for Spanish tax and simply do a return each year, using my (UK) payslips. The difference between the UK annd Spain in terms of tax would then be calculated (roughly 3/4% difference in my case) and I would have to pay that balance to the Spanish govt.

Quite how that will work post brexit I'm not sure so I'm of a mind to delay registering a little longer until it becomes clear.

My wife is working here and paying into the system.

It has never been a case of me wanting to avoid tax, it's just difficult to find a solution where I keep my employer happy!

KG
 

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Hi KG,

Yeah, it doesn't seem to be easy. Assuming I can go ahead with this, I will be moving to Spain in Oct. I think for the 2018 year, I will therefore remain Irish tax resident as I have been in Ireland over 183 days.

Then for 2019, from what I can see the approach I will take is to register as autónomo TRADE, and then do a full Spanish tax return for 2019 as Spain is where I will be resident. It works out about the same for me as in Ireland, tax wise.

Regarding what you mention about doing a return in the UK and then paying the balance to the Spanish govt, I have seen that approach mentioned elsewhere. However, assuming you are in Spain over the 183 days, doesn't that mean you are, before any other considerations, tax resident in Spain, and that's where your primary income tax liability lies? From what i have read, if there was ever an investigation into it, the fact you are in Spain over that 183 days is the primary determinant from which all other considerations arise.

Quite what complications Brexit will mean, is anyone's guess, and unfortunately, another layer for you to consider.

Do you have the contact details of someone you advise I could talk to? Your specialist perhaps. I can speak converstaional Spanish, but I think this conversation would have to be in English :)
Ta
James
 

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Hi James,

Thanks for the reminder on how confusing this was when I was getting started here! :)

I'll admit that I can't remember exactly the steps I went through but I'll tell you what I know. First of all, you are correct in saying that once you are living 183 days in Spain in a given year then you are tax resident here. However, this isn't a bad thing and if you time it right can save you a bit of money. Basically, up until you hit the landmark 183 days you can continue to get paid into your account as normal as an employee of the company. When you become tax resident is a good time to switch over to Autonomo. The year that you switch tax residency, which in your case would be 2019, you are entitled to your tax credits in both Spain and Ireland. In other words you end up paying less tax overall for that year. In the beginning of 2020 you should be able to claim some tax back from the country you are living in at the moment as you won't have paid tax for so many months of the year. I suppose the sweet spot is if you make that change in July. I made the change over in October and got a fair bit of tax back.

Getting registered as Autonomo is a whole other story and varies depending on what part of Spain you are moving to. Where are you planning on going? I would recommend getting yourself a Gestor (accountant) who will handle as much of the paper work as possible as well as handling your taxes in Spain on your behalf. Again depending on where you are you can pay somewhere between €50-€70 per month plus an initial setup fee. This is worth it just to save the headache of dealing with Spanish bureaucracy and if the Gestor is any good he will be saving you at least what you are paying him (compared to if you did the taxes yourself with no knowledge of the system).

But even before you get to the stage of registering as Autonomo you need to get your NIE (national ID number for us foreigners). There are too types,the typical 3 month NIEcertificate for people who are working for a couple of months, or the residency NIE certificate which you will need eventually. For me, this was the trickiest part and I can't exactly remember the steps here as I was thrown around offices and police stations with nobody taking responsibility for what was needed. You need to provide proof of money in a Spanish bank account (which you can't get without a NIE ;) ) and tell them why you are looking for residency. I explained my situation as Autonomo which wasn't good enough for whoever was there that day and I was denied. It was through a friend of a friend that I finally got it. However, I'm sure that these issues happened mainly because of my lack of knowledge because it's hard to get consistent information.

So this is how I think it probably should happen. When you come to Spain apply for the normal 3 month NIE which is pretty easy I hear. This will always be your identification number for Spain, it won't change. You can then use this to open a bank account and fill it with your millions. I think that doing this will make it easier when you are applying for residency. This is just what I think so don't assume it's 100% accurate.

Sorry if all of this is confusing you more. I'm typing this as I'm remembering the struggle :). The moral of the story is, stay an employee as long as possible, claim your tax back, get yourself a Gestor. I'll take a look back on things I have here to see if I can get you any further information or maybe try to structure it a bit better!

Good luck!
Anthony
 

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Getting a good gestor is essential move. The cost is insignificant compared with the benefits.

The only problem is finding a good gestor. We had at least two useless ones before a business contact recommended the lady we used for the following 15 years or so.
 

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There's a solution to all this that is perfect for those who I would term - Footloose and Fancy Free and
that's to become a Digital Nomad.


BBC - Digital Nomads, the new elite with No Fixed Abode


BBC Radio 4 - Out of Office, the rise of the Digital Nomad
Very interesting. The article talks as if it's something that's going to come, but I think it's here already. Numbers will grow, but I think that although it appeals to many, there are still many who can't or don't want to live the monad life
 

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Very interesting. The article talks as if it's something that's going to come, but I think it's here already. Numbers will grow, but I think that although it appeals to many, there are still many who can't or don't want to live the monad life
I definitely wouldn't want the monad life, all the anagrams would get on my nerves.
 

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Hi James,

Thanks for the reminder on how confusing this was when I was getting started here! :)

I'll admit that I can't remember exactly the steps I went through but I'll tell you what I know. First of all, you are correct in saying that once you are living 183 days in Spain in a given year then you are tax resident here. However, this isn't a bad thing and if you time it right can save you a bit of money. Basically, up until you hit the landmark 183 days you can continue to get paid into your account as normal as an employee of the company. When you become tax resident is a good time to switch over to Autonomo. The year that you switch tax residency, which in your case would be 2019, you are entitled to your tax credits in both Spain and Ireland. In other words you end up paying less tax overall for that year. In the beginning of 2020 you should be able to claim some tax back from the country you are living in at the moment as you won't have paid tax for so many months of the year. I suppose the sweet spot is if you make that change in July. I made the change over in October and got a fair bit of tax back.

Getting registered as Autonomo is a whole other story and varies depending on what part of Spain you are moving to. Where are you planning on going? I would recommend getting yourself a Gestor (accountant) who will handle as much of the paper work as possible as well as handling your taxes in Spain on your behalf. Again depending on where you are you can pay somewhere between €50-€70 per month plus an initial setup fee. This is worth it just to save the headache of dealing with Spanish bureaucracy and if the Gestor is any good he will be saving you at least what you are paying him (compared to if you did the taxes yourself with no knowledge of the system).

But even before you get to the stage of registering as Autonomo you need to get your NIE (national ID number for us foreigners). There are too types,the typical 3 month NIEcertificate for people who are working for a couple of months, or the residency NIE certificate which you will need eventually. For me, this was the trickiest part and I can't exactly remember the steps here as I was thrown around offices and police stations with nobody taking responsibility for what was needed. You need to provide proof of money in a Spanish bank account (which you can't get without a NIE ;) ) and tell them why you are looking for residency. I explained my situation as Autonomo which wasn't good enough for whoever was there that day and I was denied. It was through a friend of a friend that I finally got it. However, I'm sure that these issues happened mainly because of my lack of knowledge because it's hard to get consistent information.

So this is how I think it probably should happen. When you come to Spain apply for the normal 3 month NIE which is pretty easy I hear. This will always be your identification number for Spain, it won't change. You can then use this to open a bank account and fill it with your millions. I think that doing this will make it easier when you are applying for residency. This is just what I think so don't assume it's 100% accurate.

Sorry if all of this is confusing you more. I'm typing this as I'm remembering the struggle :). The moral of the story is, stay an employee as long as possible, claim your tax back, get yourself a Gestor. I'll take a look back on things I have here to see if I can get you any further information or maybe try to structure it a bit better!

Good luck!
Anthony
Hi Anthony,

Thanks for your response, I had meant to get back to you sooner, KG has been helpful to me on this also.

I am moving in early October 2018, but I have until the end of 2018 to remain as Irish tax resident, so there is a bit of leeway there. Very nice advice re the tax credits, that is not something I had thought about and will most certainly look into. I will look at the change in July as you suggest, that looks like it could be a good deal for the 2019 year (yeah, tax credits!).

Re Autonomo, I will be living Andalusia. My boss may actually have a recommendation for a good gestor, and I have another recommendation also, so I will compare and see which is the best option. As you say, navigating the Spanish system seems like it could be a bit of a nightmare, so having someone do that for me seems like the best option.

I will be going on a contract from my current employer, seems that getting the autonomo status itself can be a little bit tricky and the type of contract I have, particularly with a company for which I was a former employee, will be a central consideration in that (i.e. demonstrably clean break, a genuine contractor, not an employee by proxy who just lives in Spain).

Thanks for the tips re the NIE, the 3 month one sounds good to go as the initial step and then I can push on from there.

Your advice has been helpful and much appreciated. Like all these types of things, feeling better about it now, like I have a definite path through.

I will post back here with my own experiences once I've been through the wringer.

Ta
James
 

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Hi Anthony,

Thanks for your response, I had meant to get back to you sooner, KG has been helpful to me on this also.

I am moving in early October 2018, but I have until the end of 2018 to remain as Irish tax resident, so there is a bit of leeway there. Very nice advice re the tax credits, that is not something I had thought about and will most certainly look into. I will look at the change in July as you suggest, that looks like it could be a good deal for the 2019 year (yeah, tax credits!).

Re Autonomo, I will be living Andalusia. My boss may actually have a recommendation for a good gestor, and I have another recommendation also, so I will compare and see which is the best option. As you say, navigating the Spanish system seems like it could be a bit of a nightmare, so having someone do that for me seems like the best option.

I will be going on a contract from my current employer, seems that getting the autonomo status itself can be a little bit tricky and the type of contract I have, particularly with a company for which I was a former employee, will be a central consideration in that (i.e. demonstrably clean break, a genuine contractor, not an employee by proxy who just lives in Spain).

Thanks for the tips re the NIE, the 3 month one sounds good to go as the initial step and then I can push on from there.

Your advice has been helpful and much appreciated. Like all these types of things, feeling better about it now, like I have a definite path through.

I will post back here with my own experiences once I've been through the wringer.

Ta
James
Re the NIE
You may be a little confused. When you apply just for an NIE, the number is yours permanently, it is the certificate you get that is only valid for three months. Why? you might ask. It is because, if you are going to be living here you must register on the foreigners' list within 90 days of your arrival in which case you will get a new certificate stating that you are a resident with the same NIE and your original NIE certificate is then redundant. Obviously they don't want thousands of redundant NIE certificates, that might be misused, in circulation, so they automatically expire after three months.
 

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Re the NIE
You may be a little confused. When you apply just for an NIE, the number is yours permanently, it is the certificate you get that is only valid for three months. Why? you might ask. It is because, if you are going to be living here you must register on the foreigners' list within 90 days of your arrival in which case you will get a new certificate stating that you are a resident with the same NIE and your original NIE certificate is then redundant. Obviously they don't want thousands of redundant NIE certificates, that might be misused, in circulation, so they automatically expire after three months.
The certs which expire after 3 months are no longer issued.
 

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Hi James,

Thanks for the reminder on how confusing this was when I was getting started here! :)

I'll admit that I can't remember exactly the steps I went through but I'll tell you what I know. First of all, you are correct in saying that once you are living 183 days in Spain in a given year then you are tax resident here. However, this isn't a bad thing and if you time it right can save you a bit of money. Basically, up until you hit the landmark 183 days you can continue to get paid into your account as normal as an employee of the company. When you become tax resident is a good time to switch over to Autonomo. The year that you switch tax residency, which in your case would be 2019, you are entitled to your tax credits in both Spain and Ireland. In other words you end up paying less tax overall for that year. In the beginning of 2020 you should be able to claim some tax back from the country you are living in at the moment as you won't have paid tax for so many months of the year. I suppose the sweet spot is if you make that change in July. I made the change over in October and got a fair bit of tax back.

Getting registered as Autonomo is a whole other story and varies depending on what part of Spain you are moving to. Where are you planning on going? I would recommend getting yourself a Gestor (accountant) who will handle as much of the paper work as possible as well as handling your taxes in Spain on your behalf. Again depending on where you are you can pay somewhere between €50-€70 per month plus an initial setup fee. This is worth it just to save the headache of dealing with Spanish bureaucracy and if the Gestor is any good he will be saving you at least what you are paying him (compared to if you did the taxes yourself with no knowledge of the system).

But even before you get to the stage of registering as Autonomo you need to get your NIE (national ID number for us foreigners). There are too types,the typical 3 month NIEcertificate for people who are working for a couple of months, or the residency NIE certificate which you will need eventually. For me, this was the trickiest part and I can't exactly remember the steps here as I was thrown around offices and police stations with nobody taking responsibility for what was needed. You need to provide proof of money in a Spanish bank account (which you can't get without a NIE ;) ) and tell them why you are looking for residency. I explained my situation as Autonomo which wasn't good enough for whoever was there that day and I was denied. It was through a friend of a friend that I finally got it. However, I'm sure that these issues happened mainly because of my lack of knowledge because it's hard to get consistent information.

So this is how I think it probably should happen. When you come to Spain apply for the normal 3 month NIE which is pretty easy I hear. This will always be your identification number for Spain, it won't change. You can then use this to open a bank account and fill it with your millions. I think that doing this will make it easier when you are applying for residency. This is just what I think so don't assume it's 100% accurate.

Sorry if all of this is confusing you more. I'm typing this as I'm remembering the struggle :). The moral of the story is, stay an employee as long as possible, claim your tax back, get yourself a Gestor. I'll take a look back on things I have here to see if I can get you any further information or maybe try to structure it a bit better!

Good luck!
Anthony

Anthony,

I am curious about the 183 days meaning you are automatically tax resident in Spain. I came across the below on citizensinformation.ie, which would imply you would have to be living there for longer to break away from the requirement make a tax return in Ireland. Seems contradictory that one country can say 183 days (Spain) and Ireland is effectively saying 280 days over two years.

Curious if you or anyone can shed some light? For example if I spent Yr2018 275(Ire), 90(Spain) + Yr2019 270(Spain), 95(Ire), this would imply I am tax resident in both Ireland and Spain for 2019. Not sure what takes precedence.

Copied tex below:

You are resident for tax purposes for a year if:

You spend 183 days or more in Ireland in that year from 1 January – 31 December or,
If you spend 280 days or more in Ireland over a period of two consecutive tax years, you will be regarded as resident for the second tax year. For example, if you spend 140 days here in Year 1 and 150 days here in Year 2, you will be resident in Ireland for Year 2.

Any insight anyone has would be useful.
Ta
 

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Anthony,

I am curious about the 183 days meaning you are automatically tax resident in Spain. I came across the below on citizensinformation.ie, which would imply you would have to be living there for longer to break away from the requirement make a tax return in Ireland. Seems contradictory that one country can say 183 days (Spain) and Ireland is effectively saying 280 days over two years.

Curious if you or anyone can shed some light? For example if I spent Yr2018 275(Ire), 90(Spain) + Yr2019 270(Spain), 95(Ire), this would imply I am tax resident in both Ireland and Spain for 2019. Not sure what takes precedence.

Copied tex below:

You are resident for tax purposes for a year if:

You spend 183 days or more in Ireland in that year from 1 January – 31 December or,
If you spend 280 days or more in Ireland over a period of two consecutive tax years, you will be regarded as resident for the second tax year. For example, if you spend 140 days here in Year 1 and 150 days here in Year 2, you will be resident in Ireland for Year 2.

Any insight anyone has would be useful.
Ta
In this sort of situation, they decide for you

Where do you live. That is, where is your main residence? Where do your family live?
 
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