Resident in Spain but work or have a Company in the UK including Ltd.
Updated: Apr 9, 2021
I have had a few questions lately being asked about the rules and consequences of having a Ltd Company , having a job or being Autonomo in the uk and living in Spain.
It should be known that once you are resident in Spain then that is your home and it's where your obligations are so you will need to submit a Tax return here regardless, there is not and will not be no other question to ask about this. I will consult further with an appointment (See Services)
*The following is for Residents protected by the Withdrawal agreement not those applying for the NLV or other visa´s which is written in another post.
The Limited Company
As UK Ltd company owners you can be company directors, take a salary and dividends and pay UK tax, even though you don't reside in the UK although you may find just taking dividends for the payment, less complicated, you can either pay the difference in tax for the salaries and dividends (or as company directors just take dividends - less tax efficient in the UK but easier if you are living in Spain) as tax on worldwide income as this is the rule for Spain or to go as Autonomo.
A few points to take note
The Spanish view dividends this way as straight income and tax it in the same way as salary
Also the Dividends allowance (tax free amount) was reduced in April 2018
even if you are a tax resident abroad you will still have to pay UK income tax on salary taken from a UK company.
You then have to declare the salary and any tax already paid, you won't have to pay tax on it twice, i.e. in the UK and then in Spain, as we have the double tax treaty*see link
National Insurance - this is payable on either a "salary" or " fees". Under EU legislation you should pay your national insurance where you normally live, in this case Spain. The correct procedure is for you to ask HMRC and they will tell you where you should be paying NI. If it is Spain, which it will be if you work in Spain the majority of your time (75%) then they will issue you with a Form A1, and your company will need to register this with the Social Security in Spain. Please ask for help on this!
Fees are taxable in both countries, salary may be taxable in both countries, depending where your actually work. If you work predominantly in Spain, then it will be taxable in Spain. If you carry out part of your work in the UK, then some of it will also be taxable in the UK. Where it is taxable in both countries, you will be able to offset tax paid in the UK( see above)
Dividends that you receive from a UK company are taxable in Spain. However, you can offset the tax credit (10%) against tax due in Spain. Be aware however, that as pointed out above, tax on dividends is levied at the savings rate. Currently this is 21% upto €6,000 and 25% upto €24,000, and then 27%.
*There are options available but it would require a discussion for me to be able to tailor it to your individual needs, please note appointment and Fee is required.
The rules in Spain regarding autónomo status are strict. Regardless of whether your earnings are casual and small scale – such as selling on eBay, selling at craft markets, selling online or if you do occasional after dinner speaking – you are supposed to register.
Where your earnings are more sporadic and you are not actually earning a proper living then there are some exemptions.
You will need to register for a Social security number in order to register for Reta to pay your monthly social security payments which are reduced in the first 2 years ( under 30 Male/35 female and/or inhabitants under 5000 it is for 3 years)
There is talk of making it a PAYE system but that's not happened yet.
You will need to file a modelo 36 for simple registration or 37 for more in depth, this is to acknowledging your autónomo classification. This is because different categories of employment trigger different social security payments, so if your work is deemed to be dangerous, then you will pay more in contributions.
The benefits are healthcare for yourself and family, help with disability, accident or if you are unable to work, you will also save for a pension in the future, if you do find it hard to meet payments you can also take a break.
Unless you make the necessary payments you will not be entitled to access public health facilities, receive a pension or sick-pay or paid maternity-leave and you will also be breaking the law.
Other steps you may need to take will entirely depend on the type of business you run, so for example, if you operate a premises that is open to the public you will need an opening licence called a “licencia de apertura” which can be obtained from the local town hall. You will need to be inspected before the license is granted and you will pay fees and be asked to provide evidence of any documents or certificates that the town hall demand
IVA (VAT) must be added to all invoices unless you are invoicing overseas then other paperwork is needed.
Provide quarterly tax and VAT (IVA) returns
Keep up with your monthly social security payments
Issue properly drawn-up invoices, as appropriate
Keep accounting records according to the legal standards of Spain
Pay up front tax retention on invoices from other autónomo workers or businesses .
The reduced introductory flat rate social security payment of €60 per month, under 47yrs and €92 over *aprox
Up to 50% of petrol expenses can be claimed back.
Up to 30% of electricity, gas and water costs can be claimed back if working from home.
Autonomos can claim up to €26.67 per day for food as an expense if working away from home while on business. This increases to up to €53.34 per day to cover accommodation if their work required and overnight stay, to name a few
Plus as your accountant we can discuss other claimable expenses, my job is to correctly present your accounts and save you money.
A monthly retainer fee is required if you want me to keep all your accounts, submit all monthly, quarterly, yearly and any other documents you may need in between
Please get in touch to book a consultation appointment and see my other posts for further information on rates and fees and how i can help you further.
This is much more straightforward, the person who employs you will pay all the necessary tax and social security payments that are due, please make sure you get a contract and if you have doubts make an appointment in order to have the contract looked over for any flaws, just for peace of mind.