Its a messy situation for sure and you would think that with so many of us in this kind of situation - and surely growing - there’d be more clarity and consistency in the advice given.

I was advised to set up a Spanish based SL, to invoice my old employers in the UK - I have to put the IVA on the invoice but they don’t actually pay it to me.  Found an accountant by recommendation and he tells me what retention tax to pay every 3 months.  Awaiting latest confusing correspondence from UK tax office (as I still have small income there from rented property etc).  Complicated…?  Nah…

Maya

BuenosDiasPet - 16 August 2009 10:37 PM

Its a messy situation for sure and you would think that with so many of us in this kind of situation - and surely growing - there’d be more clarity and consistency in the advice given.

I was advised to set up a Spanish based SL, to invoice my old employers in the UK - I have to put the IVA on the invoice but they don’t actually pay it to me.  Found an accountant by recommendation and he tells me what retention tax to pay every 3 months.  Awaiting latest confusing correspondence from UK tax office (as I still have small income there from rented property etc).  Complicated…?  Nah…

Maya

This appears to be a whole lot simpler but surely then the IVA that is invoiced (although not paid) is owed in Spain ?? Or is there a situation similar in Spain to that in the UK where VAT is only payable once a certain threshold is reached

I am NOT an expert Jacko so have to take the advice of people who are… to my understanding there are reciprocal arrangements that take place when an IVA-registered SL bills a UK VAT reg company that means neither party has to actually pay the tax to each other (even though the rates aren’t the same so god knows how it all gets straightened out).  So far as I do understand it, there is no minimum threshold, ie every SL is effectively the equivalent of ‘VAT registered’ in the UK. 

Maya

Dear All,

I moved to Madrid from the UK a few months ago. My UK employer has offered me to carry on working for them but from home. They have no presence in Spain. 
They have applied to the UK gov. so that I can carry on paying my NIC in the UK & we are waiting for the outcome of the application.
I’m now wondering about income tax. Until now, I had assumed that the inland revenue will tax my salary directly & that would be it. But I just spoke with the Inland revenue & they told me that I’ll actually also be taxed in Spain on my income from outside Spain & that treaties to avoid double taxation are not applied on income from employment…..!!!!! 
Can you help?
Cheers

I would think it’s probably crossed over into qualified advice rather than forum advice you need at this point!  But so far as I am aware the double taxation treaty applies to most income, you should only end up paying tax on it once.

I suspect the Spanish tax authorities would however require you to pay autonomos (NI), if you are living in Spain and using Spanish services, it would seem appropriate to contribute? I expect you can continue to pay voluntary UK contributions if you wish, depending on what your long-term plans are,

good luck!

abi72 - 27 March 2010 10:26 PM

However, I’ve noticed that HMRC are changing their rules on EU VAT and ‘place of business’ - meaning that for my type of services (design & marketing) it doesn’t matter that I’m in Spain, it’s where the customer is that deems your place of business and VAT liabilities. I’m not quite sure how this affects my plan.

Abi

The rules changed at the beginning of the year for what the HMRC call cross border B2B (business to business) services.  The new general rule - there are exceptions - is that the VAT is due where the customer is not, as before, where the service was provided.  In practical terms for you this means that your autonomo invoices would not include IVA because they are to a UK business.  However the UK business would account for the payment as if UK VAT were due on it i.e. even though the invoice doesn’t include VAT the company has to add it to its VAT on inputs at the UK rate. 

Presumably this VAT would be offset against the VAT your UK company charges on its client invoices so I don’t think it would affect your plan too much.  The plan itself is perfectly OK but, as you will know, does involve paying the Spanish social security and the costs of running the UK company and the autonomo. 

I have seen similar set-ups but sometimes with some added bells and whistles to save tax.  For example instead of taking all of your income via autonomo invoices you could get the UK company to pay you a salary and some dividends.  I know this will open you up to tax in the UK but due to various allowances and reliefs it can work out in your favour.

I just put a little video called “autonomo basics” on YouTube which covers some of these issues although not the more complicated nuances.