Hi, I’ve been looking for information regarding this but just don’t know where to start.
My situation is I’m a self employed English musician presently living in England and I have been booked to work with a Spanish band during the winter during which I’ll be based in Spain and I have a few questions regarding Tax etc.
Firstly I’m having the renta de las personas fiscas deducted at source and it’s 24% which I’m told is quite high, is that right? Should I get it lowered?
The management retains this 24% which the other Spanish guys in the band, who pay 22%, say they claim back every few months. Would it be possible for me to do this? If so how, and does the payment I get back relate to how many work related expenditures I have like British self employment?
I realise all this info is out there somewhere be I don’t have the first clue where to look.
Thanks

Hire a ‘Contable’ who will do it all for you?
(Altho of course it would habe to be econimical to do this.  My last one charged a lot of money - I.e Eu 100 per quarter, plus extra for everthing they did - i.e submitting forms).  You need to shop around/get a second opinion as I never thought the accountant was earning their money. (Thankfully I never picked up the bill as the UK co I was working for, but here, insisted I was self-employed and paid his bills).

I think most people use a cheaper ‘Gestoria’ for the basics. (Eu 40 for an annual tax return).... I found out this after I stopped working for the UK outfit.

Hi Susan, thanks for that, so does that mean I can claim some of the money they retain back? That would be great I was told that I would just get Foreign Tax Credits. A gestoria sounds like the kind of thing, I’m sure one of my colleagues will know someone like this.
Thanks again

Hi Frank,
I don’t know about claiming money back (unlike non UK citizens do when the work in the UK)...
Best to ask your friends (if they are non Spanish citizens too)... or the advice of a gestoria etc…
But please do get a recommendation/keep an eye on whoever you hire, as there are as many bad out
there as there are good.

PS - I do remember something about the UK/other EU countires having reciprocal tax agreements.
‘If’ you were not working outside of the UK for more than 3 months of the year, you may still be able to
be registered/pay your tax in the UK.

Good luck. There is more than a bit of red tape this end!

Sorry to add another ‘possible’ Frank….
I wonder if your Spanish colleagues are like the millions of seasonal workers here - those who work full time in the summer in the myriad of bars/restaurants in the tourist resorts and are laid off in the winter.  I know we have a personal annual tax allowance like the UK - and you may be able to get away with lower tax as you will not have earned a full years salary.

Again, good luck 😊

Hi Susan, thanks for your response. Ok so I imagine I can’t claim any back but I’ll look into getting a lower rate from not having worked a full year. Everyone I know is Spanish so no one has experience of this unfortunately. Your right, Spain and the UK have a Tax agreement so that you don’t pay tax twice, how this will work out exactly I don’t really know, I’m sure it’s not as simple as saying I’ve been taxed in Spain on ?XXX amount so I’m not paying tax on that, I had a look at the form and it’s pretty confusing. I’m working more than 3 months in Spain so I can’t submit a totally UK tax return , anyway they’re taking the 24% at source so that would mean I would pay tax twice.

I’m sure it will be fine

Thanks again Susan

Hi Frank,
Just remembered some more info… Hope it helps…
If you are here for just xxx months in a tax year… when you finish your contract with the band you need to ask your gestor/accountant to put you ‘Baja’ for tax and Social Security.  This way you save all round and you may even get a tax rebate on what you have paid to that point. (I think the annual personal allowance is Eu10,000…. but don’t quote me - all I know is that you don’t officially have to file a tax return if you income is under this.)

I still can’t understand why your employer is holding back 24% tax, as it is ultimately your responsibility to declare your earnings. Unless there is a rule that I don’t know of where an employer of freelance people is obliged by law to help the tax office get their cut.

(NB If you do come back to work in Spain again in the future, you just go ‘Alta’ again when you are earning here.)

Hi Susan,
thanks for that info. My employer says they have to take the 24% at source by law. So there we go.
There seems to be a contract for each show which is lots of paperwork but at least I’ll be released from contract and baja (bajo?) at the point I finish work.
I spoke to the HMRC in the UK about all this and they said they would give me a tax credit for the amount of tax I’ve paid on my earnings in Spain. How this would work is if I’m taxed in the UK at 20% then as I’ve paid 24% already they wouldn’t take any more from my Spanish wages. If I’m taxed at 40% in the UK (higher tax bracket not very likely) then they would take a further 16% from my earnings in Spain.
I’m still unclear about details like whether I can offset my expenses in Spain against my overall earnings for the year both in the UK and Spain. Also in the UK you are allowed to earn about ?6800 before being taxed so would this allowance be applied to my UK earnings alone or would it be applied to my total earnings for the year.
Also my whole tax status changes if I’m out of the UK for more than 183 days in the year, which I nearly am, would it benefit me to stay out of the country for an extra week or two so that I get taxed as a non resident in the UK?
Lot’s of questions I know but I was thinking maybe someone might know.
All the best and thanks for your help again Susan
Frank

I presume the point of a reciprocal taxation treaty is to capture all income and get taxed in one country (or they?ll eventually catch on).

From what I remember, 6,800 GBP threshold is for all annual earnings, and they?ll know this when you apply for tax credits in UK as you?ll need to report your Spanish income for that purpose. This is my logic anyways, I?m not actually British, but I worked in London and was surprised I didn?t get taxed on my first wage! hahaha That didn?t last long. Even if you go down the non-resident road, the other country will get your tax. There?s really no trick way out.

The 24% is the foreign non-resident rate, exactly. Think the only way to claim something back is via the UK path. If you?re on a resident rate in Spain, you?ll have deductions on taxable income such as if you?re single, married, rent, etc. So in your case, you?re not going to need a Gestoria (no tax returns need to be filed), but get yourself a good tax consultant in the UK!! Another rationale, from what I?ve overheard from my colleague who works in employment law, as long as you are taxed in one of the treaty countries, you?re fine. So if the UK deal works out better for you, ask the employer not to take tax out from Spain, and you organise to pay the UK tax man instead, as you would as a freelance. Or again, the tax credits are probably the same thing.

Anyways, I?m not really answering your question, but I hope it gives you an idea! Best get a tax expert if you?re really going to be collecting wages from multiple countries from your base country!! Good luck!!