tax confusion - Company director and employee of UK company whilst resident in Spain
Posted: 07 January 2007 10:36 PM  
Tourist
Rank
Total Posts:  1
Joined  2007-01-07

Hello everyone


This is my first post in this forum (and it is very long, sorry!) and I have read lots of other postings with great interest.  Many of these refer to retired income, pensions and wealth tax on UK property etc.  I was wondering if anyone has experience of a situation similar to mine.  If so any help or advice of what other people have done (and the outcomes!) would be most gratefully appreciated.  My head really is spinning!

A short summary of my situation:  I have set up a UK Ltd company.  I am the sole director and am also the sole PAYE employee.  I am now (as of November 2006) resident in Spain.  All my clients are UK based.  I have not completed any forms as yet to tell the UK tax office that I am going to pay full tax in Spain.  Prior to leaving the UK for April - October 2006 I was a PAYE employee of a different firm.  I do not have any property in the UK.  I do own a house in Spain but do not currently live in it (nor rent it out).  My partner is Spanish and we live together (and he is as confused as I am with the tax and social security situation).


My questions are many but my most pressing ones are these:

1) Can I carry on paying tax on my company earnings in the UK until the end of this financial year (end of Mar 2007) as I will not have been living in Spain over the 183 day threshold (or is that 183 days in a calendar year?)

2) Taxes in Spain appear to be based on the calendar year, which is different from the UK.  If I pay my taxes on my income in the UK until the end of the financial year and then complete the form for the UK tax office stating that from that date onwards I will be living in Spain full time and will therefore pay full tax from the 1st April 2007 in Spain, what will happen to my UK tax contributions for Jan, Feb and Mar 2007?

3) Also will I need to start paying social security here immediately?  If so how will that be deducted from my PAYE payroll in the UK? 

4) Dividends received from my UK company - are these taxed as normal income in Spain?  That is do they simply get lumped in with my salary and taxed within the standard tax bands? Or is there any reduced rate of tax here for company dividends, as there is in the UK?

A thousand thanks for whatever help anyone can give me.  Also if anyone has had positive experiences with a Spanish accountancy firm then I would warmly welcome a recommendation.  I am based in the Granada area, but if they are contactable via e-mail / phone then geographical location is not really an issue.

Best wishes

 

Wendy

Profile