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| CURRENT SECTION :: Overseas Guides | UK's most visited IT Contractor Site - 250k unique visitors March 2008 |
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Profile written by Matt Walters of Capital Consulting (October 2008). Introduction Spain is a very popular country for European contractors, especially in the Oil & Gas, IT and Comms as well as banking sectors. Offering plenty of sunshine, but also winter sports in the Northern Pyrenees and surfing in the Bay of Biscay, Spain also has something for everyone from a leisure perspective, while retaining a relatively low cost of living (Madrid and Barcelona are 22-24% cheaper than London, according to Mercer, 2008). I. Registration In order to register in Spain, there are two steps which must be completed in person: i. N I E The first piece of administration to complete is the securing of an N I E number (Nùmero de Identificaciòn de Extranjeros – Foreigners’ Identification Number). This number can be obtained by presenting yourself at the Town Hall with the relevant paperwork. After 4 to 6 weeks, you will receive notification that you may go and pick your N I E up. The administrative authorities will not send it by surface mail to you. ii. Residencia Once you have received your N I E, you need to apply for a residence permit (known as a Residencia). The forms are obtainable from the Town Hall. Once completed, you must return to the Town Hall with the completed questionnaires and relevant documentation. Note: It is important to complete these formalities as soon as possible upon arrival, as they will greatly facilitate the opening of bank accounts and property rental. II. Taxation in Spain The Spanish tax year is the calendar year; taxpayers must file an annual tax return between 1 May and 30 June of the year following the tax year. Tax rates are banded between 0% and 43% dependant on income. Salary and other employment remunerations are subject to a monthly withholding tax, later creditable against the individual’s income tax liability. This system is very similar to PAYE in many respects. Spanish tax allowances: i. Flat tax rate As of January 2004, there has been an option for inbound expatriate contractors, as long as they have not lived or worked in Spain for the preceding 5 years, to take advantage of a flat tax rate of 24%. ii. Other allowances Various other allowances are available, but only for Spanish tax residents (not eligible for flat rate tax). III. Social Security Social security must be paid on your salary in Spain unless your employer can detach you from another EU country by means of an E101 certificate. Care must be taken here, and it is worth taking advice, as detachment by means of an E101 may not be the best solution in all cases due to either a) the duration of your intended stay in the country, b) the level of cover provided, or c) the cost of said contributions. It is also worth noting that, under the EU social charter, social security contributions made within an EU country will count towards your time stamp for the UK. IV. Work permits Citizens of EU countries, with the exceptions of Romania and Bulgaria, do not need a work permit to take up employment in the Spain. This also goes for citizens of Switzerland, Liechtenstein, Iceland and Norway. Citizens of these countries need only register with the municipality upon arrival. The restrictions in place for nationals of Romania and Bulgaria are expected to be lifted by the end of 2008. Citizens of all other countries must go through a full registration and work permit process. A work permit can only be obtained if no suitable candidate can be found in Spain or in any other Member State of the EU. Dependant on your personal circumstances, income and where you are contracting, you may be liable for additional tax in other countries where you are tax-resident (your home country, for example). Before taking any contract overseas, you should always seek professional advice from advisors with experience in the field of international and cross-border taxation. Capital Consulting is an international payroll and contract-management company providing tailor-made tax planning services to contractors working overseas. For more detailed information on your personal situation, please contact Capital on +41 32 732 97 00. Previous Page
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