Spanish Ltd company, UK resident (&lt; or &gt;180 days) Spanish Ltd company, UK resident (< or >180 days)
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  1. #1

    Nervous Newbie

    Join Date
    Aug 2012

    Exclamation Spanish Ltd company, UK resident (< or >180 days)


    Having spent the last 6 years as a Spanish Tax resident, I'm returning to the UK, possibly permanently - I'm a British national and my wife is Spanish.

    I contract for UK companies through my own Spanish limited company (est. 4 years ago), and currently spend under 90 days in the UK. My wife has recently become 49% shareholder in the company, and can spend up to 180 days in the UK without becoming personally liable for UK tax.

    The salary paid to me by my company is around £2,500 pcm. Here are the options I see available - are they realistic? Is my Spanish limited company safe from the HMRC?:

    Option 1
    spend up to 180 days in the UK (becoming UK tax resident), pay myself £2,000 pcm (taxable in the UK) and dividends could be paid to my wife (Spanish tax resident). Keep the Spanish limited company - as far as the UK is concerned I'm a UK national, employed by a Spanish company. My wife receives dividends in Spain, the Spanish limited company is out of UK jurisdiction. Pay living expenses from the Spanish limited company.

    Option 2
    spend over 180 days in the UK (becoming UK tax resident), pay myself £3,000 pcm. No dividends are paid to my wife (she would spend >180 days here and be a UK tax resident). Pay much greater living expenses from the Spanish limited company.

    The questions are:
    would my Spanish limited company be liable for UK tax or am I right in assuming that it will always remain a Spanish fiscal entity? Do I have to declare directorship, etc? i.e. are the scenarios above realistic loopholes or risky?

    Would the Spanish tax authorities become suspicious that my expenses (in option 2) are exorbitant, in spite of the fact that relocation often involves expense? Spanish tax authorities regard contractors as small companies struggling to survive, and are more forgiving.

    Any other problems with these scenarios?

    I'd be very grateful for any advice..

  2. #2

    More fingers than teeth

    BlasterBates's Avatar
    Join Date
    Jul 2005
    1922 Commitee


    The 180 day rule doesn´t apply to businesses. Don´t make that mistake.

    You get a three month contract in the UK it will almost be certainly taxable there.

    If you are doing business regularly in the Uk the correct way to do it is register a company there, it can be your Spanish co, but needs a separate set of accounts.

    If you look around the forum you will see quite a number of contractors who have been done for tax evasion in Germany even though they only did 3 nnonth contracts, and Germany has a similar 180 day rule.

    The 180 day rule does not exempt you from tax completely you are stlll taxed on UK sourced income subject to the double taxation treaty.

    Do go and see an accountant and don´t make your own intepretation, or follow the advice of non-experts on a forum.

    If you satisfy the 180 day non-resident rule then you are exempt from taxation on your Spanish income.

    The converse applies in Spain, if you spend less than 180 days in Spain you will probably continue to be liable for tax there for any Spanish income.

    Lets put it this way, better to assume it´s taxable and then be informed by the tax authorities it isn´t than have a tax inspector raid your digs and sling in you the klink for not paying VAT. The double taxation treaty makes sure you won´t lose out, so it´s worth getting professional advice as to whether your UK income is taxable and getting it right.
    Last edited by BlasterBates; 13th August 2012 at 07:20.
    I'm alright Jack

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