Contracting through UK Ltd resident in Spain

[zafoeta]

Hi

I have been running my UK Ltd for a few years now. Due to family reasons I am thinking to move to Spain with my wife and start commuting to UK on a weekly basis. I would very likely spend less than 183 days in UK and my residence would be in Spain anyway as far as I understand because my wife and daughter would be resident there.

Is someone able to tell me what sort of implications this would have for my UK Ltd wrt taxes as well as how I would draw salary and dividends from it? What would the best legal setup be?

Thanks
Walter

[arfur]

Same Here

I'm looking at this as well for a number of reasons. In fact was viewing properties over Easter. There are excellent links in the Murcia region and will be 3 airports by the end of this year giving easy access to London.

[stek]

You’d be tax resident in both countries

[zafoeta]

You’d be tax resident in both countries

Are you able to elaborate a bit more? Would I pay corporation tax in UK and salary/dividends tax in Spain or how would this work ?

[Fred Bloggs]

Are you able to elaborate a bit more? Would I pay corporation tax in UK and salary/dividends tax in Spain or how would this work ?

Read the UK/Spain dual tax treaty. It is pretty easy to understand and covers both corporate and personal taxation. (Caveat - I haven't looked at the Spanish one, but I have looked at Oman, UAE, Australia and Portugal ones recently and they have much in common, I can't imagine the Spanish one being much different).

[SueEllen]

Are you able to elaborate a bit more? Would I pay corporation tax in UK and salary/dividends tax in Spain or how would this work ?

There are posts in this forum if you search using google explaining the difference between the "economic employer" and "employer of record" models. There is also this Q&A linky

To put it bluntly there is no 183 rule which gives you the right to pay tax where you like. If you live in two countries then you pay tax in both subject to the dual tax agreements each country has with each other.

While you may argue that you only work in the UK - due to being a British citizen, having lived here for most of your life and still working here then HMRC regard you as still living here. On the other hand due to your wife and child living in Spain, not being divorced and you visiting them on a very regularly basis then the Spain tax authorities regard you as living in Spain.

[Fred Bloggs]

There are posts in this forum if you search using google explaining the difference between the "economic employer" and "employer of record" models. There is also this Q&A linky

To put it bluntly there is no 183 rule which gives you the right to pay tax where you like. If you live in two countries then you pay tax in both subject to the dual tax agreements each country has with each other.

While you may argue that you only work in the UK - due to being a British citizen, having lived here for most of your life and still working here then HMRC regard you as still living here. On the other hand due to your wife and child living in Spain, not being divorced and you visiting them on a very regularly basis then the Spain tax authorities regard you as living in Spain.

Exactly. And it isn't so hard to get your head round it if you download and read the DTA. You do not pay tax on the same income twice (as a general rule).

[zafoeta]

There are posts in this forum if you search using google explaining the difference between the "economic employer" and "employer of record" models. There is also this Q&A linky

To put it bluntly there is no 183 rule which gives you the right to pay tax where you like. If you live in two countries then you pay tax in both subject to the dual tax agreements each country has with each other.

While you may argue that you only work in the UK - due to being a British citizen, having lived here for most of your life and still working here then HMRC regard you as still living here. On the other hand due to your wife and child living in Spain, not being divorced and you visiting them on a very regularly basis then the Spain tax authorities regard you as living in Spain.

Thanks for the QA link. Given this is all new to me I obviously don't find it all that simple.

From the link:
"The 183-day rule does not apply in situations where a one-person limited company is the employer. As soon as the director of the company moves, the permanent establishment of the company moves with him."

So my understanding is that my main residence would be in Spain because my wife and daughter will be living there hence my main ties will be there. Wouldn't this mean then that all taxes (cotporation and personal) would then have to be paid in Spain? Would it still make sense in any way to keep the UK Ltd in that case?

[SueEllen]

Thanks for the QA link. Given this is all new to me I obviously don't find it all that simple.

From the link:
"The 183-day rule does not apply in situations where a one-person limited company is the employer. As soon as the director of the company moves, the permanent establishment of the company moves with him."

So my understanding is that my main residence would be in Spain because my wife and daughter will be living there hence my main ties will be there. Wouldn't this mean then that all taxes (cotporation and personal) would then have to be paid in Spain? Would it still make sense in any way to keep the UK Ltd in that case?

If you are working through UK agencies in the UK then you will find some won't work with you if you use a company not incorporated and having a registered address in one of the UK jurisdictions.

How you go about sorting out your corporation tax is something I've not researched.

Some countries require you to have one or more directors in the other country which indicates that the company isn't resident for tax purposes even though you, as an individual, are. So if your parents are still alive or there is/are other relation(s) where there is a good level of trust between you, it may be simpler to make them director(s) as well and use your UK accountants address as the registered office. Also just because someone is a director they don't have to be a shareholder or on the payroll though they should be compensated for any business expenses.

Banks can also be funny which is why you may need a UK address. Again this is something you will need to look into.

[Fred Bloggs]

Thanks for the QA link. Given this is all new to me I obviously don't find it all that simple.

From the link:
"The 183-day rule does not apply in situations where a one-person limited company is the employer. As soon as the director of the company moves, the permanent establishment of the company moves with him."

So my understanding is that my main residence would be in Spain because my wife and daughter will be living there hence my main ties will be there. Wouldn't this mean then that all taxes (cotporation and personal) would then have to be paid in Spain? Would it still make sense in any way to keep the UK Ltd in that case?

This is covered in the UK/Spain dual tax treaty.