Contracting from Spain

**kaiser78** · 9 August 2016, 10:45

I worked with a colleague a couple of years ago who worked Mon/Fri from Spain and flew over for the mid week days. He was an English resident and so UK tax situation was as per living in the UK.

**chef** · 9 August 2016, 10:52

if you spend >183 days in a country you will likely find out that you are personally tax resident in that country and therefore have to pay local taxes on personal income.
depending on the local laws you can almost certainly work via any company you like (therefore there is likely no limitation to working via your UK Ltd) however, in order to maximise your take home profit it may turn out better to form a local company in the country you live and work via this.
There is also the issue of where your uk ltd is registered. if its currently registered to your address then you will have to move this to your accounts address if you sell up.
Because you are likely tax resident in a foreign country you will also have a second accountant to pay assuming your uk accountant doesnt know foreign personal tax laws as well as local accountant would.
then there is the issue of does your current work setup likely allow remote working? personally i find that im expected onsite at minimum at the start of the project and in the run up to deadline simply to gather requirements and deliver/demo etc. there is this extra cost (of course company deducatable as travel expense) to consider.

**northernladuk** · 9 August 2016, 11:25

Plenty of useful resources out there for Spain so must be a popular idea. Any of these any good?

IT Contracting in Spain: Money & Tax :: Contractor UK

IT Contracting in Spain: Living & Working :: Contractor UK

**stek** · 9 August 2016, 13:07

UK tax residency rules look very onerous, as I plan my move to Copenhagen. I can't spend more than 91 days in UK over 12 months or I will be tax resident in UK, there's a shiit-load of tests too that really do try and shift you inside UK tax scope.

**DimPrawn** · 9 August 2016, 13:30

Originally posted by stek View Post

UK tax residency rules look very onerous, as I plan my move to Copenhagen. I can't spend more than 91 days in UK over 12 months or I will be tax resident in UK, there's a shiit-load of tests too that really do try and shift you inside UK tax scope.

91 days is quite a lot. If you have left, then apart from a few weeks a year visiting family, why would you be in the UK that much? You live and work in Denmark, why would you be in the UK 25% of your time?

**stek** · 9 August 2016, 13:58

Originally posted by DimPrawn View Post

91 days is quite a lot. If you have left, then apart from a few weeks a year visiting family, why would you be in the UK that much? You live and work in Denmark, why would you be in the UK 25% of your time?

Agree, but it's the other tests like family, house (even rented out) etc blur the edges. Even having a UK limited is a tie according to one Tax expert I spoke to. The 183 day stuff too, which applies 183 or 91 days? It's just not clear at all.

Not complaining, just sharing what I've learnt, it's a bit of a minefield with no real EU harmonisation as to who is tax resident and who isn't and when, this bit is only a start...

Step 1: Consider whether you spent 183 days* in the UK in that tax year. If you did, you will be resident in the UK. If not:

Step 2: Consider the 3 automatic overseas tests. If you meet 1 of these you are not UK resident. If you did not:

Step 3: Consider if you meet the second and third UK tests. If you meet 1 of these, you are UK resident. If you did not:

Step 4: Consider the sufficient ties test. If you meet this you are UK resident, if you do not meet this, you are not UK resident.

https://www.gov.uk/government/upload...ted_078500.pdf

**doconline** · 9 August 2016, 16:02

Originally posted by oliverson View Post

I'm giving serious consideration to selling up in the UK and moving full-time to our place in Spain. The objective is to reduce costs, work less, at least on other companies projects, and have a better quality of life.

My question is what would this new direction look like from a contracting perspective (I'm a developer), irrespective of whether I worked 100% remotely or jetted into London and contracted half-the year? Can I still do this through my UK Limited Company? Would it be better to set up a Spanish equivalent company? What does the tax situation look like? Are there other lucrative markets than the UK for overseas contractors?

I know I have significant work to do to research all of this but is there anybody out there who has done the same kind of thing and if so what are your findings?

A UK company can be owned by someone that lives overseas, the registered office just needs to be in the UK, your accountant will probably allow this for a charge. Some Spanish folks I used to work with used to fly in on a Monday and fly out on a Thursday, doing 5 days hours in 4 days, so it is possible, think this (along with holidays etc) got round the 183 day rule, but they were Spanish Nationals. Don't know if they were using a UK LTD but they were contractors. Setting up a Spanish Ltd can be a pain. My parents lived over there and had a business, they were registered as 'Autonomo'. They didn't pay much tax and seemed like a very good deal, paid about 350 per month social security whether they worked or not though. This gives Spanish state pension, access to other services etc. Your best bet would speak to your accountant here, and also speak to one in Spain, you will find an English speaking one through expat forums, try and get a recommendation.

By lucrative markets, do you mean places you can work directly or remotely? If remotely, you are competing with Asia and all the other 3rd world countries who are willing to work for a few $ per hour. I think the best way is build your contacts / network here, and use that.

I'm not an accountant / lawyer so this may be all wrong, so maybe speak to your accountant first about your tax situation etc?

**oliverson** · 9 August 2016, 19:42

Thanks for your input everyone.

**BlasterBates** · 10 August 2016, 08:37

The thing is that regardless of where you're resident, you pay tax for any work you do in the country that you do the work. Not being resident doesn't mean you don't pay tax. There is a myth that if you're not resident you don't pay tax.

So if you work in Spain remotely then it's Spanish taxable income, if you travel to the UK every week to work and return to Spain at the weekend then it's UK taxable income. The 183 day rule is irrelevant in this regard.

Now if you live in Spain and travel to the UK during the week and your wife and family are in Spain, you will not be UK resident even if you spend more than 183 days in the UK, but of course you will be paying tax in the UK on your UK income. That means worldwide income will be taxed in Spain including UK income, but the double taxation treaty means effectively because the UK income was already taxed, t won't be taxed again, though in reality sometimes there is a bit extra to pay.

HMRC will expect you to be filling out tax declarations and you need to claim exemption based on the fact that your worldwide income is taxed in Spain. i.e. investments, CGT and so on will be taxed in Spain and you need to send the necessary documentation to HMRC.

When I was living in Germany and working in Switzerland I submitted tax returns in Germany and Switzerland, I actually declared all my income in both countries, but in Switzerland I enclosed a letter and proof of German residency. That involved a lot of checks from the Swiss as I was in Switzerland for more than 183 days a year. I had to have proof of travel back to Germany. "Tax Residency" isn't something where there's an official document, it's something that has to be accepted by the tax authority for every tax return you submit.

If you live and work remotely in Spain then you will have no UK tax obligations, even if you use a UK Ltd company.

Contracting from Spain