Contracting but living in spain with a uk Ltd company.

**david@purpleaccounts.com** · 15 January 2008, 21:43

A useful HMRC guide for your situation.
http://www.hmrc.gov.uk/pdfs/ir20.pdf

**tim123** · 16 January 2008, 10:30

IR20's hardly bed-time reading, and IME it doesn't do well at explaining the rules, unless you already know them.

So back to the question.

If you are travelling to the UK "year on year", you will be declared tax resident in the UK, if your visits are for more than 91 days, on average, per year. As of April (2008) they are changing the rules so that travelling days count and you can no lonegr use the ruse of flying in on Monday, back on Thursday and only counting 2 days, it will now count as 4. There are no other rules for tax residency, owing a house, renting a house (or alternatively: not owning a house or not renting one) is irrelevent (unlike some countries).

If you only go to the UK in one single year and not the years either side, you will become tax resident if you spend more that 183 days in the country that tax year.

So what does being tax resident mean? It means that you are liable to UK tax on the whole of your world wide income, from employment or investment for that year.

If you don't spend enough time in the UK to become Tax resident, you are still liable to UK tax, but only on that income which was earnt in the UK during the time that you were physically present.

You may, or may not, be liable to tax in Spain (I really have no idea). If you are, you will have to use the double taxation relief to avoid being taxed twice. This is likely to be non trivial. The fact that most countries operate a Jan to Dec Tax year makes this even harder than it might otherwise be. Where two countries want to tax the same income, the usual rule is that the country where the income was earnt, get's their tax first, you cannot just choose the one which is easier for you.

As to working out if you are due to pay UK tax, like everything else to do with Tax in the UK, you Self Assess. It is entirely up to you, if appropriate, to declare youself resident and offer the tax due. You can, if you wish, decide not to bother doing this, but if declared by a court to be a deliberate avoidance the penalty for doing so is jail time (which is not the case in almost every other European country).

If you are a UK non dom, different rules apply.

HTH

tim

**compaid** · 27 January 2010, 16:51

Working Uk resident Spain

Agree with last post. A good accountant in Spain can sort out the double taxation issue very easily. You will need all the payslips etc showing where you paid the tax. They then submit them with your annual tax return.

Dont forget the other option of the E101 where you can pay elect to pay into Spanish NI (if resident) which covers you for health and towards the 15 year min pension allowance. This can avoid a lot of expense on UK rates. Typically fixed at 250 euros per month and is not a percentage unlike UK. This is an EU wide directive so can be applied when you work outside Spain in any EU country. Hope that adds a bit more to the good reply posted earlier.

**terenceslattery** · 4 June 2013, 13:12

Originally posted by compaid View Post

Agree with last post. A good accountant in Spain can sort out the double taxation issue very easily. You will need all the payslips etc showing where you paid the tax. They then submit them with your annual tax return.

Dont forget the other option of the E101 where you can pay elect to pay into Spanish NI (if resident) which covers you for health and towards the 15 year min pension allowance. This can avoid a lot of expense on UK rates. Typically fixed at 250 euros per month and is not a percentage unlike UK. This is an EU wide directive so can be applied when you work outside Spain in any EU country. Hope that adds a bit more to the good reply posted earlier.

Hi,

So just to clarify, if I was contracting in the UK and living in Spain I wouldn't need to pay employer or employee NI if electing to pay E101 and if so I would only pay 250 euro per month yeah?

**biergarten** · 11 March 2016, 00:07

In this scenario, when you have to pay taxes in the UK, because you spend over 183 days, will the accommodation in the UK be considered a business expense (a rented room, for example)?

**john@UKCA** · 11 March 2016, 08:32

Company Residence

Will also need to consider whether your company becomes non UK resident if spending considerable time in Spain

**BlasterBates** · 11 March 2016, 09:35

If you are contracting in the UK and living in Spain, i.e. you are commuting on a weekly basis, then you will almost certainly be taxing your UK earnings in the UK regardless of 183 days.

Not being tax resident doesn't exempt you from tax. You still pay tax on earnings from the UK. It is complicated and if you are less than 183 days there may be ways to mitigate tax NI etc, but that is the general rule, and I would use the assumption of paying UK tax and declaring it in Spain as already taxed. You probably won't really save anything by trying not to pay UK tax and you can easily end up in hot water if you don't. Taxing in the UK and then submitting the tax return to the Spain authorities is the safe way.

**Hobosapien** · 11 March 2016, 10:59

With all the uncertainty of brexit and how that may change the rules, I'd stay officially resident in UK and keep any Ltd registered there too (can be registered at accountant or relative's address if you don't want to keep a property in UK).

Then any contracting in UK is treated as now for tax/legal purposes.

You may find you want to keep a contract and commute from Spain at weekends or do some WFSpain to break up the travelling, rather than straight 6 months in contract 6 months off. I once was on a contract with a woman who did the weekend commute from London to Marbella where her hubby was based, and she seemed happy with the arrangement as long as she could leave early Friday and come in late on Monday so got Fri/Sat/Sun nights in Spain at the weekends.

Then see how you get on and if you like the lifestyle of Spain and want to move permanently officially you can sort out the legalities later, and see what happens with brexit or other EU rules in the meantime.

That's how I'd do it. Have often thought about renting a private villa (with pool) in Spain and WFSpain. They say it's best to rent over there before buying. Rental agreements are typically 12 months then option of up to 5 years when I looked into it a few years ago.

There are loads of expats in Spain and not all are retired, so check out the expat forums for more info on how to go about any move.

**TheFaQQer** · 11 March 2016, 12:02

Nobody going to play this card?

Contracting but living in spain with a uk Ltd company.