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Contracting in Spain / tax questions

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    Contracting in Spain / tax questions

    Hi guys,

    I may have the opportunity to work a 6 month contract (184 days) in Barcelona for an overseas employer in the near future, but there are one or two things I’m uncertain about and was wondering if I could query the contractoruk hive mind?

    I was thinking of going through an umbrella company whilst working out there, simply because Im unfamiliar with Spanish tax laws (which admittedly I’m still researching).

    Does anyone have any experience of contracting in Spain, and if so, what sort of arrangements did you make with regards to tax and the like, and did you have to pay tax in Spain AND the UK?

    With regards to the income I receive, the direct.gov site says "you'll only pay tax on earnings you bring into the UK - it makes no difference whether or not you're ordinarily resident" - does this mean that if my income gets paid into a UK bank account via an umbrella company, I’ll get hit for tax in Spain, and tax in the UK? Similarly, if I get paid into a Spanish bank account, Ill only get hit once for tax? If I transferred the money via a bank transfer at a later date into a UK account would that still be liable?

    Finally, does anyone have any umbrella companies that they could recommend that deal with overseas contractors? I was looking at http://www.cpmgroup.co.uk but have no idea what they are like!

    I'd be most grateful for any advice guys.

    Many thanks!

    #2
    I did 18 months out in Alicante ending last year. You won't be liable for any Spanish tax until you've been there 6 months. If your contract is going to extend beyond this you get yourself an NIE number & become an Autonomo (bit like being self employed over here). You'll be taxed at a flat rate of 20% (+4% NI) & there are no tax deductable expenses. If you are caught by IR35 you'll find you'll be better off paying under this system than you would have been coughing up in the UK. In my own case, since I wasn't there for the whole tax year I believe I'm liable to pay some top up tax to HMRC. I intend offsetting all the expenses (that weren't deductable in Spain) against this burden & hopefully I'll have little or nothing to pay. Feel free to PM if you have any questions.

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      #3
      Spanish Basics

      Hire an English speaking 'Gestor', they are a little mini solicitor that deals with all the administration and paperwork. If you're not planning on staying longer than 6 months it's not worth registering, too much hassle and you'll still have to do your UK taxes, but if your contract will be renewed, you're in for a treat!

      Taxes are not as good as the 24%, Wurzel suggests, closer to 30%-35% for a typical project. Nobody needs to do anything special to make a profit. Spain is also trying to attract German and Belgium projects, so they are offering a special expat tax status to senior programmers if they're likely to cause a lot of Spanish staff to get jobs. It makes earnings from abroad tax free. Ask your Gestor, but even without it the tax situation and living costs are very favorable.

      Yellow pages is your friend:
      http://www.paginas-amarillas.es/

      Comment


        #4
        From the CUK Overseas Guides:

        IT Contracting in Spain: Money & Tax

        and

        IT Contracting in Spain: Living & Working
        My all-time favourite Dilbert cartoon, this is: BTW, a Dumpster is a brand of skip, I think.

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