Spanish LTD company contracting in UK

[iarmst]

I hope you can help me. I have a limited company here in Barcelona, Spain where I live. I am coming to the UK to undertake an IT contract. I believe that all I require is a European VAT number and a sterling account with my bank here in Barcelona. Then I invoice the employment agency in the UK (who in turn invoices the client). Is this correct? I am a British national.

Many thanks! ian

[ASB]

I hope you can help me. I have a limited company here in Barcelona, Spain where I live. I am coming to the UK to undertake an IT contract. I believe that all I require is a European VAT number and a sterling account with my bank here in Barcelona. Then I invoice the employment agency in the UK (who in turn invoices the client). Is this correct? I am a British national.

Many thanks! ian

You do not need to sterling account. Your banks should be able to convert on receipt of funds. The agency may or may not be happy paying into a foreign account. That is a matter for them.

Depending on the circumstance you may become UK resident for tax purposes, which would mean you will pay UK tax on your income (fir PAYE purposes). What is actually payable will depend upon any DTA agreements in force that apply to you and your specific circumstances.

Your company could potentially become UK resident for tax purposes. Again depends upon the circumstances.

[iarmst]

OK, time to setup a UK LTD company?

You do not need to sterling account. Your banks should be able to convert on receipt of funds. The agency may or may not be happy paying into a foreign account. That is a matter for them.

Depending on the circumstance you may become UK resident for tax purposes, which would mean you will pay UK tax on your income (fir PAYE purposes). What is actually payable will depend upon any DTA agreements in force that apply to you and your specific circumstances.

Your company could potentially become UK resident for tax purposes. Again depends upon the circumstances.

ASB, thanks so much for the reply. I appreciate it.

It would appear that the agency in the UK is reluctant to contract me as a foreign LTD company; I think they are nervous about this even though in tax year 2010-2011 my company would be taxed in Spain as normal.

So, to the question. If I setup a UK LTD company registered in London while living in Barcelona (I have no house/family/contacts in the UK) can I realistically expense travel (BCN to LON) and lodging while I am in the UK each week (Monday to Friday). If I could expense these then it would be like with my Spanish company except I would pay UK tax.

Regards, iarmst

[ASB]

ASB, thanks so much for the reply. I appreciate it.

It would appear that the agency in the UK is reluctant to contract me as a foreign LTD company; I think they are nervous about this even though in tax year 2010-2011 my company would be taxed in Spain as normal.

So, to the question. If I setup a UK LTD company registered in London while living in Barcelona (I have no house/family/contacts in the UK) can I realistically expense travel (BCN to LON) and lodging while I am in the UK each week (Monday to Friday). If I could expense these then it would be like with my Spanish company except I would pay UK tax.

Regards, iarmst

Yes, you should be able to expense that - provided the UK fits the criteria for a temporary workplace (and it probably does).

Remember too that however the UK end of things is structured you will still be tax resident in spain (probably). Spain will probably expect tax on your worldwide income (albeit with potential relief from the DTA). Worst case is that you are likely to pay whichever is higher. You therefore need to consider the system from both ends, they will interact (sometimes in quite bizarre ways).

It may also be worth mentioning that dividends in the UK do not attract any specific tax - it is just PAYE (and this effectively becomes a top up). Some regimes do not seek to tax foreign dividend income, as a result of this if you were to pay dividends (from retained profits) in a year when you were not resident in the UK then there is no liability to any additional UK tax. This may or may not be beneficial dependant upon the Spanish system.

There are also considerations related to NI. Even if you are employed by a UK company your position may be such that you can elect to stay in the Spanish SS system. Whether or not this is advantageous would remain to be seen.

[iarmst]

Thanks!

Yes, you should be able to expense that - provided the UK fits the criteria for a temporary workplace (and it probably does).

Remember too that however the UK end of things is structured you will still be tax resident in spain (probably). Spain will probably expect tax on your worldwide income (albeit with potential relief from the DTA). Worst case is that you are likely to pay whichever is higher. You therefore need to consider the system from both ends, they will interact (sometimes in quite bizarre ways).

It may also be worth mentioning that dividends in the UK do not attract any specific tax - it is just PAYE (and this effectively becomes a top up). Some regimes do not seek to tax foreign dividend income, as a result of this if you were to pay dividends (from retained profits) in a year when you were not resident in the UK then there is no liability to any additional UK tax. This may or may not be beneficial dependant upon the Spanish system.

There are also considerations related to NI. Even if you are employed by a UK company your position may be such that you can elect to stay in the Spanish SS system. Whether or not this is advantageous would remain to be seen.

Thanks for your response, it's what I am learning now too. There should be no issue in expensing flights, lodging etc. to the temporary workplace (24 months) so I'm going to do that and see how that works out.

Regards, iarmst