Spain / UK tax help pls?

[Andy 888]

I'm new to contracting and new to Spain. I have an opportunity to work as a contractor in the UK but I want to do it through a Spanish company. (I don't have one yet but can open one).

I have no ties with the UK, no bank account or address etc. so I think it would be difficult to open a company and anyway I'd MUCH prefer to keep all my finances in Spain.

Does anyone know if this is possible?

Cheers, Andy

[SueEllen]

You have a couple of problems.

Firstly agencies in the UK and some UK companies will only work with UK based contractor companies. This is to avoid any problems with the taxman where they are chased for tax that you owe.

Secondly the statutory residence test. This means if you work more in the UK then you do in Spain or elsewhere in one or more tax years, you can find yourself paying tax on your income in the UK.

[ASB]

You have a couple of problems.

Firstly agencies in the UK and some UK companies will only work with UK based contractor companies. This is to avoid any problems with the taxman where they are chased for tax that you owe.

Secondly the statutory residence test. This means if you work more in the UK then you do in Spain or elsewhere in one or more tax years, you can find yourself paying tax on your income in the UK.

yep. Its doable. Whether its practical is a different matter. Though there are ways round that with a uk based holding co if need be. There is also a question as to whether the Spanish company also gains a residence in the uk.

As ever tbe devil will be in the detail. It could become fairly complex.

[BlasterBates]

The rule is in the UK non UK residents pay tax on income sourced in the UK.

If you use your Spanish co in the UK you will have to register it and set up all the book keeping as if it was a UK Ltd.

i.e. it might be easier to set up a UK Ltd co. but do talk to a UK accountant about this, for example I see you may be able to avoid UK NI , if you are still resident in Spain, and paying Social Insurance there.

If your home will still be in Spain you will be mainly resident in Spain and you will have to declare this in Spain as well.

If you are only working in the UK for a very short time or you can work mainly in Spain (on the plain, in the rain )
then you might be able to argue it is Spanish income, and not register in the UK, but normally contractors don't work this way.

You will need advice from a UK and a Spanish accountant about your options, and what is tax efficient for a UK resident is not necessarily so for a Spanish resident, i.e. whether you pay yourself dividends.

The key thing is unfortunately you will have to submit tax returns in both countries and they will assume full tax residency. If you are less than 6 months in the UK it will be very straightforward to demonstrate you are only taxable on UK income, if you are longer, then you need proof that your home is in Spain. The fact that you are new to Spain means they will want proof that your friends and family are in Spain or some justification that Spain is really your home. If you have a partner this should be straight forward, if you are single then it becomes "grey", particularly as you are new to Spain. You might want to take advice on that.