Reply to: Company Registered in Spain

Not high, but I think it would be pretty serious if they did drag him in. It would have to come from an investigation into the agency thats paying him I guess. To be honest I don't know the exact deets of his setup but he had the IoM Co on his offical business card. Quite a few Sth Africans I've worked with also had offshore pay setups but this was a few years ago. I think agencies are probably scared off from paying direct to offshore but I'm sure you'll find one who'll do it.

I think he believes its all legit

I wonder what the chances of being caught are.

I have generally taken the BlasterBates approach and paid the tax in the country I earned it in and haven' t got involved in cross country tax legislation. My dealings with 'experts' has generally got me nowhere so decided I would just sort matters out if I'm ever dragged in for investigation. My theory ( maybe not a good one but it's worked so far !? ) is to then show that I have paid tax in each country and let them try and work out the complicated stuff. I found it was impossible to comply with both UK and Oz rules if you are constantly yoyo'ing as I was offcially tax resident in both at the same time. Have any of the antipodeans on the site ever had to deal with this stuff ? I know one aussie who just gets paid in the IoM and doesn't pay tax at either end. I think he believes its all legit but I don't fancy his chances if they get him.

The easiest way to avoid complications is to be taxed where you do the work, this is particularly true if you might . qualify for residency but your not sure, and the rules for charging VAT cross borders is a bit of a nightmare.

Generally if you have a business in another EU country and you're taxed there you don't pay tax in your home country.

If you're going to do regular work in the UK just register a Ltd and let the UK accountants deal with that, and in Spain let the Spanish accountants deal with the SA.

...hmm forgot about the adjustment to the tax bands for foreign earnings in the country where you're resident, but that usually has minimal impact on your tax bill.

Good luck with the expert advisors ! I was involved in a complicated cross country tax issue and the company I worked for paid Price Waterhouse to sort it out, they did my tax returns, I read them and took 5 minutes to work out they hadn't got a clue and had a made a right mess. I ended up getting more and more senior PW people involved who pretended to have a clue before losing interest and passing me to someone else. In the end they all gave in and left it as a mess and we all lived with it, years ago now and I never heard a thing from any of the tax authorities involved.

You're quite right Spod, you can operate through you're SA. Legally an SA is no different to a Ltd. Don't clarify it with the Agent, just bill them through it, there is no need to ask the Agency at all.

You do however need to register your SA with the UK tax authorities however, if you qualify for residency.

It is actually cheaper to operate Europe wide through a Ltd though.

Coral,

1500 Euro to register, 3200 Euro registered with the bank, so yes, I have registered an SA. In the long run, it will be more efficient - or so my accountant reckons!

Spod - In "Just gotta bite the bullet" mode!

Spod,
Have you really registered and SA company? The startup capital for those is quite hefty compared to an SL, isn't it?

It shouldn't cost much to get a decent local tax/legal advisor - we're switching to a local guy for 100 EUR/month. They might well be quite relaxed about how you go about setting things up for Spanish tax purposes, if you get my gist.

If you're leaving UK mid tax year, you can specify a leaving date to the IR. They refunded me a proportion of 03/04's SA payment on account as a result.

cheers,
coralsoft

Not sure about the legality of this, but I do know of a couple of people based in Spain who operate Gibraltar registered companies.

This lot may be able to advise:

www.formaco.gi/home.htm

A quote from that site:

Gibraltar is not party to any double taxation agreement. There is therefore no exchange of information with any other fiscal authority

:hat

RR, all will be revealed...

just not yet a while.

Needless to say, nothing to do with pubs, or selling timeshares!

Spod - In "I'm an experienced engineer, I know what I'm doing" mode!

Well you did mention UK based contracts - they could make both you and your company UK tax resident. Also losing UK residence is a potentially involved technical matter. There is also the domicile aspect of UK/Spanish inheritance tax. Need to look at UK and Spanish tax law and UK/Spain double tax treaty in light of your and your company's circumstances - also capital taxes treaty (if there is one) for IHT matters.

What are you going to be doing there - pciking tomatoes and bananas, or changing beer barrels in an English pub?

Rabbit, I assume that the fact that I will no longer be resident in the UK for Tax Purposes and will in effect be working for a Spanish Company(mine) living in Tenerife and registered with the Tenerife authorities for Tax and National Insurance that I will no longer have any ties to the UK Inland Revenue.

However, you may be correct about me needing to consult with a tax adviser, thanks for the "heads up" though.

Spod - In "560 quid to fix an electrical fault on my bastard range rover" mode!

No difference Spod, just a wind-up mate. I know you are strictly legit .

Still will be nice money for your tax adviser. Why do you assume your company will pay Spanish and not UK taxes for example? If you can't explain why, you need to see a tax adviser about this.

Hi Spod,
I currently operate through a Spanish company to a UK agency. I live in Madrid, end client work is for UK project. The company took ages to set up (6 months to get at the bank account, not like the 48 hours to get my UK co. up and running) and the agency is big enough to handle their own forex (they have branches outside the UK) and put the money into the Spanish co. account. No VAT charged/paid, since it is between EU companies.

Although the account manager was initially unsure, a check with their legal dept, and it was full steam ahead and down to me to provide company details. This was a switch from a UK MyCo which I had been using, but they didn't make a fuss. I had considered using the UK co to sub-contract to the Spanish co, as someone else suggested and the Spanish financial advisor said that this would have been OK, too.

Contact me off-board if you want further info, since I don't often look in here.

cheers,
coralsoft

Re: Spain

RR, it is my intention to live on Tenerife, if I choose to accept a contract with a company based in the UK, where does the tax evasion come into this?

My company will be liable to taxation to the Spanish Government, just like an Indian based outsourcing company is liable for taxation purposes to India.

What is the difference?