Off topic: Can you live in Spain as a UK ex-pat as a limited company and continue paying taxes in the UK? Thread poster: Michael Boone
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Michael Boone 
Spain
Local time: 04:05
Member (2007)
Spanish to English
Not considering this as a viable option any time soon. Currently living in Spain as a freelancer and making the transition over to their tax and social security system. I hear these rumours, that's all, and was wondering if anyone has actually done this successfully? From what I gather, you set yourself up as a limited company in the UK, get someone to be the "head" of that company, and pay yourself dividends. Or something like that.. just curious to know more... any input would be much apprecia... See more Not considering this as a viable option any time soon. Currently living in Spain as a freelancer and making the transition over to their tax and social security system. I hear these rumours, that's all, and was wondering if anyone has actually done this successfully? From what I gather, you set yourself up as a limited company in the UK, get someone to be the "head" of that company, and pay yourself dividends. Or something like that.. just curious to know more... any input would be much appreciated. ▲ Collapse
| | | | Tom in London
United Kingdom
Local time: 03:05
Member (2008)
Italian to English
Michael Boone wrote:
Not considering this as a viable option any time soon. Currently living in Spain as a freelancer and making the transition over to their tax and social security system. I hear these rumours, that's all, and was wondering if anyone has actually done this successfully? From what I gather, you set yourself up as a limited company in the UK, get someone to be the "head" of that company, and pay yourself dividends. Or something like that.. just curious to know more... any input would be much appreciated.
You would still be resident in Spain for tax purposes and would have to declare your income from the UK plc as "foreign income".
Additionally if the Spanish (or indeed the UK) tax authorities suspected that you were setting up the UK plc with the intention of avoiding taxes, this would have other consequences.
| | | | Michael Boone
Spain
Local time: 04:05
Member (2007)
Spanish to English
TOPIC STARTER
That's what I thought, thanks.
| | | | Jo Macdonald
Spain
Local time: 04:05
Italian to English
+ ...
| Probably cost more to set up a company than work as a freelancer | Jan 30, 2023 |
Hi Michael
The Spanish system is pretty fair for a freelancer imo.
It's about 20% income tax paid quarterly (none in advance for next year) plus about €300/month social security/state pension, which will change in 2023 and be based on income rather than a fixed rate. If things are slow you can close your business up to three times a year to avoid paying social security contributions and open again when things pick up.
If you set up a company you'll have to pay ... See more Hi Michael
The Spanish system is pretty fair for a freelancer imo.
It's about 20% income tax paid quarterly (none in advance for next year) plus about €300/month social security/state pension, which will change in 2023 and be based on income rather than a fixed rate. If things are slow you can close your business up to three times a year to avoid paying social security contributions and open again when things pick up.
If you set up a company you'll have to pay tax on any wages the company pays you where you are resident for tax purposes (in Spain) and the company will pay taxes where it is established (in the UK) on any profits left after expenses (such as your wages, accounting, etc.).
Expenses like accounting, registration, etc will be double or more. Accounting costs will probably be higher for a company. For a freelancer in Spain it's about €30/month for an accountant and if most of your work is in the EU you can get a VAT refund at the end of the year if you've paid VAT on work-related expenses like 1/3 of home office costs, hardware, software, etc.
They go down hard on tax evasion here and can take any money they think you owe straight out of your bank account. Never happened to me but my ex was very "I'm not paying that!" and they'd just dock any unpaid amounts from her account.
Check out what sort of pension you'll be eligible for if you're going to be working in the EU after working in GB. Contributions paid in different EU states count towards your pension, and the UK used to be in the EU. ▲ Collapse
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Michael Boone
Spain
Local time: 04:05
Member (2007)
Spanish to English
TOPIC STARTER | Thanks Jo - I can see the way it works here now no way am I doing any avoidance! | Jan 30, 2023 |
Nah! Not for me, but it was good to hear some opinions on the subject. I'll just stick to the system here and pay my tax/social security here. I won't be getting involved in any avoidance. I was just curious to know if someone had tried it but it definitley doesn't look worth the hassle! A gestor told me the payments for social security are 60 eur for the first year, then 144.50 eur for months 13-18, then 202.30 for months 19-24. So, hopefully by the time this new income-based social security co... See more Nah! Not for me, but it was good to hear some opinions on the subject. I'll just stick to the system here and pay my tax/social security here. I won't be getting involved in any avoidance. I was just curious to know if someone had tried it but it definitley doesn't look worth the hassle! A gestor told me the payments for social security are 60 eur for the first year, then 144.50 eur for months 13-18, then 202.30 for months 19-24. So, hopefully by the time this new income-based social security comes in, I'll never have paid the full 300 per month. My concern now is getting switched over from HMRC, but I believe that I can do that fairly smoothly, with just another form to fill in for the next tax return.. which has to be sent by post and can't be done on line. Many thanks for all your inputs it's put my mind at rest.
Jo Macdonald wrote:
Hi Michael
The Spanish system is pretty fair for a freelancer imo.
It's about 20% income tax paid quarterly (none in advance for next year) plus about €300/month social security/state pension, which will change in 2023 and be based on income rather than a fixed rate. If things are slow you can close your business up to three times a year to avoid paying social security contributions and open again when things pick up.
If you set up a company you'll have to pay tax on any wages the company pays you where you are resident for tax purposes (in Spain) and the company will pay taxes where it is established (in the UK) on any profits left after expenses (such as your wages, accounting, etc.).
Expenses like accounting, registration, etc will be double or more. Accounting costs will probably be higher for a company. For a freelancer in Spain it's about €30/month for an accountant and if most of your work is in the EU you can get a VAT refund at the end of the year if you've paid VAT on work-related expenses like 1/3 of home office costs, hardware, software, etc.
They go down hard on tax evasion here and can take any money they think you owe straight out of your bank account. Never happened to me but my ex was very "I'm not paying that!" and they'd just dock any unpaid amounts from her account.
Check out what sort of pension you'll be eligible for if you're going to be working in the EU after working in GB. Contributions paid in different EU states count towards your pension, and the UK used to be in the EU. ▲ Collapse
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